<PAGE>   1


                       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, 1997

                 [ ] 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 Other Jurisdiction of                    (I.R.S. Employer
       Incorporation or Organization)                  Identification No.)

       318 West Pike Street, Suite 475
           Lawrenceville, Georgia                             30246
---------------------------------------------       ------------------------
  (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 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 year ended December 31, 1997 were
$232,286.

         Aggregate market value of the voting common stock held by persons other
than directors and executive officers of the Registrant computed by reference to
the price at which the common stock was sold, or the average bid and asked price
of such common stock, as of a specific date within the past 60 days: $7,084,220
based on the average bid and asked price as of March 19, 1998.

         There were 950,080 shares of the Registrant's common stock outstanding
as of March 30, 1998.

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

                       DOCUMENTS INCORPORATED BY REFERENCE

         None.




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                                TABLE OF CONTENTS

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

Item 1.      Description of Business............................................................................   1

Item 2.      Description of Property............................................................................   8

Item 3.      Legal Proceedings..................................................................................   9

Item 4.      Submission of Matters to a Vote of Security Holders................................................   9

PART II.........................................................................................................   9

Item 5.      Market for Common Equity and Related Stockholder Matters...........................................   9

Item 6.      Management's Discussion and Analysis of Financial Condition and Results of Operations..............  10

Item 7.      Financial Statements and Supplementary Data........................................................  24

Item 8.      Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...............  50

PART III........................................................................................................  50

Item 9.      Directors and Executive Officers; Compliance with Section 16(a) of the Exchange Act................  50

Item 10.     Executive Compensation.............................................................................  52

Item 11.     Security Ownership of Certain Beneficial Owners and Management.....................................  53

Item 12.     Certain Relationships and Related Transactions.....................................................  55

PART IV.........................................................................................................  56

Item 13.     Exhibits and Reports on Form 8-K...................................................................  56
</TABLE>





                                       (i)

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                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

THE COMPANY

             GBC Bancorp, Inc., a Georgia corporation (the "Company"), was
organized on August 21, 1996 for the purpose of acquiring all of the common
stock of Gwinnett Banking Company, a Georgia corporation which opened for
business on October 31, 1997 (the "Bank"). The Company is a bank holding company
within the meaning of the Bank Holding Company Act of 1956, as amended (the "BHC
Act"), and the Georgia Bank Holding Company Act (the "Georgia BHC Act").

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

THE BANK

             The Bank is a full service commercial bank located at 165 Nash
Street, Lawrenceville, Gwinnett County, Georgia. The Bank's primary service area
is Gwinnett County, Georgia; however, the Bank 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.

COMPETITION

             Management believes that Gwinnett County has a very active and
competitive banking market. The largest financial institutions serving Gwinnett
County are NationsBank, N.A. (South), Wachovia Bank, N.A., SunTrust, Atlanta,
First Union National Bank, and SouthTrust Bank of Alabama, N.A. The largest
Gwinnett County based banks are The Bank of Gwinnett County, Lawrenceville; The
Brand Banking Co., Lawrenceville; Peoples Bank & Trust, Buford; and Citizens
Bank of Gwinnett, Duluth. Based on the Federal Deposit Insurance Corporation
(the "FDIC") Summary of Deposits as of June 30, 1997, there are 24 banks, two
thrift institutions and three credit unions that operate 129 offices in Gwinnett
County. There are approximately 18 financial institutions that have offices in
the immediate vicinity of the main office of the Bank.

EMPLOYEES

             The Bank has 15 full-time employees and one part-time employee. The
Company is not expected to have any employees who are not also employees of the
Bank.



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SUPERVISION AND REGULATION

             General.

             The Company is a bank holding company registered with the Board of
Governors of the Federal Reserve System (the "Federal Reserve") and the Georgia
Department of Banking and Finance (the "Georgia Department") under the BHC Act
and the Georgia BHC Act, respectively. As such, the Company is subject to the
supervision, examination and reporting requirements of the BHC Act and the
regulations of the Federal Reserve, and the Georgia BHC Act.

             The BHC Act requires every bank holding company to obtain the prior
approval of the Federal Reserve before: (i) 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; (ii) it or any of its
subsidiaries, other than a bank, may acquire all or substantially all of the
assets of any bank; or (iii) it may merge or consolidate with any other bank
holding company.

             The BHC 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 section of the United States, or the
effect of which may be substantially to lessen competition or to tend to create
a monopoly in any section of the country, or that in any other manner would be
in restraint of trade, unless the anticompetitive 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 BHC Act, as amended by the interstate banking provisions of the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
"Interstate Banking Act"), which became effective on September 29, 1995,
repealed the prior statutory restrictions on interstate acquisitions of banks by
bank holding companies, such that the Company, and any other bank holding
company located in Georgia, may now acquire a bank located in any other state,
and any bank holding company located outside of Georgia may lawfully acquire any
Georgia-based bank, regardless of state law to the contrary, in either case
subject to certain deposit-percentage, aging requirements, and other
restrictions. The Interstate Banking Act also generally provides that, as of
June 1, 1997, national and state-chartered banks may now branch interstate
through acquisitions of banks in other states.

             In response to the Interstate Banking Act, the Georgia General
Assembly adopted the Georgia Interstate Banking Act which became effective on
July 1, 1995. The Georgia Interstate Banking Act provides that (i) interstate
acquisitions by institutions located in Georgia will be permitted in states
which also allow national interstate acquisitions, and (ii) interstate
acquisitions of institutions located in Georgia will be permitted by
institutions located in states which allow national interstate acquisitions.

             Additionally, on January 26, 1996, the Georgia General Assembly
adopted the Georgia Interstate Branching Act which permits Georgia-based banks
and bank holding companies owning or acquiring banks outside of Georgia and all
non-Georgia banks and bank holding companies owning or acquiring banks in
Georgia the right to merge any lawfully acquired bank into an interstate branch
network. The Georgia Interstate Branching Act also allows banks to establish de
novo branches on a limited basis beginning July 1, 1996. Beginning July 1, 1998,
the number of de novo branches which may be established will no longer be
limited.

             The BHC Act generally prohibits a bank holding company from
engaging in activities other than banking or managing or controlling banks or
other permissible subsidiaries and 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. In
determining

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whether a particular activity is permissible, the Federal Reserve must consider
whether the performance of such an activity reasonably can be expected to
produce benefits to the public, such as greater convenience, increased
competition, or gains in efficiency, that outweigh possible adverse effects,
such as undue concentration of resources, decreased or unfair competition,
conflicts of interest, or unsound banking practices. For example, factoring
accounts receivable, acquiring or servicing loans, leasing personal property,
conducting discount securities brokerage activities, performing certain data
processing services, acting as agent or broker in selling credit life insurance
and certain other types of insurance in connection with credit transactions, and
performing certain insurance underwriting activities all have been determined by
the Federal Reserve to be permissible activities of bank holding companies. The
BHC Act does not place territorial limitations on permissible non-banking
activities of bank holding companies. Despite prior approval, the Federal
Reserve has the power to order a bank holding company or its subsidiaries to
terminate any activity or to terminate its ownership or control of any
subsidiary when it has reasonable cause to believe that continuation of such
activity or such ownership or control constitutes a serious risk to the
financial safety, soundness, or stability of any bank subsidiary of that bank
holding company.

             The Bank is a member of the FDIC, and as such, its deposits are
insured by the FDIC to the maximum extent provided by law. The Bank is also
subject to numerous state and federal statutes and regulations that affect its
business, activities, and operations, and it is supervised and examined by one
or more state or federal bank regulatory agencies.

             The Bank is subject to regulation, supervision, and examination by
the FDIC and the Georgia Department. The FDIC and the Georgia Department
regularly examine the operations of the Bank and are given authority to approve
or disapprove mergers, consolidations, the establishment of branches, and
similar corporate actions. The FDIC and the Georgia Department also have the
power to prevent the continuance or development of unsafe or unsound banking
practices or other violations of law.

Certain Conditions

             In connection with their approvals of the formation of the Bank and
the Company, the Georgia Department, the FDIC and the Federal Reserve
conditioned their approvals on the compliance with certain restrictions and
requirements relating to the operations and activities of the Bank and the
Company (collectively, the "Conditions"), including, without limitation, (a) a
requirement for the Bank to maintain minimal capital of $9,000,000, of which not
less than $3,000,000 must be allocated to common capital, not less than
$5,100,000 must be allocated to paid in surplus and not less than $900,000 must
be allocated as an expense fund to cover pre-opening expenses and potential
losses in the Bank's first year of operation; (b) a requirement for the Bank to
maintain a Capital-to-Asset Ratio, as defined by the Georgia Department, at not
less than 8% during the first three years of operation, and further following
this initial three-year period, for the Bank to maintain a Capital-to-Asset
Ratio at levels which are consistent with the published policies of the Georgia
Department; (c) a restriction on the payment of dividends to the Company by the
Bank, and on the payment to officers or employees of the Bank of any incentive
bonuses until such time as all start-up losses of the Bank are recovered and the
Bank has earned a cumulative profit (on both a Bank-only and consolidated basis)
and, further, a requirement for the Bank to obtain the approval of the Georgia
Department and the Federal Reserve prior to the payment of dividends to the
Company; (d) a restriction on the payment by the Bank of any fees to Directors
or committee members of the Bank until the Bank has earned a cumulative profit
(on both a Bank-only and consolidated basis); (e) a restriction on changes in
the position of President, Chief Lending Officer or Chief Operations Officer of
the Bank during the first two years of operation of the Bank without obtaining
the prior approval of the Georgia Department and the FDIC; (f) a restriction on
adding any persons to the Board of Directors of the Bank or the Company during
the first two years after commencing business without obtaining the prior
approval of the Georgia Department; (g) a restriction on the creation of any
plan for the issuance of stock options to key employees and/or officers of the
Company or the Bank without obtaining the prior approval of the Georgia
Department, which shall include any arrangements for the issuance of stock
options included in employment contracts; and (h) a restriction on the Company
from incurring debt without obtaining the prior approval of the Federal Reserve.
Pursuant to the applicable regulatory approvals, all conditions imposed on the
organizers and Directors of the Bank are imposed on the organizers and

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Directors of the Company. The Boards of Directors of the Bank and the Company
have, in each instance, committed to cause the Bank and the Company to abide by
each of the Conditions imposed through formal Board action.

             Payment of Dividends

             The Company is a legal entity separate and distinct from its
banking subsidiary. The principal source of cash flow of the Company, including
cash flow to pay dividends to its shareholders, is dividends from the Bank.
There are statutory and regulatory limitations on the payment of dividends by
the Bank to the Company (including, but not limited to, the Conditions), as well
as by the Company to its 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.

             The payment of dividends by the Company and the Bank may also be
affected or limited by other factors, such as the requirement to maintain
adequate capital above regulatory guidelines.

             Capital Adequacy

             The Company and the Bank are required to comply with the capital
adequacy standards established by the Federal Reserve in the case of the
Company, and the FDIC 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 profile among banks
and bank holding companies, to account for off-balance-sheet exposure, and to
minimize disincentives for holding liquid 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 (the "Total Risk-Based Capital
Ratio") of total capital ("Total Capital") to risk-weighted assets (including
certain off-balance-sheet items, such as standby letters of credit) is 8%. At
least half of Total Capital must be comprised of 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 ("Tier 1 Capital"). The remainder may consist of subordinated
debt, other preferred stock, and a limited amount of loan loss reserves ("Tier 2
Capital"). At December 31, 1997, the Company's consolidated Total Risk-Based
Capital Ratio and its Tier 1 Risk-Based Capital Ratio (i.e., the ratio of Tier 1
Capital to risk-weighted assets) were 201.41% and 200.72%, respectively.

             In addition, the Federal Reserve has established minimum leverage
ratio guidelines for bank holding companies. These guidelines provide for a
minimum ratio (the "Leverage Ratio") of Tier 1 Capital to average assets, less
goodwill and certain other intangible assets, of 3% for bank holding companies
that meet certain specified criteria, including those having the highest
regulatory rating. All other bank holding companies generally are required to
maintain a Leverage Ratio of at least 3%, plus an additional cushion of 100 to
200 basis points. The Company's Leverage Ratio at December 31, 1997 was 109.11%.
The guidelines also provide that bank holding companies

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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" (deducting all intangibles) and other indicia of capital strength in
evaluating proposals for expansion or new activities.

             The Bank is subject to risk-based and leverage capital requirements
adopted by the FDIC, 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, 1997. Neither the
Company nor the Bank has been advised by any federal banking agency of any
specific minimum capital ratio requirement applicable to it.

             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 FDIC, 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 FDIC have, pursuant
to FDICIA, recently adopted final regulations requiring regulators to consider
interest rate risk (when the interest rate sensitivity of an institution's
assets does not match the sensitivity of its liabilities or its off
balance-sheet position) in the evaluation of a bank's capital adequacy. The bank
regulatory agencies have concurrently proposed a methodology for evaluating
interest rate risk which would require banks with excessive interest rate risk
exposure to hold additional amounts of capital against such exposures.

             Support of Subsidiary Institution

             Under Federal Reserve policy, the Company is 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,
the Company 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

             FDICIA establishes a system of prompt corrective action to resolve
the problems of undercapitalized institutions. Under this system, which became
effective in December 1992, the federal banking regulators are required to
establish five capital categories (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized, and critically
undercapitalized) and 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 which will depend upon
the capital category in which the institution is placed. Generally, subject to a
narrow exception, FDICIA requires the banking regulator 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 final agency rules implementing the prompt corrective
action provisions, an institution that (i) has a Total Risk-Based Capital Ratio
of 10% or greater, a Tier 1 Risk-Based Capital Ratio of 6.0% or greater, and a
Leverage Ratio of 5.0% or greater and (ii) is not subject to any written
agreement, order, capital directive, or prompt corrective action directive
issued by the appropriate federal banking agency is deemed to be well
capitalized. An institution with a Total Risk-Based Capital Ratio of 8.0% or
greater, a Tier 1 Risk-Based Capital Ratio of 4.0% or greater, and a Leverage
Ratio of 4.0% or greater is considered to be adequately capitalized. A
depository institution that has a Total Risk-Based Capital Ratio of less than
8.0%, a Tier 1 Risk-Based Capital Ratio of less than 4.0%, or a

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Leverage Ratio of less than 4.0% is considered to be undercapitalized. A
depository institution that has a Total Risk-Based Capital Ratio of less than
6.0%, a Tier 1 Risk-Based Capital Ratio of less than 3.0%, or a Leverage Ratio
of less than 3.0% is considered to be significantly undercapitalized, and an
institution that has a tangible equity capital to assets ratio equal to or less
than 2.0% is deemed to be critically undercapitalized. For purposes of the
regulation, the term "tangible equity" includes core capital elements counted as
Tier 1 Capital for purposes of the risk-based capital standards, plus the amount
of outstanding cumulative perpetual preferred stock (including related surplus),
minus intangible assets with certain exceptions. 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.

             An institution that is categorized as undercapitalized,
significantly undercapitalized, or critically undercapitalized is required to
submit an acceptable capital restoration plan to its appropriate federal banking
agency. Under FDICIA, a bank holding company must guarantee that a subsidiary
depository institution will meet its capital restoration plan, subject to
certain limitations. The obligation of a controlling bank holding company under
FDICIA to fund a capital restoration plan is limited to the lesser of 5% of an
undercapitalized subsidiary's assets or the amount required to meet regulatory
capital requirements. An undercapitalized institution is also generally
prohibited from increasing its average total assets, making acquisitions,
establishing any branches, or engaging in any new line of business, except in
accordance with an accepted capital restoration plan or with the approval of the
FDIC. In addition, the appropriate federal banking regulator is given authority
with respect to any undercapitalized depository institution to take any of the
actions it is required to or may take with respect to a significantly
undercapitalized institution as described below if it determines "that those
actions are necessary to carry out the purpose" of FDICIA.

             For those institutions that are significantly undercapitalized or
undercapitalized and either fail to submit an acceptable capital restoration
plan or fail to implement an approved capital restoration plan, the appropriate
federal banking agency must require the institution to take one or more of the
following actions: (i) sell enough shares, including voting shares, to become
adequately capitalized; (ii) merge with (or be sold to) another institution (or
holding company), but only if grounds exist for appointing a conservator or
receiver; (iii) restrict certain transactions with banking affiliates as if the
"sister bank" exception to the requirements of Section 23A of the Federal
Reserve Act did not exist; (iv) otherwise restrict transactions with bank or
non-bank affiliates; (v) restrict interest rates that the institution pays on
deposits to "prevailing rates" in the institution's "region"; (vi) restrict
asset growth or reduce total assets; (vii) alter, reduce, or terminate
activities; (viii) hold a new election of directors; (ix) dismiss any director
or senior executive officer who held office for more than 180 days immediately
before the institution became undercapitalized, provided that in requiring
dismissal of a director or senior executive officer, the regulator must comply
with certain procedural requirements, including the opportunity for an appeal in
which the director or officer will have the burden of proving his or her value
to the institution; (x) employ "qualified" senior executive officers; (xi) cease
accepting deposits from correspondent depository institutions; (xii) divest
certain nondepository affiliates which pose a danger to the institution; or
(xiii) be divested by a parent holding company. In addition, without the prior
approval of the appropriate federal banking regulator, a significantly
undercapitalized institution may not pay any bonus to any senior executive
officer or increase the rate of compensation for such an officer, without
regulatory approval.

             At December 31, 1997, the Bank had the requisite capital levels to
qualify as "well capitalized."

             FDIC Insurance Assessments

             Pursuant to FDICIA, the FDIC 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, which went into effect on January
1, 1994, assigns an institution to one of three capital categories: (i) well
capitalized; (ii) adequately capitalized; and (iii) 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. An
institution is also assigned by the FDIC to one of three supervisory subgroups
within each capital group. The supervisory subgroup to which an institution is
assigned is based on a supervisory evaluation provided to the FDIC by the
institution's primary federal regulator and information which the FDIC
determines to be

                                      - 6 -

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relevant to the institution's financial condition and the risk posed to the
deposit insurance funds (which may include, if applicable, information provided
by the institution's state supervisor). An institution's insurance assessment
rate is then determined based on the capital category and supervisory category
to which it is assigned. Under the final risk-based assessment system, there are
nine assessment risk classifications (i.e., combinations of capital groups and
supervisory subgroups) to which different assessment rates are applied.
Assessment rates for members of both the Bank Insurance Fund ("BIF") and the
Savings Association Insurance Fund ("SAIF") for the first half of 1995, as they
had been during 1994, ranged from 23 basis points (0.23% of deposits) for an
institution in the highest category (i.e., "well capitalized" and "healthy") to
31 basis points (0.31% of deposits) for an institution in the lowest category
(i.e., "undercapitalized" and "substantial supervisory concern"). These rates
were established for both funds to achieve a designated ratio of reserves to
insured deposits (i.e., 1.25%) within a specified period of time.

             Once the designated ratio for the BIF was reached in May 1995, the
FDIC reduced the assessment rate applicable to BIF deposits in two stages, so
that, beginning in 1996, the deposit insurance premiums for 92% of all BIF
members in the highest capital and supervisory categories were set at $2,000 per
year, regardless of deposit size. The FDIC elected to retain the existing
assessment rate range of 23 to 31 basis points for SAIF members for the
foreseeable future given the undercapitalized nature of that insurance fund.

             Recognizing that the disparity between the SAIF and BIF premium
rates have adverse consequences for the SAIF insured institutions and other
banks with SAIF assessed deposits, including reduced earnings and an impaired
ability to raise funds in capital markets and to attract deposits, in July 1995,
the FDIC, the Treasury Department, and the Office of Thrift Supervision released
statements outlining a proposed plan to recapitalize the SAIF, the principal
feature of which was a special one-time assessment on depository institutions
holding SAIF-insured deposits, which was intended to recapitalize the SAIF at a
reserve ratio of 1.25%. This proposal contemplated elimination of the disparity
between the assessment rates on BIF and SAIF deposits following recapitalization
of the SAIF.

             A variation of this proposal designated the Deposit Insurance Funds
Act of 1996 ("DIFA") was enacted by Congress as part of the omnibus budget
legislation and signed into law on September 30, 1996. As directed by DIFA, the
FDIC implemented a special one-time assessment of approximately 65.7 basis
points (0.657%) on a depository institution's SAIF-insured deposits held as of
March 31, 1995 (or approximately 52.6 basis points on SAIF deposits acquired by
banks in certain qualifying transactions). In addition, the FDIC has implemented
a revision in the SAIF assessment rate schedule which effected, as of October 1,
1996 (i) a widening in the assessment rate spread among institutions in the
different capital and risk assessment categories, (ii) an overall reduction of
the assessment rate range assessable on SAIF deposits of from 0 to 27 basis
points, and (iii) a special interim assessment rate range for the last quarter
of 1996 of from 18 to 27 basis points on institutions subject to Financing
Corporation ("FICO") assessments. Effective January 1, 1997, assessments to help
pay off the $780 million in annual interest payments on the $8 billion FICO
bonds issued in the late 1980's as part of the government rescue of the thrift
industry are imposed on both BIF- and SAIF-insured deposits in annual amounts
presently estimated at 1.29 basis points and 6.44 basis points, respectively.
Beginning in January, 2000, BIF- and SAIF-insured institutions will share the
FICO interest costs at equal rates currently estimated at 2.43 basis points.

             Under the FDIA, insurance of deposits may be terminated by the FDIC
upon a finding that the institution has engaged in unsafe and unsound practices,
is in an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order, or condition imposed by the FDIC.

             Safety and Soundness Standards

             The FDIA, as amended by the FDICIA and the Riegle Community
Development and Regulatory Improvement Act of 1994, requires the federal bank
regulatory agencies to prescribe standards, by regulations or guidelines,
relating to internal controls, information systems and internal audit systems,
loan documentation, credit underwriting, interest rate risk exposure, asset
growth, asset quality, earnings, stock valuation and compensation, fees and
benefits, and such other operational and managerial standards as the agencies
deem appropriate. The federal bank regulatory agencies have adopted, effective
August 9, 1995, a set of guidelines prescribing safety and soundness

                                      - 7 -

<PAGE>   10



standards pursuant to FDICIA, as amended. The guidelines establish general
standards relating to internal controls and information systems, internal audit
systems, loan documentation, credit underwriting, interest rate exposure, asset
growth and compensation and 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,
after being so notified, an institution fails to submit an acceptable compliance
plan or fails in any material respect to implement an acceptable compliance
plan, the agency must issue an order directing action to correct the deficiency
and may issue an order directing other actions of the types to which an
undercapitalized institution is subject under the "prompt corrective action"
provisions of FDICIA. See "--Prompt Corrective Action." 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. The federal regulatory
agencies also proposed guidelines for asset quality and earnings standards.

             Community Reinvestment Act

             The Community Reinvestment Act of 1977 ("CRA") requires the federal
bank regulatory agencies to encourage financial institutions to meet the credit
needs of low- and moderate-income borrowers in their local communities. In May
1995, the federal bank regulatory agencies published final amended regulations
promulgated pursuant to the CRA. The final regulations eliminate the 12
assessment factors under the former regulation and replace them with performance
tests. Institutions are no longer required to prepare CRA Statements or
extensively document director participation, marketing efforts or the
ascertainment of community credit needs. Under the final rule, 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 have the option of
being evaluated under a strategic plan formulated with community input and
pre-approved by the bank regulatory agency.

             CRA regulations provide for certain disclosure obligations. In
accordance with the CRA, each institution must post a CRA notice advising the
public of the right to comment to the institution and its regulator on the
institution's CRA performance and to review the institution's CRA 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. Public disclosure of written
CRA evaluations of financial institutions made by regulatory agencies is
required by the CRA. This promotes enforcement of CRA requirements by providing
the public with the status of a particular institution's community reinvestment
record.

ITEM 2.  DESCRIPTION OF PROPERTY

             On March 17, 1998, the Bank entered into a month-to-month lease
agreement with GBC Properties, LLC ("GBC LLC") to lease the real estate for the
Bank located at 165 Nash Street, Lawrenceville, Gwinnett County, Georgia for a
rental of $1.00 per month until the permanent banking facility described below
for the Bank is constructed. In addition, the temporary modular office and the
temporary operation and administrative offices of the Bank are leased on a
short-term basis from independent third parties for $6,727.00 per month. Upon
completion of the construction of the permanent banking facility, the temporary
modular office will be removed and temporary operation and administrative
offices will be vacated.

             On March 17, 1998, the Bank entered into a primary lease agreement
(the "Lease Agreement") with GBC LLC to lease permanent office space for the
Bank located at 165 Nash Street, Lawrenceville, Gwinnett County, Georgia (the
"Permanent Premises") for five years, beginning on the completion of the
construction of the Permanent Premises, with two five-year renewal options.
Pursuant to the Lease Agreement, the initial annual rental for the 16,000 square

                                      - 8 -

<PAGE>   11



feet of office space is $240,000 or $15.00 per square foot. The rental for the
renewal will be increased based on the increase in the Consumer Price Index.

             The Bank obtained two appraisals for the fair rental value of the
Permanent Premises. One appraisal, dated October 8, 1996, provided a range of
market rental for the Permanent Premises. The mid-point of such range was $16.00
per square foot. The other appraisal, also dated October 8, 1996, determined
that the fair market rental value of the Permanent Premises was $15.66 per
square foot.

             The owner of the property and the building where the Permanent
Premises will be located is GBC LLC. Most of the members of GBC LLC are
directors and officers of the Company and the Bank. See "Item 12. Certain
Relationships and Related Transactions."

             The Permanent Premises, when completed, will include a full-service
teller line and drive-in and walk-up windows. The Bank also will offer safe
deposit boxes.

             The Company does not invest in real estate, interests in real
estate, real estate mortgages, or securities of or interests in persons
primarily engaged in real estate activities.

ITEM 3.  LEGAL PROCEEDINGS

None.

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

None.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

             There is currently no market for shares of the Company's common
stock, par value $1.00 per share (the "Common Stock") and it is not likely that
an active trading market will develop for the shares in the future. There are no
present plans for the Company's Common Stock to be traded on any stock exchange
or over-the-counter market. As of December 31, 1997, there were no private
trades of shares of the Company's Common Stock.

             As of December 31, 1997, the Company had approximately 365 holders
of the Company's Common Stock.

             The Company has not paid any dividends to date. Under the Georgia
Business Corporation Code, the Company may from time to time make distributions,
including the payment of dividends, to its shareholders in money, indebtedness
or other property (except its own shares) unless, after giving effect to such
distribution, the Company would not be able to pay its debts as they become due
in the usual course of business or the Company's total assets would be less than
the sum of its total liabilities plus the amount that would be needed, if the
Company 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. The Company may also
distribute its shares pro rata and without consideration to its shareholders or
to the shareholders of one or more classes or series, which constitutes a share
dividend.

             Subject to the Conditions, the Company, as the sole holder of
common stock of the Bank, is entitled to such dividends as may be declared from
time to time by the Board of Directors out of funds legally available therefor.
Dividends paid may not exceed 50% of net profits after taxes for the previous
fiscal year without prior approval of the Department of Banking. The Bank may
not pay cumulative dividends on its common stock.


                                      - 9 -

<PAGE>   12



             In the absence of other activities conducted by the Company, its
ability to pay dividends will depend upon the earnings of the Bank and
fulfillment of the Conditions. However, the Company cannot assure the future
payment of dividends, either in cash or in stock.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

             The following is a discussion of the financial condition of the
Company and the Bank at December 31, 1997 and 1996 and the results of operations
for the year ended December 31, 1997 and for the period from inception to
December 31, 1996. The purpose of this discussion is to focus on information
about the Company's financial condition and results of operations which are not
otherwise apparent from the 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.

OVERVIEW

The Company's 1997 results were highlighted by the successful completion of its
common stock offering and the commencement of its banking operations on October
31, 1997. The Company's capital base will allow for substantial growth in 1998.

FINANCIAL CONDITION AT DECEMBER 31, 1997 AND 1996

Following is a summary of the Company's balance sheets for the periods
indicated:


<TABLE>
<CAPTION>
                                       DECEMBER 31,
                                    ------------------
                                      1997        1996
                                    -------      -----
                                   (Dollars in thousands)
<S>                                 <C>          <C>
Cash and due from banks .........      $   959      $   1

Federal funds sold ..............        9,700         --

Loans ...........................        1,841         --

Premises and equipment ..........          139         32

Other assets ....................          211        116
                                       -------      -----

                                       $12,850      $ 149
                                       =======      =====

Total deposits ..................      $ 4,272      $  --

Other borrowings ................           --        387

Other liabilities ...............           28         --

Stockholders' equity (deficit)...        8,550       (238)
                                       -------      -----
                                       $12,850      $ 149
                                       =======      =====
</TABLE>


                                     - 10 -

<PAGE>   13



FINANCIAL CONDITION AT DECEMBER 31, 1997 AND 1996

             As of December 31, 1997, the Company had total assets of $12.8
million. The Company raised $9.5 million from the sale of its common stock and
has received $4.3 million in deposits since the commencement of operations on
October 31, 1997. The Company has invested the proceeds from its stock sale and
deposit growth in Federal funds sold ($9.7 million) and loans ($1.9 million).
The Company also repaid debt incurred during the organizational period of
$950,000. The Company expects that loan and deposit growth will be significant
during the coming year. This expected growth is not uncommon for de novo banks.
The Company was in process of organizing the Company and obtaining regulatory
approvals as of December 31, 1996.

             The Bank's investments, consisting solely of Federal funds sold,
amounted to $9.7 million at December 31, 1997.

             The Company has 69% of its loan portfolio collateralized by real
estate located in the Company's primary market area of Gwinnett County and
surrounding counties. The Company's real estate mortgage and construction
portfolio consists of loans collateralized by one to four-family residential
properties (61%) and construction loans to build one to four-family residential
properties (39%). The Company generally requires that loans collateralized by
real estate not exceed 80%-85% of the collateral value.

             The Company's remaining 31% of its loan portfolio consists of
commercial, consumer, and other loans. The Company requires collateral
commensurate with the repayment ability and creditworthiness of the borrower.

             The specific economic and credit risks associated with the
Company's 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 the Company's 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
developers can find builders to buy lots for home construction, 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 the Company's market area
are stable with no indications of a significant downturn in the general economy.

             The Company attempts to reduce these economic and credit risks not
only by adherence to loan to value guidelines, but also by investigating the
creditworthiness of the borrower and monitoring the borrower's financial
position. Also, the Company establishes and periodically reviews its lending
policies and procedures as well as continually monitoring the real estate market
within the Company's market area. 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
other needs of the Company. 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. The Company
attempts to price its deposits to meet its asset/liability objectives consistent
with local market conditions.

                                     - 11 -

<PAGE>   14



             The liquidity and capital resources of the Bank are monitored on a
periodic basis by State and Federal regulatory authorities. As determined under
guidelines established by those regulatory authorities and internal policy, the
Bank's liquidity was considered satisfactory.

             At December 31, 1997, the Company had loan commitments outstanding
of $3,366,000. 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, the Bank has the
ability on a short-term basis to borrow and purchase Federal funds from other
financial institutions. At December 31, 1997, the Bank had arrangements with
three commercial banks for additional short-term advances of approximately
$4,500,000.

             At December 31, 1997, the Company's and the Bank's capital ratios
were considered adequate based on regulatory minimum capital requirements. The
Company's stockholders' equity increased due to the issuance of common stock of
$9.5 million offset by a net loss of $688,000.

             In the future, the primary source of funds available to the Company
will be the payment of dividends by its subsidiary Bank. Banking regulations
limit the amount of the dividends that may be paid without prior approval of the
Bank's regulatory agency. Currently, no dividends can be paid by the Bank to the
Company without regulatory approval.

             The minimum capital requirements to be considered well capitalized
under prompt corrective action provisions and the actual capital ratios for the
Company and the Bank as of December 31, 1997 are as follows:


<TABLE>
<CAPTION>
                                                 Actual
                                          --------------------    Regulatory
                                          Company       Bank     Requirements
                                          -------      -------   ------------
<S>                                       <C>          <C>       <C>
Leverage capital ratio .............      109.11%      104.41%       5.00%

Risk-based capital ratios:

             Core capital ..........      200.72       192.08        6.00

             Total capital .........      201.41       192.77       10.00
</TABLE>


             At December 31, 1997, the Company entered into a lease agreement
with GBC LLC, a corporation formed by the organizers of the Company to own land
and construct office facilities thereon. Upon completion of construction, the
Company will lease permanent office space from GBC LLC for an initial annual
rental of $240,000.

             These ratios will decline as asset growth continues, but will still
remain in excess of the regulatory minimum requirements.

             Management believes that its liquidity and capital resources are
adequate and will meet its foreseeable short and long-term needs. Management
anticipates that it will have sufficient funds available to meet current loan
commitments and to fund or refinance, on a timely basis, its other material
commitments and liabilities.

             Except for expected growth common to a de novo bank, management is
not aware of any other known trends, events or uncertainties that will have or
that are reasonably likely to have a material effect on its liquidity, capital
resources or operations. Management is also not aware of any current
recommendations by the regulatory authorities which, if they were implemented,
would have such an effect.


                                     - 12 -

<PAGE>   15



             Effects of Inflation

             The impact of inflation on banks differs from its impact on
non-financial institutions. Banks, as financial intermediaries, have assets
which are primarily monetary in nature and which 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. The Company, through its asset-liability
committee, attempts 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 the Company's interest rate sensitive
assets and liabilities, see the "Asset/Liability Management" section.

RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 AND PERIOD FROM
INCEPTION TO DECEMBER 31, 1996

             Following is a summary of the Company's operations for the periods
indicated.


<TABLE>
<CAPTION>
                                                YEAR ENDED           PERIOD ENDED
                                            DECEMBER 31, 1997      DECEMBER 31, 1996
                                            -----------------      -----------------
                                                    (DOLLARS IN THOUSANDS)
<S>                                         <C>                    <C>
Interest income ....................               $ 199                $  --

Interest expense ...................                  54                    7

Net interest income (expense) ......                 145                   (7)

Provision for loan losses ..........                  29                   --

Other income .......................                  33                   --
                                                                        -----
Other expenses .....................                 837                  232

Pretax loss ........................                (688)                (239)
                                                   =====                =====
Income taxes .......................                  --                   --

Net loss ...........................                (688)                (239)
</TABLE>

             The Company commenced its operations on October 31, 1997. Prior to
the commencement, the Company was engaged in activities involving the formation
of the Company, selling its common stock, and obtaining necessary approvals. The
Company incurred operating losses totaling $723,000 during its organizational
period ($239,000 in 1996 and $484,000 in 1997). The Company incurred total
organizational and stock issue costs of $197,000 of which $173,000 has been
capitalized to be amortized over a period of sixty months, and $24,000 has been
recorded as a reduction in capital surplus. Through the end of the year, the
Company has incurred additional operating losses of $203,000.

             Operations during 1996 and through October of 1997 consisted
primarily of the Company's organizers engaging in organizational and preopening
activities necessary to obtain regulatory approvals and to prepare to commence
business as a bank. Therefore, operational comparisons between 1997 and 1996
would not be meaningful and are not presented.

             Net Interest Income

             The Company's results of operations are determined by its ability
to effectively manage interest income and expense, to minimize loan and
investment losses, to generate non-interest income, and to control operating
expenses.

                                     - 13 -

<PAGE>   16



Since interest rates are determined by market forces and economic conditions
beyond the control of the Company, the Company's ability to generate net
interest income is dependent upon its ability to obtain an adequate net interest
spread between the rate paid on interest-bearing liabilities and the rate earned
on interest-earning assets.

             The net yield on average interest-earning assets during the
Company's operational period from October 31, 1997 to December 31, 1997 was
5.74%. Average loans were $222,000, and average Federal funds sold were $1.95
million. Average interest-bearing liabilities were $276,000. The rate earned on
average interest-earning assets was 6.18%. The rate paid on average
interest-bearing liabilities was 3.49%.

             Provision for Loan Losses

             The provision for loan losses was $29,000 in 1997. The amount
provided was due primarily to the growth of the portfolio. Based upon
management's evaluation of the loan portfolio, management believes the reserve
for loan losses to be adequate to absorb possible losses on existing loans that
may become uncollectible. This evaluation considers past due and classified
loans, underlying collateral values, and current economic conditions which may
affect the borrower's ability to repay. As of December 31, 1997, the Company has
no nonperforming loans or assets. The allowance for loan losses as a percentage
of total loans was 1.53%.

             Other Income

             Other operating income consists of service charges on deposit
accounts, mortgage loan origination fees, and other miscellaneous revenues and
fees. Other operating income was $33,000 in 1997.

             Other Expenses

             Other expenses consist of salaries and employee benefits
($635,000), equipment and occupancy expenses ($84,000), and other operating
expenses ($117,000).

             Income Tax

             The Company had no income tax expense due to a pre-tax operating
loss of $688,000.

             Asset/Liability Management

             It is the Company's objective 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. Certain
officers are charged with the responsibility for monitoring policies and
procedures that are designed to ensure acceptable composition of the
asset/liability mix. It is the overall philosophy of management to support asset
growth primarily through growth of core deposits of all categories made by local
individuals, partnerships, and corporations.

             The Company's 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 Board of
Directors of the Bank 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 adversely affect net interest income, 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 adversely affect net interest income. If the Company's assets and

                                     - 14 -

<PAGE>   17



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, the Company also evaluates 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 the Company's liquidity
position. The Company currently prices 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 which would
negatively affect the Company's liquidity position.

             At December 31, 1997, the Company's cumulative one year interest
rate-sensitivity gap ratio was 356%. The Company's targeted ratio is 80% to 120%
in this time horizon. This indicates that the Company's interest-earning assets
will reprice during this period at a rate considerably faster than the Company's
interest-bearing liabilities. The Company is not within its targeted parameters.
However, as the Company continues to invest its excess liquidity, currently
invested in Federal funds sold, in loans and securities, the gap ratio will
become more in line with the targeted ratio, and net interest income should not
be significantly affected by changes in interest rates. A gap ratio in the
Company's current range is not unusual for a de novo bank. It is also noted that
91% of the Company's certificates of deposit greater than $100,000 mature within
the one year time horizon. It is management's belief that as long as the Company
pays the prevailing market rate on these type deposits, the Company's liquidity,
while not assured, will not be negatively affected.

             The following table sets forth the distribution of the repricing of
the Company's interest-earning assets and interest-bearing liabilities as of
December 31, 1997, 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 earning assets and 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 since
the repricing of various categories of assets and liabilities is subject to
competitive pressures and the needs of the Company's 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.

                                     - 15 -

<PAGE>   18



<TABLE>
<CAPTION>
                                                                      AFTER THREE      AFTER ONE
                                                           WITHIN      MONTHS BUT       YEAR BUT
                                                           THREE       WITHIN ONE     WITHIN FIVE    AFTER FIVE
                                                           MONTHS         YEAR            YEARS         YEARS          TOTAL
                                                          -------     -----------     -----------    ----------       -------
                                                                              (DOLLARS IN THOUSANDS)
<S>                                                       <C>         <C>             <C>            <C>              <C>
Interest-earning assets:
   Federal funds sold ............................        $ 9,700        $    --         $   --        $    --        $ 9,700
   Loans .........................................          1,398            216            256             --          1,870
                                                          -------        -------         ------        -------        -------
                                                           11,098            216            256             --         11,570
                                                          -------        -------         ------        -------        -------
Interest-bearing liabilities:
   Interest-bearing demand deposits ..............          1,830             --             --             --          1,830
   Savings .......................................            109             --             --             --            109
   Certificates, less than $100,000 ..............             97            243             28             --            368
   Certificates, $100,000 and over ...............            550            350             --             --            900
                                                          -------        -------         ------        -------        -------
                                                            2,586            593             28             --          3,207
                                                          -------        -------         ------        -------        -------
Interest rate sensitivity gap ....................        $ 8,512        $  (377)        $  228        $    --        $ 8,363
                                                          =======        =======         ======        =======        =======

Cumulative interest rate sensitivity gap..........        $ 8,512        $ 8,135         $8,363        $ 8,363
                                                          =======        =======         ======        =======
Interest rate sensitivity gap ratio ..............           4.29           0.36           9.14             --
                                                          =======        =======         ======        =======
Cumulative interest rate sensitivity gap ratio ...           4.29           3.56           3.61           3.61
                                                          =======        =======         ======        =======
</TABLE>

         Capability of the Company's Data Processing Software to Accommodate
         the Year 2000

         Like many financial institutions, the Company and the Bank rely upon
computers for the daily conduct of their business and for data processing
generally. There is concern among industry experts that commencing on January 1,
2000, computers will be unable to "read" the new year and that there may be
widespread computer malfunctions. Management of the Company has assessed the
electronic systems, programs, applications, and other electronic components used
in the operations of the Company and believes that the Company's hardware and
software has been programmed to be able to accurately recognize the year 2000,
and that significant additional costs will not be incurred in connection with
the year 2000 issue, although there can be no assurances in this regard.

               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 assets, liabilities and stockholders' equity of the Company, the
interest rates experienced by the Company; the investment portfolio of the
Company; the loan portfolio of the Company, 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
reserves for loan losses of the Company; types of deposits of the Company and
the return on equity and assets for the Company.


                                     - 16 -

<PAGE>   19



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

AVERAGE BALANCES

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


<TABLE>
<CAPTION>
                                                          FROM OCTOBER 31, 1997, DATE OF
                                                          COMMENCEMENT OF OPERATIONS, TO
                                                                 DECEMBER 31, 1997
                                                          ------------------------------
                                                               (DOLLARS IN THOUSANDS)
<S>                                                       <C>
                            ASSETS

Cash and due from banks ...............................                $    64
Federal funds sold ....................................                  1,953
Loans(2) ..............................................                    222
Reserve for loan losses ...............................                     (1)
Other assets ..........................................                     43
                                                                       -------
                                                                       $ 2,281
                                                                       =======
Total interest-earning assets .........................                $ 2,175
                                                                       =======
         LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
         Noninterest-bearing demand ...................                $   235
         Interest-bearing demand ......................                    211
         Savings ......................................                      7
         Time .........................................                     58
                                                                       -------
                  Total deposits ......................                $   511

         Other liabilities ............................                      2
                                                                       -------
                  Total liabilities ...................                    513
                                                                       -------
         Stockholders' equity .........................                  1,768
                                                                       -------
                                                                       $ 2,281
                                                                       =======
         Total interest-bearing liabilities ...........                $   276
                                                                       =======
</TABLE>

(1)      Average balances were determined using the daily average balances
         during the period from October 31, 1997, date of commencement of
         operations, to December 31, 1997, for each category.

(2)      Average loans are stated net of unearned income. There were no
         nonaccrual loans.

INTEREST INCOME AND INTEREST EXPENSE

         The following tables set forth the amount of the Company's 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

                                     - 17 -

<PAGE>   20



assets and total interest-bearing liabilities, net interest spread and net yield
on average interest-earning assets. These rates do not include the time period
prior to the commencement of its banking operations.


<TABLE>
<CAPTION>
                                                                                YEAR ENDED DECEMBER 31, 1997
                                                                                ----------------------------
                                                                                                   AVERAGE
                                                                                  INTEREST          RATE
                                                                                -----------      -----------
                                                                                   (DOLLARS IN THOUSANDS)
<S>                                                                             <C>              <C>
INTEREST INCOME:
         Interest and fees on loans(1) ......................................        $ 27         12.33%
         Interest on Federal funds sold .....................................         107          5.48
         Interest earned during the period prior to commencement of banking
                  operations ................................................          65            --
                                                                                     ----
         Total interest income ..............................................        $199          6.18
                                                                                     ----
INTEREST EXPENSE:
         Interest on interest-bearing demand deposits .......................        $  6          2.85
         Interest on savings deposits(2) ....................................          --          5.06
         Interest on time deposits ..........................................           3          5.63
         Interest incurred during the period prior to commencement of banking
                  operations ................................................          45            --
                                                                                     ----
         Total interest expense .............................................          54          3.49
                                                                                     ----
NET INTEREST INCOME .........................................................        $145
                                                                                     ====
         Net interest spread ................................................                      2.69%
                                                                                                  =====
         Net yield on average interest-earning assets .......................                      5.74%
                                                                                                  =====
</TABLE>

(1)      Interest and fees on loans includes $14,000 of loan fee income for the
         year ended December 31, 1997. There was no interest income recognized
         on nonaccrual loans during 1997.

(2)      Interest expense on savings deposits was less than $400.

RATE AND VOLUME ANALYSIS

         Because the Company commenced its banking operations in 1997, the
change in net interest income from banking operations is all due to volume.
Therefore, a rate and volume analysis table is not presented.

                              INVESTMENT PORTFOLIO

TYPES OF INVESTMENTS

         Other than Federal funds sold of $9.7 million, the Company had no
investments as of December 31, 1997.



                                     - 18 -

<PAGE>   21



                                 LOAN PORTFOLIO

TYPES OF LOANS

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


<TABLE>
<CAPTION>
                                                      DECEMBER 31, 1997
                                                   (DOLLARS IN THOUSANDS)
<S>                                                <C>
Commercial .......................................        $   164
Construction loans secured by real estate ........            764
Commercial loans secured by real estate ..........            525
Consumer installment loans and other .............            417
                                                          -------
                                                            1,870
                                                          -------
Less allowance for loan losses ...................            (29)
                                                          -------
         Net loans ...............................        $ 1,841
                                                          =======
</TABLE>

MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST RATES

         Total loans as of December 31, 1997 are shown in the following table
according to contractual maturity classifications (1) one year or less, (2)
after one year through five years, and (3) after five years.


<TABLE>
<CAPTION>
                                              (DOLLARS IN THOUSANDS)
<S>                                           <C>
Commercial
     One year or less .......................        $    6
     After one year through five years ......           158
     After five years .......................            --
                                                     ------
                                                        164
                                                     ------
Construction
     One year or less .......................           764
     After one year through five years ......            --
     After five years .......................            --
                                                     ------
                                                        764
                                                     ------
Other
     One year or less .......................           852
     After one year through five years ......            90
     After five years .......................            --
                                                     ------
                                                     $1,870
                                                     ======
</TABLE>



                                     - 19 -

<PAGE>   22



         The following table summarizes loans at December 31, 1997 with the due
dates after one year which have predetermined and floating or adjustable
interest rates.


<TABLE>
<CAPTION>
                                                (DOLLARS IN THOUSANDS)
<S>                                             <C>
Predetermined interest rates ................           $ --
Floating or adjustable interest rates .......            248
                                                        ----
                                                        $248
                                                        ====
</TABLE>

RISK ELEMENTS

         Information with respect to nonaccrual, past due, and restructured
loans at December 31, 1997 is as follows:


<TABLE>
<CAPTION>
                                                                                                     DECEMBER 31, 1997
                                                                                                  (DOLLARS IN THOUSANDS)
<S>                                                                                               <C>
Nonaccrual loans..............................................................................          $         0
Loans contractually past due ninety days or more as to interest or principal payments
     and still accruing.......................................................................                    0
Restructured loans............................................................................                    0
Loans, now current about which there are serious doubts as to the ability of the
     borrower to comply with loan repayment terms.............................................                    0
Interest income that would have been recorded on nonaccrual and restructured loans
     under original terms.....................................................................                    0
Interest income that was recorded on nonaccrual and restructured loans........................                    0
                                                                                                         ----------
</TABLE>

         It is the policy of the Bank to discontinue the accrual of interest
income when, in the opinion of management, collection of such interest becomes
doubtful. This status is accorded such interest when (1) there is a significant
deterioration in the financial condition of the borrower and full repayment of
principal and interest is not expected and (2) the principal or interest is more
than ninety 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 which 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 which causes management to
have serious doubts as to the ability of such borrowers to comply with the loan
repayment terms.



                                     - 20 -

<PAGE>   23



                         SUMMARY OF LOAN LOSS EXPERIENCE

         The following table summarizes average loan balances for the year
determined using the daily average balances during the period of banking
operations; 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 period to average loans.


<TABLE>
<CAPTION>
                                                                                         1997
                                                                                 (DOLLARS IN THOUSANDS)
<S>                                                                              <C>
Average amount of loans outstanding ............................................        $222
                                                                                        ----
Balance of allowance for loan losses at beginning of period ....................        $ --
                                                                                        ----
Loans charged off ..............................................................          --
                                                                                        ----
Loans recovered ................................................................          --
                                                                                        ----
Net charge-offs ................................................................          --
                                                                                        ----
Additions to allowance charged to operating expense during period ..............          29
                                                                                        ----
Balance of allowance for loan losses at end of period ..........................        $ 29
                                                                                        ====
Ratio of net loans charged off during the period to average loans outstanding ..          --%
                                                                                        ====
</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. Management's evaluation of the loan portfolio includes a
periodic review of loan loss experience, current economic conditions which may
affect the borrower's ability to pay and the underlying collateral value of the
loans.

         As of December 31, 1997, management had made no allocations of its
allowance for loan losses to specific categories of loans. Based on management's
best estimate, the allocation of the allowance for loan losses to types of
loans, as of the indicated dates, is as follows:


<TABLE>
<CAPTION>
                                                           DECEMBER 31, 1997
                                                    ------------------------------
                                                       AMOUNT     PERCENT OF LOANS
                                                    (DOLLARS IN   IN EACH CATEGORY
                                                     THOUSANDS)    TO TOTAL LOANS
                                                    -----------   ----------------
<S>                                                 <C>           <C>
Commercial                                              $  3              9%


Construction loans secured by real estate ......          10             41

Commercial loans secured by real estate ........           8             28

Consumer installment loans and other ...........           8             22
                                                        ----            ---
                                                        $ 29            100%
                                                        ====            ===
</TABLE>


                                     - 21 -

<PAGE>   24



                                    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, for the period of banking operations is
presented below.(1)


<TABLE>
<CAPTION>
                                                            1997
                                                    ---------------------
                                                    AMOUNT        PERCENT
                                                    ------        -------
                                                    (DOLLARS IN THOUSANDS)
<S>                                                 <C>           <C>
Noninterest-bearing demand deposits...........      $ 235             --%

Interest-bearing demand deposits..............        211           2.85

Savings.......................................          7           5.06

Time deposits.................................         58           5.63
                                                    -----
         Total deposits.......................      $ 511
                                                    =====
</TABLE>

(1)      Average balances were determined using the daily average balances
         during the year for the period from October 31, 1997, date of
         commencement of operations, to December 31, 1997.

         The amounts of time certificates of deposit issued in amounts of
$100,000 or more as of December 31, 1997 are shown below by category, which is
based on time remaining until maturity of (1) three months or less, (2) over
three through six months, (3) over six through twelve months, and (4) over
twelve months.


<TABLE>
<CAPTION>
                                                         (DOLLARS IN THOUSANDS)
<S>                                                      <C>
Three months or less...................................           $550
                                                                  ----
Over three months through six months...................            350
                                                                  ----
Over six through twelve months.........................             --
                                                                  ----
Over twelve months.....................................             --
                                                                  ----
     Total.............................................           $900
                                                                  ====
</TABLE>



                                     - 22 -

<PAGE>   25



                    RETURN ON ASSETS AND STOCKHOLDERS' EQUITY

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


<TABLE>
<CAPTION>
                                                                        1997
<S>                                                                    <C>
Return on assets(1).............................................       (5.12)%
Return on equity(2).............................................       (6.61)
Dividend payout raio(3).........................................          --
Equity to assets ratio(4).......................................       77.51
</TABLE>

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








                                     - 23 -





<PAGE>   26


ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                                GBC BANCORP, INC.
                                 AND SUBSIDIARY

                          CONSOLIDATED FINANCIAL REPORT

                                DECEMBER 31, 1997




























                                     - 24 -



<PAGE>   27



                                GBC BANCORP, INC.
                                 AND SUBSIDIARY

                          CONSOLIDATED FINANCIAL REPORT
                                DECEMBER 31, 1997

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

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                PAGE
                                                                                ----
<S>                                                                          <C>
INDEPENDENT AUDITOR'S REPORT.......................................................26

FINANCIAL STATEMENTS

     CONSOLIDATED BALANCE SHEETS...................................................27
     CONSOLIDATED STATEMENTS OF OPERATIONS.........................................28
     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT).....................29
     CONSOLIDATED STATEMENTS OF CASH FLOWS................................... 30 - 31
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS...............................32 - 49
</TABLE>


























                                     - 25 -



<PAGE>   28




                          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, 1997 and 1996, and the
related consolidated statements of operations, stockholders' equity (deficit),
and cash flows for the year ended December 31, 1997 and for the period from July
17, 1996, date of inception, to December 31, 1996. 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 generally accepted
auditing standards. 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, 1997 and 1996, and the results
of their operations and their cash flows for the year ended December 31, 1997
and for the period from July 17, 1996, date of inception, to December 31, 1996,
in conformity with generally accepted accounting principles.

                                    /s/ Mauldin & Jenkins, LLC





Atlanta, Georgia
February 25, 1998













                                     - 26 -
<PAGE>   29




                                GBC BANCORP, INC.
                                 AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1997 AND 1996
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                             1997               1996
                                                                         ------------         ---------
<S>                                                                      <C>                  <C>
                               ASSETS

Cash and due from banks                                                  $    959,117         $     800
Federal funds sold                                                          9,700,000                --

Loans                                                                       1,870,469                --
Less allowance for loan losses                                                (28,696)               --
          Loans, net                                                        1,841,773                --
                                                                         ------------         ---------

Premises and equipment                                                        139,093            31,785
Other assets                                                                  209,932           116,657
                                                                         ------------         ---------

         Total assets                                                    $ 12,849,915         $ 149,242
                                                                         ============         =========

            Liabilities and Stockholders' Equity (Deficit)

Deposits
    Noninterest-bearing demand                                           $  1,065,570         $      --
    Interest-bearing demand                                                 1,829,901                --
    Savings                                                                   108,496                --
    Time, $100,000 and over                                                   900,000                --
    Other time                                                                367,675                --
                                                                         ------------         ---------
           Total deposits                                                   4,271,642                --
    Other borrowings                                                               --           386,980
                                                                                              ---------
    Other liabilities                                                          27,798                --
                                                                         ------------         ---------
          Total liabilities                                                 4,299,440           386,980
                                                                         ------------         ---------

Commitments and contingent liabilities

Stockholders' equity (deficit)
Common stock, par value $1; 3,000,000 shares authorized;
    950,080 and 80 issued and outstanding, respectively                       950,080                80
Capital surplus                                                             8,526,827               720
Accumulated deficit                                                          (926,432)         (238,538)
                                                                         ------------         ---------
         TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                               8,550,475          (237,738)
                                                                         ------------         ---------
         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)            $ 12,849,915         $ 149,242
                                                                         ============         =========
</TABLE>


SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                      -27-


<PAGE>   30

                                GBC BANCORP, INC.
                                 AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     YEAR ENDED DECEMBER 31, 1997 AND PERIOD
           FROM JULY 17, 1996, DATE OF INCEPTION, TO DECEMBER 31, 1996
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                     1997               1996
                                                                   ---------         ----------
<S>                                                                <C>               <C>
Interest income
    Loans                                                          $  27,325         $       --
    Federal funds sold                                               172,037                 --
                                                                   ---------         ----------
          Total interest income                                      199,362                 --
                                                                   ---------         ----------
Interest expense
    Deposits                                                           9,623                 --
    Other borrowings                                                  45,120              6,933
                                                                   ---------         ----------
          Total interest expense                                      54,743              6,933
                                                                   ---------         ----------

          Net interest income (expense)                              144,619             (6,933)
Provision for loan losses                                             28,696                 --
                                                                   ---------         ----------
          Net interest income (expense) after provision for
              loan losses                                            115,923             (6,933)
                                                                   ---------         ----------

Other income
    Service charges on deposit accounts                                1,174                 --
    Other operating income                                            31,750                 --
                                                                   ---------         ----------
          Total other income                                          32,924                 --
                                                                   ---------         ----------

Other expenses
    Salaries and employee benefits                                   635,466            182,596
    Equipment and occupancy expenses                                  84,402             33,407
    Other operating expenses                                         116,873             15,602
                                                                   ---------         ----------
          Total other expenses                                       836,741            231,605
                                                                   ---------         ----------

          Loss before income taxes                                  (687,894)          (238,538)

Income tax expense                                                        --                 --

          Net loss                                                 $(687,894)        $ (238,538)
                                                                   =========         ==========

Losses per common share                                            $   (4.26)        $(2,981.73)
                                                                   =========         ==========
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                      -28-

<PAGE>   31


                                GBC BANCORP, INC.
                                 AND SUBSIDIARY

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                     YEAR ENDED DECEMBER 31, 1997 AND PERIOD
           FROM JULY 17, 1996, DATE OF INCEPTION, TO DECEMBER 31, 1996
--------------------------------------------------------------------------------




<TABLE>
<CAPTION>
                                         COMMON STOCK
                                 ---------------------------------         CAPITAL            ACCUMULATED        STOCKHOLDERS'
                                      SHARES         PAR VALUE             SURPLUS              DEFICIT         EQUITY (DEFICIT)
                                 ---------------- ----------------    ------------------    ----------------    ----------------
<S>                              <C>              <C>                 <C>                   <C>                 <C>
BALANCE, JULY 17, 1996

   (DATE OF INCEPTION)                         --         $     --          $        --           $      --          $        --

   Net loss                                    --               --                   --            (238,538)            (238,538)

   Issuance of common stock                    80               80                  720                  --                  800
                                          -------         --------          -----------           ---------          -----------
BALANCE, DECEMBER 31, 1996                     80               80                  720            (238,538)             237,738)

   Net loss                                    --               --                   --            (687,894)            (687,894)

   Issuance of common stock               950,000          950,000            8,550,000                  --            9,500,000

   Stock issue costs                           --               --              (23,893)                 --              (23,893)
                                          -------         --------          -----------           ---------          -----------
BALANCE, DECEMBER 31, 1997                950,080         $950,080          $ 8,526,827           $(926,432)         $ 8,550,475
                                          =======         ========          ===========           =========          ===========
</TABLE>


SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                      - 29 -

<PAGE>   32

                                GBC BANCORP, INC.
                                 AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEAR ENDED DECEMBER 31, 1997 AND PERIOD
           FROM JULY 17, 1996, DATE OF INCEPTION, TO DECEMBER 31, 1996
--------------------------------------------------------------------------------






<TABLE>
<CAPTION>
                                                                          1997                1996
                                                                      ------------         ---------
<S>                                                                   <C>                  <C>
OPERATING ACTIVITIES
    Net loss                                                          $   (687,894)        $(238,538)
    Adjustments to reconcile net loss to net cash
        used in operating activities:
          Depreciation                                                       5,226                --
          Amortization of intangibles                                        6,313                --
          Provision for loan losses                                         28,696                --
          Increase in interest receivable                                  (17,677)               --
          Increase in interest payable                                       4,953                --
          Preopening expenses incurred by the Joint Venture on
            behalf of the Company                                               --           238,538
          Other operating activities                                        (2,526)               --
                                                                      ------------         ---------

            Net cash used in operating activities                         (662,909)               --
                                                                      ------------         ---------

INVESTING ACTIVITIES
    Net increase in Federal funds sold                                  (9,700,000)               --
    Net increase in loans                                               (1,870,469)               --
    Purchase of premises and equipment                                    (112,534)               --
    Increase in organization costs                                         (56,540)               --
                                                                      ------------         ---------

            Net cash used in investing activities                      (11,739,543)               --
                                                                      ------------         ---------

FINANCING ACTIVITIES
    Net increase in deposits                                             4,271,642                --
    Repayment of other borrowings                                         (386,980)               --
    Net proceeds from sale of common stock                               9,476,107               800
                                                                      ------------         ---------

            Net cash provided by financing activities                   13,360,769               800
                                                                      ------------         ---------
</TABLE>


                                      - 30 -

<PAGE>   33

                               GBC BANCORP, INC.
                                 AND SUBSIDIARY


                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                    YEAR ENDED DECEMBER 31, 1997 AND PERIOD
          FROM JULY 17, 1996, DATE OF INCEPTION, TO DECEMBER 31, 1996

-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                   1997                1996
                                                                                -----------         -----------
<S>                                                                             <C>                 <C>
Net increase in cash and due from banks                                         $   958,317         $       800

Cash and due from banks at beginning of period                                          800                  --
                                                                                -----------         -----------

Cash and due from banks at end of year                                          $   959,117         $       800
                                                                                ===========         ===========

SUPPLEMENTAL DISCLOSURES
     Cash paid for interest                                                     $    49,790         $     6,933

NONCASH TRANSACTIONS
     Cost of equipment and deferred organization and stock offering
       costs incurred by the Joint Venture on behalf of the Company             $        --         $   148,442
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                     - 31 -

<PAGE>   34



                                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. The
                  Bank provides a full range of banking services in its primary
                  market area of Gwinnett County and surrounding counties. The
                  Company commenced its banking operations on October 31, 1997.

                  BASIS OF PRESENTATION

                  The consolidated financial statements for 1997 include the
                  accounts of the Company and its subsidiary. Significant
                  intercompany transactions and accounts are eliminated in
                  consolidation. The financial statements for 1996 include the
                  accounts of the Company only.

                  The accounting and reporting policies of the Company conform
                  to generally accepted accounting principles and general
                  practices within the financial services industry. In preparing
                  the financial statements, management is required to make
                  estimates and assumptions that affect the reported amounts and
                  disclosures of assets and liabilities as of the date of the
                  balance sheet and revenues and expenses for the period. Actual
                  results could differ from those estimates.

                  CASH AND DUE FROM BANKS

                  Cash on hand, cash items in process of collection, and amounts
                  due from banks are included in cash and due from banks.

                  The Company maintains amounts due from banks which, at times,
                  may exceed Federally insured limits. The Company has not
                  experienced any losses in such accounts.




                                      - 32 -

<PAGE>   35

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

                  SECURITIES

                  Securities are classified based on management's intention on
                  the date of purchase. Securities which management has the
                  intent and ability to hold to maturity would be classified as
                  held-to-maturity and reported at amortized cost. All other
                  debt securities would be classified as available-for-sale and
                  carried at fair value with net unrealized gains and losses
                  included in stockholders' equity.

                  Interest and dividends on securities, including amortization
                  of premiums and accretion of discounts, are included in
                  interest income. Realized gains and losses from the sales of
                  securities are determined using the specific identification
                  method.

                  LOANS

                  Loans are carried at their principal amounts outstanding less
                  unearned income and the allowance for loan losses. Interest
                  income on loans is credited to income based on the principal
                  amount outstanding.

                  Loan origination fees and costs incurred for loans are
                  deferred and recognized as interest income over the estimated
                  life of the loan.

                  The allowance for loan losses is maintained at a level that
                  management believes to be adequate to absorb potential losses
                  in the loan portfolio. Management's determination of the
                  adequacy of the allowance is based on an evaluation of the
                  portfolio, current economic conditions, volume, growth,
                  composition of the loan portfolio, and other risks inherent in
                  the portfolio. In addition, regulatory agencies, as an
                  integral part of their examination process, will periodically
                  review the Company's allowance for loan losses, and may
                  require the Company to record additions to the allowance based
                  on their judgment about information available to them at the
                  time of their examinations.

                  The accrual of interest on impaired loans is discontinued
                  when, in management's opinion, the borrower may be unable to
                  meet payments as they become due. When accrual of interest is
                  discontinued, all unpaid accrued interest is reversed.
                  Interest income is subsequently recognized only to the extent
                  cash payments are received.


                                      - 33 -

<PAGE>   36


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


NOTE 1.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

                  LOANS (CONTINUED)

                  A loan is impaired when it is probable the Company will be
                  unable to collect all principal and interest payments due in
                  accordance with the terms of the loan agreement. Individually
                  identified impaired loans are measured based on the present
                  value of payments expected to be received, using the
                  contractual loan rate as the discount rate. Alternatively,
                  measurement may be based on observable market prices or, for
                  loans that are solely dependent on the collateral for
                  repayment, measurement may be based on the fair value of the
                  collateral. If the recorded investment in the impaired loan
                  exceeds the measure of fair value, a valuation allowance is
                  established as a component of the allowance for loan losses.
                  Changes to the valuation allowance are recorded as a component
                  of the provision for loan losses.

                  PREMISES AND EQUIPMENT

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

                  INCOME TAXES

                  Income tax expense consists of current and deferred taxes.
                  Current income tax provisions approximate taxes to be paid or
                  refunded for the applicable year. Deferred tax assets and
                  liabilities are recognized for the temporary differences
                  between the bases of assets and liabilities as measured by tax
                  laws and their bases as reported in the financial statements.
                  Deferred tax expense or benefit is then recognized for the
                  change in deferred tax assets or liabilities between periods.

                  Recognition of deferred tax balance sheet amounts is based on
                  management's belief that it is more likely than not that the
                  tax benefit associated with certain temporary differences, tax
                  operating loss carryforwards and tax credits will be realized.
                  A valuation allowance is recorded for those deferred tax items
                  for which it is more likely than not that realization will not
                  occur in the near term.

                  The Company and the Bank file a consolidated income tax
                  return. Each entity provides for income taxes based on its
                  contribution to income taxes (benefits) of the consolidated
                  group.

                                      - 34 -

<PAGE>   37


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


NOTE 1.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

                  LOSSES PER COMMON SHARE

                  Losses per common share are computed by dividing net loss by
                  the weighted average number of shares of common stock
                  outstanding.

                  RECENT ACCOUNTING PRONOUNCEMENTS

                  The Financial Accounting Standards Board (FASB) has issued,
                  and the Company has adopted, Statement of Financial Accounting
                  Standards (SFAS) No. 125, "Accounting for Transfers and
                  Servicing of Financial Assets and Extinguishments of
                  Liabilities". SFAS No. 125 was amended by SFAS No. 127, which
                  defers the effective date of certain provisions of SFAS No.
                  125 until January 1, 1998. This statement provides accounting
                  and reporting standards for transfers and servicing of
                  financial assets and extinguishments of liabilities based on
                  consistent application of a financial-components approach that
                  focuses on control. It distinguishes transfers of financial
                  assets that are sales from transfers that are secured
                  borrowings. The adoption of this statement is not expected to
                  have a material effect on the Company's financial statements.

                  The FASB has issued, and the Company has adopted, SFAS No.
                  128, "Earnings Per Share". SFAS No. 128 supersedes Accounting
                  Principles Board Opinion No. 15 "Earnings Per Share" and
                  specifies the computation, presentation, and disclosure
                  requirements for earnings per share (EPS) for entities with
                  publicly held common stock or potential issuable common stock.
                  SFAS No. 128 replaces the presentation of primary EPS with a
                  presentation of basic EPS and fully diluted EPS with diluted
                  EPS. It also requires dual presentation of basic and diluted
                  EPS on the face of the income statement for all entities with
                  complex capital structures and requires a reconciliation of
                  the numerator and denominator for the basic EPS computation to
                  the numerator and denominator of the diluted EPS computation.
                  SFAS No. 128 is effective for financial statements for both
                  interim and annual periods ending after December 15, 1997. The
                  adoption of this statement did not have a material effect on
                  the Company's financial statements.

                                     - 35 -

<PAGE>   38



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

                  RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

                  The FASB has issued SFAS No. 130, "Reporting Comprehensive
                  Income". This statement establishes standards for reporting
                  and display of comprehensive income and its components in the
                  financial statements. SFAS No. 130 requires all items that are
                  required to be recognized under accounting standards as
                  components of comprehensive income to be reported in a
                  financial statement that is displayed in equal prominence with
                  the other financial statements. The term "comprehensive
                  income" is used in the SFAS to describe the total of all
                  components of comprehensive income including net income.
                  "Other comprehensive income" refers to revenues, expenses,
                  gains and losses that are included in comprehensive income but
                  excluded from earnings under current accounting standards.
                  SFAS No. 130 is effective for periods beginning after December
                  15, 1997.

NOTE 2.           LOANS AND ALLOWANCE FOR LOAN LOSSES

                  The composition of loans is summarized as follows:


<TABLE>
<CAPTION>
                                                 DECEMBER 31,
                                                     1997
                                                 -----------
<S>                                              <C>
Commercial                                       $   164,450

Construction loans secured by real estate            806,590
Commercial loans secured by real estate              525,150
Consumer instalment and other                        416,876
                                                 -----------
                                                   1,913,066
Deferred fees                                        (42,597)
Allowance for loan losses                            (28,696)
                                                 -----------
Loans, net                                       $ 1,841,773
                                                 ===========
</TABLE>


                                     - 36 -

<PAGE>   39



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 2.           LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)

                  Changes in the allowance for loan losses are as follows:


<TABLE>
<CAPTION>
                                                     DECEMBER
                                                        31,
                                                     --------
                                                       1997
                                                     --------
<S>                                                  <C>
BALANCE, BEGINNING OF YEAR                           $    --

   Provision for loan losses                          28,696
   Loans charged off                                      --
   Recoveries of loans previously charged off             --
                                                     -------
BALANCE, END OF YEAR                                 $28,696
                                                     =======
</TABLE>

Management has identified no material amounts of impaired loans as defined by
SFAS No. 114, ("Accounting by Creditors for Impairment of a Loan").

         The Company had no loans outstanding to directors, executive officers,
         or their related entities at December 31, 1997 or 1996.


NOTE 3.           PREMISES AND EQUIPMENT

                  Premises and equipment are summarized as follows:

<TABLE>
<CAPTION>
                                      DECEMBER 31,
                                -----------------------
                                  1997            1996
                                --------        -------
<S>                             <C>             <C>
Equipment                       $144,319        $31,785

Accumulated depreciation          (.5226)            --
                                --------        -------
                                $139,093        $31,785
                                ========        =======
</TABLE>


                                     - 37 -

<PAGE>   40



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 4.           OTHER BORROWINGS

                  Other borrowings consist of the following:


<TABLE>
<CAPTION>
                                                         DECEMBER 31,
                                                   -------------------------
                                                      1997            1996
                                                   ---------        --------
<S>                                                <C>              <C>
Amount due to organizational Joint Venture,
  a related party, repaid in 1997                  $      --        $386,980
                                                   =========        ========
</TABLE>


NOTE 5.           INCOME TAXES

                  The components of income tax expense are as follows:


<TABLE>
<CAPTION>
                                             DECEMBER 31,
                                     --------------------------
                                        1997             1996
                                     ---------         --------
<S>                                  <C>               <C>
Current                              $ (60,233)        $     --

Deferred                              (173,651)         (81,103)
Change in valuation allowance          233,884           81,103
                                     ---------         --------
 Income tax expense                  $      --         $     --
                                     =========         ========
</TABLE>

                  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>
                                                             DECEMBER 31,
                                        -----------------------------------------------------
                                                  1997                           1996
                                        -----------------------        ----------------------
                                         AMOUNT         PERCENT         Amount        Percent
                                        ---------       -------        --------       -------
<S>                                     <C>             <C>            <C>            <C>
Income taxes at statutory rate          $(233,884)          34%        $(81,103)          34%

   Change in valuation allowance          233,884          (34)          81,103          (34)
                                        ---------          ---         --------          ---
Income tax expense                      $      --            -%        $     --            -%
                                        =========          ===         ========          ===
</TABLE>



                                     - 38 -

<PAGE>   41


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 5.           INCOME TAXES (Continued)


                    The components of deferred income taxes are as follows:


<TABLE>
<CAPTION>
                                                 DECEMBER 31,
                                         --------------------------
                                            1997             1996
                                         ---------         --------
<S>                                      <C>               <C>
Deferred tax assets:
  Loan fees                              $  14,483         $     --
  Preopening expenses                      252,222           81,103
  Net operating loss carryforward           60,233               --
  Other                                        342               --
                                         ---------         --------
                                           327,280           81,103

Valuation allowance                       (314,987)         (81,103)
                                         ---------         --------
                                            12,293               --
                                         ---------         --------

Deferred tax liabilities:
  Depreciation                                 852               --
  Loan loss reserves                        11,441               --
                                         ---------         --------
                                            12,293               --
                                         ---------         --------
Net deferred taxes                       $      --         $     --
                                         =========         ========
</TABLE>

                    At December 31, 1997, the Company has available net
                    operating loss carryforwards of $177,157 for Federal income
                    tax purposes. If unused, the carryforwards will expire
                    beginning in 2007.


                                     - 39 -

<PAGE>   42

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 6.           LOSSES PER COMMON SHARE

                           Losses per common share were computed as follows:


<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31, 1997
                                                              ---------------------------------------
                                                                   WEIGHTED-
                                                                    AVERAGE
          NET               NUMBER                                   SHARES              LOSSES PER
          LOSS                OF                DAYS              OUTSTANDING              COMMON
      (NUMERATOR)           SHARES          OUTSTANDING           (DENOMINATOR)            SHARE
--------------------     -------------   ------------------   --------------------    ----------------
<S>                      <C>             <C>                  <C>                     <C>
                                 80              303                      66                $

                            950,080               62                 161,384
                                                                     -------
     $(687,894)                                                      161,450                $(4.26)
     =========                                                       =======                ======
</TABLE>


<TABLE>
<CAPTION>

                                                     PERIOD ENDED DECEMBER 31, 1996
                                            ----------------------------------------------
                                                 WEIGHTED-AVERAGE
                              NET                   SHARES                 LOSSES PER
                             LOSS                 OUTSTANDING                COMMON
                          (NUMERATOR)            (DENOMINATOR)               SHARE
                      ------------------   -----------------------  ----------------------
                      <S>                  <C>                      <C>
                       $(238,538)                   80                  $(2,981.73)
                       =========                    ==                  ==========
</TABLE>


NOTE 7.           RELATED PARTY TRANSACTIONS AND LEASES

                           To facilitate the formation of the Company and the
                  Bank, the organizers formed Gwinnett Banking Company Joint
                  Venture (the Joint Venture). The Joint Venture established a
                  line of credit with an independent bank for the purpose of
                  paying organization and preopening expenses for the Company
                  and the Bank, and the expenses of the Company's common stock
                  offering. The liability of the Joint Venture was repaid in
                  1997 from proceeds of the Company's common stock offering. The
                  Joint Venture was liquidated upon completion of the stock
                  offering.



                           The Company has entered into a lease agreement with
                  GBC Leasing, LLC (the LLC), a corporation formed by the
                  organizers to own land and construct office facilities
                  thereon. Upon completion of construction, the Company will
                  lease permanent office space from the LLC for an initial
                  annual rental of $240,000.

                                     - 40 -

<PAGE>   43


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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



NOTE 7.           RELATED PARTY TRANSACTIONS AND LEASES (CONTINUED)

                  The Company currently operates out of facilities leased from
                  independent third parties under noncancelable operating lease
                  agreements. In addition to the lease payments, the Company is
                  also required to pay for normal occupancy expenses. The leases
                  expire in 1998 with a total rental commitment of $36,960. The
                  total rental expense for the years ended December 31, 1997 and
                  1996 was $43,902 and $17,909, respectively.


NOTE 8.           COMMITMENTS AND CONTINGENT LIABILITIES

                  In the normal course of business, the Company has entered into
                  off-balance-sheet financial instruments which are not
                  reflected in the financial statements. These financial
                  instruments may include commitments to extend credit and
                  standby letters of credit. Such financial instruments are
                  included in the financial statements when funds are disbursed
                  or the instruments become payable. These instruments involve,
                  to varying degrees, elements of credit risk in excess of the
                  amount recognized in the balance sheet.

                  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.
                  A summary of the Company's commitments is as follows:

<TABLE>
<CAPTION>
                                                                DECEMBER
                                                                   31,
                                                               ----------
                                                                   1997
                                                               ----------
                      <S>                                      <C>
                      Commitments to extend credit             $3,366,000
                                                               ==========
</TABLE>

                  Commitments to extend credit generally have fixed expiration
                  dates or other termination clauses and may require payment of
                  a fee. Since many of the commitments are expected to expire
                  without being drawn upon, the total commitment amounts do not
                  necessarily represent future cash requirements. The credit
                  risk involved in issuing these financial instruments is
                  essentially the same as that involved in extending loans to
                  customers. The Company evaluates each customer's
                  creditworthiness on a case-by-case basis. The

                                     - 41 -

<PAGE>   44



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 8.           COMMITMENTS AND CONTINGENT LIABILITIES (Continued)


                  amount of collateral obtained, if deemed necessary by the
                  Company upon extension of credit, is based on management's
                  credit evaluation of the customer. Collateral held varies but
                  may include real estate and improvements, marketable
                  securities, accounts receivable, inventory, equipment, and
                  personal property.

                  Standby letters of credit are conditional commitments issued
                  by the Company to guarantee the performance of a customer to a
                  third party. Those guarantees 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 loan facilities to customers.
                  Collateral held varies as specified above and is required in
                  instances which the Company deems necessary.

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


NOTE 9.           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.

                  Sixty-nine 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, as a matter of policy, does not generally extend
                  credit to any single borrower or group of related borrowers in
                  excess of 25% of the lesser of statutory capital or net assets
                  as defined, or approximately $2,025,000.


                                     - 42 -

<PAGE>   45






                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 10.          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, 1997, no 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. The
                  Company and Bank's capital amounts and classification are also
                  subject to qualitative judgments by the regulators about
                  components, risk weightings, and other factors.

                  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 and of Tier I capital to average assets.
                  Management believes, as of December 31, 1997, the Company and
                  the Bank meet all capital adequacy requirements to which they
                  are subject.

                                     - 43 -

<PAGE>   46






                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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



NOTE 10.          REGULATORY MATTERS (CONTINUED)

                  As of December 31, 1997, the most recent notification from the
                  FDIC 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.

<TABLE>
<CAPTION>
                                                                                                 TO BE WELL
                                                                                             CAPITALIZED UNDER
                                                                         FOR CAPITAL               PROMPT
                                                                           ADEQUACY              CORRECTIVE
                                                  ACTUAL                   PURPOSES          ACTION PROVISIONS
                                           ---------------------       ----------------      -----------------
                                           AMOUNT         RATIO        AMOUNT     RATIO      AMOUNT      RATIO
                                           ------        -------       ------     -----      ------      -----
                                                                   (DOLLARS IN THOUSANDS)
                                           --------------------------------------------------------------------
<S>                                        <C>           <C>           <C>        <C>        <C>         <C>
TOTAL CAPITAL (TO RISK WEIGHTED
ASSETS):
   CONSOLIDATED                            $8,413        201.41%        $335        8%        $418        10%

   BANK                                    $8,052        192.77%        $335        8%        $418        10%

TIER I CAPITAL (TO RISK WEIGHTED
ASSETS):
   CONSOLIDATED                            $8,384        200.72%        $168        4%        $251         6%

   BANK                                    $8,023        192.08%        $168        4%        $251         6%

TIER I CAPITAL (TO AVERAGE ASSETS):
   CONSOLIDATED                            $8,384        109.11%        $308        4%        $385         5%

   BANK                                    $8,023        104.41%        $308        4%        $385         5%
</TABLE>




                                     - 44 -

<PAGE>   47


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


NOTE 11.          FAIR VALUE OF FINANCIAL INSTRUMENTS

                  The following methods and assumptions were used by the Company
                  in estimating its fair value disclosures for financial
                  instruments. In cases where quoted market prices are not
                  available, fair values are based on estimates using discounted
                  cash flow methods. Those methods are significantly affected by
                  the assumptions used, including the discount rates and
                  estimates of future cash flows. In that regard, the derived
                  fair value estimates cannot be substantiated by comparison to
                  independent markets and, in many cases, could not be realized
                  in immediate settlement of the instrument. The use of
                  different methodologies may have a material effect on the
                  estimated fair value amounts. Also, the fair value estimates
                  presented herein are based on pertinent information available
                  to management as of December 31, 1997 and 1996. Such amounts
                  have not been revalued for purposes of these financial
                  statements since those dates and, therefore, current estimates
                  of fair value may differ significantly from the amounts
                  presented herein.

                  CASH, DUE FROM BANKS, AND FEDERAL FUNDS SOLD:

                  The carrying amounts of cash, due from banks, and Federal
                  funds sold approximates their fair value.

                  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 methods, using interest
                  rates currently being offered for loans with similar terms to
                  borrowers of similar credit quality. Fair values for impaired
                  loans are estimated using discounted cash flow methods or
                  underlying collateral values.

                  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 discounted cash
                  flow methods, using interest rates currently being offered on
                  certificates.


                                     - 45 -

<PAGE>   48


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 11.          FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

                  OTHER BORROWINGS:

                  The fair values of the Company's other borrowings approximate
                  their fair values.

                  ACCRUED INTEREST:

                  The carrying amounts of accrued interest approximate their
                  fair values.

                  OFF-BALANCE SHEET INSTRUMENTS:

                  The fair values of the Company's off-balance sheet financial
                  instruments are based on fees charged to enter into similar
                  agreements. However, commitments to extend credit and standby
                  letters of credit do not represent a significant value to the
                  Company until such commitments are funded. The Company has
                  determined that these instruments do not have a
                  distinguishable fair value and no fair value has been
                  assigned.

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


<TABLE>
<CAPTION>
                                            DECEMBER 31, 1997                 DECEMBER 31, 1996
                                     ------------------------------        ------------------------
                                      CARRYING             FAIR            CARRYING         FAIR
                                       AMOUNT              VALUE            AMOUNT          VALUE
                                     -----------        -----------        --------        --------
<S>                                  <C>                <C>                <C>             <C>
FINANCIAL ASSETS:
  Cash, due from banks,
    and Federal funds sold           $10,659,117        $10,659,117        $    800        $    800

  Loans                                1,841,773          1,884,653              --              --
  Accrued interest receivable             17,677             17,677              --              --

FINANCIAL LIABILITIES:
  Deposits                             4,271,642          4,267,973              --              --
  Other borrowings                            --                 --         386,980         386,980
  Accrued interest payable                 4,953              4,953              --              --
</TABLE>




                                     - 46 -

<PAGE>   49


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


NOTE 12.          PARENT COMPANY FINANCIAL INFORMATION

                  The following information presents the condensed balance
                  sheets, statements of operations, and cash flows as of and for
                  the year ended December 31, 1997 and period from July 17,
                  1996, date of inception, to December 31, 1996:


                            CONDENSED BALANCE SHEETS



<TABLE>
<CAPTION>
                                                              1997              1996
                                                           ----------        ---------
<S>                                                        <C>               <C>
ASSETS
  Cash                                                     $  361,121        $     800

  Investment in subsidiary                                  8,116,840               --
  Other assets                                                 72,514          148,442
                                                           ----------        ---------

      Total assets                                         $8,550,475        $ 149,242
                                                           ==========        =========

LIABILITIES                                                $       --        $-386,980


STOCKHOLDERS' EQUITY (DEFICIT)                              8,550,475         (237,738)
                                                           ----------        ---------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $8,550,475        $ 149,242
                                                           ==========        =========
</TABLE>




                                     - 47 -

<PAGE>   50


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


NOTE 12.          PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)


                       CONDENSED STATEMENTS OF OPERATIONS



<TABLE>
<CAPTION>
                                                          1997              1996
                                                       ---------         ---------
<S>                                                    <C>               <C>
EXPENSES
  Salaries and employee benefits                       $  21,804         $ 182,596
  Interest                                                    --             6,933
  Amortization                                             3,148                --
  Other expenses                                          18,320            49,009
                                                       ---------         ---------
       TOTAL EXPENSES                                     43,272           238,538
                                                       ---------         ---------

       LOSS BEFORE EQUITY IN LOSS OF SUBSIDIARY          (43,272)         (238,538)

EQUITY IN LOSS OF SUBSIDIARY                            (644,622)               --
                                                       ---------         ---------

        NET LOSS                                       $(687,894)        $(258,538)
                                                       =========         =========
</TABLE>



                                     - 48 -

<PAGE>   51



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


NOTE 12.          PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)


                       CONDENSED STATEMENTS OF CASH FLOWS



<TABLE>
<CAPTION>
                                                                    1997              1996
                                                                -----------         ---------
<S>                                                             <C>                 <C>
OPERATING ACTIVITIES
  Net loss                                                      $  (687,894)        $(238,538)


  Adjustments to reconcile net loss to net cash provided
    by operating activities:
    Amortization                                                      3,148                --
    Loss of subsidiary                                              644,622                --
    Other operating activities                                      311,318           238,538
                                                                -----------         ---------

        Net cash provided by operating activities                   271,194                --
                                                                -----------         ---------

INVESTING ACTIVITIES
  Investment in subsidiary                                       (9,000,000)               --
                                                                -----------         ---------
        Net cash used in investing activities                    (9,000,000)               --
                                                                -----------         ---------
FINANCING ACTIVITIES
  Net repayment of other borrowings                                (386,980)               --
  Net proceeds from sale of common stock                          9,476,107               800
                                                                -----------         ---------

        Net cash provided by financing activities                 9,089,127               800
                                                                -----------         ---------

Net increase in cash                                                360,321               800

Cash at beginning of period                                             800                --
                                                                -----------         ---------

Cash at end of year                                             $   361,121         $     800
                                                                ===========         =========
</TABLE>


                                     - 49 -

<PAGE>   52



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

None.

                                    PART III

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

         The following table sets forth the current members of the Board of
Directors of the Company and the Bank, and senior and executive officers for the
Company and the Bank (a) their names, addresses and ages at December 31, 1997,
(b) the positions they hold in the Company and the Bank, if any, and (c) the
year first elected as a Director.


<TABLE>
<CAPTION>
                                                                                     YEAR FIRST
                                                                                     ELECTED AS
            NAME                 AGE         POSITION HELD                           A DIRECTOR
----------------------------     ---         -------------                           ----------
<S>                              <C>         <C>                                     <C>
Larry D. Key                      52         President, Chief                           1997
                                             Executive Officer and
                                             Chairman of the
                                             Company and the Bank

John T. Hopkins III               56         Executive Vice
                                             President, Chief
                                             Financial Officer,
                                             Secretary and Treasurer
                                             of the Company and the
                                             Bank

Michael A. Roy                    52         Executive Vice
                                             President and Chief
                                             Credit Officer of the
                                             Bank

Paul C. Birkhead                  52         Senior Vice President
                                             and Commercial Loan
                                             Officer of the Bank

Marcia N. Watkins                 52         Senior Vice President
                                             and Chief Operating
                                             Officer of the Bank

James B. Ballard                  53         Director of the                            1997
                                             Company and the Bank

Jerry M. Boles                    57         Director of the                            1997
                                             Company and the Bank

W. H. Britt                       59         Director of the                            1997
                                             Company and the Bank

Richard F. Combs                  50         Director of the                            1997
                                             Company and the Bank
</TABLE>


                                     - 50 -

<PAGE>   53



<TABLE>
<CAPTION>
                                                                                        YEAR FIRST
                                                                                        ELECTED AS
            NAME                 AGE         POSITION HELD                              A DIRECTOR
----------------------------     ---         -------------                              ----------
<S>                              <C>         <C>                                        <C>
William G. Hayes                  59         Director of the                               1997
                                             Company and the Bank

Douglas A. Langley                39         Director of the                               1997
                                             Company and the Bank

Norris J. Nash                    70         Director of the                               1997
                                             Company and the Bank

James J. Powell                   53         Director of the                               1997
                                             Company and the Bank

William S. Stanton, Jr.           42         Director of the                               1997
                                             Company and the Bank
</TABLE>

BIOGRAPHIES

         JAMES B. BALLARD was the Chief Executive Officer, founder and a member
of the board of directors from 1972 until January 1996 of Spartan Constructors,
Inc., an industrial constructor serving the continental United States as well as
the international market. Mr. Ballard currently serves as the Chief Executive
Officer of The Summit Industrial Group, an industrial contractor.

         PAUL C. BIRKHEAD was Executive Vice President and Senior Lending
Officer of Commercial Bank of Georgia from 1988 when Commercial Bank opened
until July 1995 when he resigned to participate in current organizing group of
the Company. Mr. Birkhead was Group Vice President of Commercial Lending of
Heritage Bank from 1984 until November 1987, when Heritage merged with Bank
South, N.A. Mr. Birkhead was Vice President of Commercial Lending for Bank
South, N.A. until he resigned in January 1988 to join the organizing group of
Commercial Bank of Georgia.

         JERRY M. BOLES has been in the wholesale automotive after-market for 35
years. Mr. Boles is owner and president of Boles Parts Supply, Inc., which was
founded in 1964, with headquarters in Atlanta, Georgia and distribution
warehouses in Oklahoma City, Oklahoma; Tappahannock, Virginia and Dahlonega,
Georgia.

         W. H. BRITT is the founder and owner of H & H Truck and Tractor, Inc.,
an equipment sales company and W. H. Britt and Associates, Inc., a real estate
brokerage and development company. Mr. Britt was an organizer of Gwinnett County
Bank (Heritage Bank) in 1972 and served as a director until 1987 when the bank
was sold.

         RICHARD F. COMBS is the Founder and President of Pureflow Ultraviolet,
Inc., a company specializing in ultraviolet disinfecting equipment, parts and
services to industrial clients since 1978.

         WILLIAM G. HAYES has served as President and Chairman of Hayes, James
and Associates, an engineering and survey company based in Lawrenceville,
Georgia since 1986. Mr. Hayes was a director of the First National Bank of
Gwinnett from 1984 to 1986.

         JOHN T. HOPKINS III was the Chief Financial Officer and Executive Vice
President of Commercial Bank of Georgia until he resigned in July 1996 to
participate in the Company's organizing group. Mr. Hopkins was Chief Financial
Officer and Chief Operating Officer of Paragon Mortgage from 1993 to 1995. He
was Chief Financial Officer of West Corp. which operated commercial, electrical
and mechanical contracting companies from 1989 to 1993. From


                                     - 51 -

<PAGE>   54



1985 to 1989, he was Internal Auditor and Chief Financial Officer of Heritage
Bank and Corporate Accountant of Williams Service Group. Prior to 1985, Mr.
Hopkins was a partner with H. H. Brunet and Company, Certified Public
Accountants, specializing in the financial services industry.

         LARRY D. KEY was the Executive Vice President and Chief Lending Officer
of Commercial Bank of Georgia from the merger of Commercial Bank of Georgia and
Commercial Bank of Gwinnett in March 1995 until he resigned in July 1996 to
participate in current organizing group. Mr. Key served as President and Chief
Executive Officer of the former Commercial Bank of Georgia from 1994 until the
merger. He served as Executive Vice President and Chief Credit Officer of the
former Commercial Bank of Georgia from 1992 until 1994. Mr. Key was Senior Vice
President from the opening of the former Commercial Bank of Georgia in 1988
until 1992. He was Group Vice President and an advisory director of Heritage
Bank from 1984 until 1987. Mr. Key operated Moores Building Center, Inc. in
Dahlonega, Georgia from 1987 to 1988. Mr. Key served as a director of Commercial
Bancorp of Georgia, Inc. and Commercial Bank of Georgia from their initial
organization in 1988 until July 1996.

         DOUGLAS A. LANGLEY is a managing partner of Ashworth and Associates, a
CPA firm in Tucker and Lawrenceville, Georgia and has been employed by this firm
since 1977.

         NORRIS J. NASH is the President of Metropolitan Land Development and
Investment Corporation and Gwinnett- DeKalb, Inc. He has been a real estate
developer since 1962. Mr. Nash has served as director of the former Gwinnett
County Bank, and on the Advisory Board of Wachovia Bank of Georgia, N.A.. Mr.
Nash was a member of the House of Representatives for Gwinnett County, District
22, Post #1 from 1967 to 1969.

         JAMES J. POWELL is President of Joe Powell and Associates, Inc. since
1971 representing Liebert Corporation, provider of mechanical and electrical
equipment for computer operations.

         MICHAEL A. ROY served as an Assistant Director and a Field Manager with
the Office of Thrift Supervision in Atlanta, Georgia, from 1988 through 1997
when he resigned to join Gwinnett Banking Company. Prior to that time, he was
Vice President and Senior Lender at Capital-Union Savings, FA in Baton Rouge,
Louisiana for three years and was Executive Vice President and Director at
Citizens Savings and Loan Association in Baton Rouge, Louisiana for eight years.

         WILLIAM S. STANTON, JR. is President of Print Direction, Inc. and
Atlanta Screen Print, Inc. Mr. Stanton has served as President of Print
Direction since its inception in 1984 and Atlanta Screen Print since 1988. He
was an Account Representative with Xerox Corporation from 1977 to 1981.

         MARCIA N. WATKINS served as Senior Vice President and Chief Operations
Officer of Commercial Bank of Georgia from its inception in February 1988 to
June 1996. Ms. Watkins was one of the original seven employees involved in the
opening of Gwinnett County Bank, a/k/a Heritage Bank, in February 1971. Ms.
Watkins served as Senior Operations Officer of Heritage Trust from February 1986
to February 1988. Ms. Watkins held various positions with the Heritage Bank,
including Vice President and Cashier between 1971 and 1986.

         The Company is not subject to filings required by Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company is
filing this Annual Report on Form 10-KSB pursuant to Section 15(d) of the
Exchange Act.

ITEM 10.  EXECUTIVE COMPENSATION

         The following table provides information with respect to the annual
compensation for services in all capacities to the Company from the Company's
organization on August 21, 1996 through the fiscal year ended December 31, 1997
of the Chief Executive Officer:


                                     - 52 -

<PAGE>   55



                           SUMMARY COMPENSATION TABLE


<TABLE>
<CAPTION>
                                                       ANNUAL
                                                  COMPENSATION (1)
         NAME AND                                 ----------------
    PRINCIPAL POSITION             YEAR                SALARY
    ------------------             ----           ----------------
<S>                                <C>            <C>
Larry D. Key                       1997               $130,000
President, Chief                   1996               $ 46,945
Executive Officer and
Chairman
</TABLE>


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

(1)      In accordance with the rules of the Securities and Exchange Commission,
         the compensation set forth in the table does not include medical, group
         life insurance or other benefits which are available to all salaried
         employees of the Company and certain perquisites and other benefits,
         securities or property which do not exceed the lesser of $50,000 or 10%
         of the Chief Executive Officer's salary and bonus shown in the table.

COMPENSATION OF DIRECTORS

         The Conditions provide that the directors and committee members of the
Bank will not be compensated for their services as directors and committee
members until the Bank earns a cumulative profit.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth the beneficial ownership of the Common
Stock as of March 30, 1998, by each director and the Chief Executive Officer of
the Company, and all directors and the Chief Executive Officer of the Company as
a group. No person known by the Company beneficially owns more than 5% of the
Common Stock of the Company. The information in this table was based in part on
information supplied by the named individuals.


<TABLE>
<CAPTION>
                                                                NUMBER OF SHARES OF
                                                                   COMMON STOCK                   PERCENTAGE
      NAME AND ADDRESS OF BENEFICIAL OWNER                       BENEFICIALLY OWNED                OWNERSHIP
-----------------------------------------------------           -------------------               ----------
<S>                                                             <C>                               <C>
Larry D. Key (2)
3300 Jim Moore Road
Dacula, Georgia 30019                                                   22,173                       2.33%

James B. Ballard (3)
2400 Bagley Road
Cumming, Georgia 30040                                                  41,706                       4.39%

Jerry M. Boles
Boles Parts Supply, Inc.
1057 Boulevard, S.E.
Atlanta, Georgia 30312                                                  32,986                       3.47%

W. H. Britt (4)
W. H. Britt & Associates, Inc.
535 Grayson Parkway
Grayson, Georgia 30221                                                  15,337                       1.61%
</TABLE>


                                     - 53 -

<PAGE>   56



<TABLE>
<CAPTION>
                                                                NUMBER OF SHARES OF
                                                                   COMMON STOCK                   PERCENTAGE
      NAME AND ADDRESS OF BENEFICIAL OWNER                       BENEFICIALLY OWNED                OWNERSHIP
-----------------------------------------------------           -------------------               ----------
<S>                                                             <C>                               <C>
Richard F. Combs (5)
Pureflow Ultraviolet, Inc.
1750 Spectrum Drive
Lawrenceville, Georgia  30043                                           21,361                       2.25%

William G. Hayes (6)
Hayes, James & Associates
3005 Breckenridge Boulevard, Suite 200
Duluth, Georgia  30096                                                   5,000                          *

Douglas A. Langley (7)
Ashworth & Associates
270 Constitution Boulevard
Lawrenceville, Georgia  30045                                           21,000                       2.21%

Norris J. Nash (8)
Gwinnett DeKalb Realty, Inc.
4830 Lawrenceville Highway
Lilburn, Georgia  30047                                                 17,685                       1.86%

James J. Powell (9)
Joe Powell & Associates
500 Miller Court
Norcross, Georgia  30071                                                25,000                       2.63%

William S. Stanton, Jr. (10)
Print Direction, Inc.
1455 Oakbrook Drive
Norcross, Georgia  30093                                                39,410                       4.15%

ALL DIRECTORS AND THE CHIEF EXECUTIVE
OFFICER AS A GROUP (10 PERSONS)                                        241,658                      25.44%
</TABLE>

------------------------
*        Represents less than one percent (1%) of the shares outstanding.

(1)      On a fully-diluted basis, except as otherwise indicated, the persons
         named in the table have sole voting and investment power with respect
         to all shares shown as beneficially owned by them. The information
         shown above is based upon information furnished by the named persons
         and based upon "beneficial ownership" concepts set forth in rules
         promulgated under the Exchange Act. Under such rules, a person is
         deemed to be a "beneficial owner" of a security if that person has or
         shares "voting power," which includes the power to vote or to direct
         the voting of such security, or "investment power," which includes the
         power to dispose or to direct the disposition of such security. A
         person is also deemed to be a beneficial owner of any security of which
         that person has the right to acquire beneficial ownership within 60
         days. More than one person may be deemed to be a beneficial owner of
         the same securities.

(2)      Includes 663 shares owned by Mr. Key's wife.

(3)      Includes 5,000 shares owned by Mr. Ballard's son and 5,000 shares owned
         by a company that Mr. Ballard controls.

(4)      Includes 1,500 shares owned by Mr. Britt's children.

(5)      Includes 1,000 shares owned by Mr. Combs' wife.

(6)      Includes 2,500 shares owned by a company that Mr. Hayes controls.

(7)      Includes 1,000 shares owned by Mr. Langley's wife and 20,000 shares
         held by the Ashworth & Associates, P.C. Profit Sharing Plan in which
         Mr. Langley is the Trustee.

(8)      Includes 2,500 shares owned by a company that Mr. Nash controls.

(9)      Includes 1,000 shares owned by Mr. Powell's son.

(10)     Includes 15,400 shares owned by a company that Mr. Stanton controls.


                                     - 54 -

<PAGE>   57



ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         It is possible that the Company and the Bank will have banking and
other business transactions in the ordinary course of business with directors
and officers of the Company and the Bank, including members of their families or
corporations, partnerships or other organizations in which such directors and
officers have a controlling interest. If such transactions occur, they will be
on substantially the same terms (including price, interest rate and collateral)
as those prevailing at the time for comparable transactions with unrelated
parties, and any banking transactions will not be expected to involve more than
the normal risk of collectibility or present other unfavorable features to the
Company and the Bank.

         Columbus Bank and Trust Company, The Bankers Bank, Regions Bank and
SunTrust Bank, Atlanta operate as correspondent banks for the Bank
(collectively, the "Correspondents"). The Correspondents provide bank services
such as check clearing, international services, wire transfers and various
additional services for the Bank. The Correspondents also serve the Bank through
purchasing and selling federal funds, purchasing other investments, and
providing short-term lines of credit for the purpose of borrowing and purchasing
federal funds from other institutions.

         All of the relationships established with the Correspondents were at
arms-length. There is no affiliation between the Bank and any of its officers
and directors and any of the Correspondents.

         On March 17, 1998, the Bank entered into a Lease Agreement with GBC LLC
to lease the Permanent Premises. Most of the members of GBC LLC are directors
and officers of the Company and the Bank. The Permanent Premises lease rate is
market rental value established by two MAI appraisals and, therefore, management
believes is as favorable as rates obtainable from an unaffiliated third party.
In addition, for the period during which Permanent Premises are being
constructed, the Bank will lease temporary premises from GBC LLC.



                                     - 55 -

<PAGE>   58



                                     PART IV

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

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

<TABLE>
<CAPTION>
        Exhibit
        Number    Description
        -------   -----------
        <S>       <C>
         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      Bylaws of the Company (filed as Exhibit 3.2 to the
                  Registration Statement on Form SB-2, as amended (Registration
                  No. 333-19081)).

         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     Escrow Agreement between the Registrant and Columbus Bank and
                  Trust Company (filed as Exhibit 10.1 to the Registration
                  Statement on Form SB-2, as amended (Registration No.
                  333-19081)).

         10.2     Line of Credit Promissory Note in the amount of $500,000
                  having Registrant as Maker and Gwinnett Banking Company GBC
                  LLC as Holder (filed as Exhibit 10.2 to the Registration
                  Statement on Form SB-2, as amended (Registration No.
                  333-19081)).

         10.3     Provesa, Inc. Data Processing Agreement (filed as Exhibit 10.3
                  to the Registration Statement on Form SB-2, as amended
                  (Registration No. 333-19081)).

         10.4     Real Estate Commercial Lease Contract dated as of March 17,
                  1998, by and between GBC Properties, LLC and Gwinnett Banking
                  Company.

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

         27       Financial Data Schedule (for SEC use only).
</TABLE>

(b)      Reports on Form 8-K filed in the fourth quarter of 1997:  None.

                  SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH
                 REPORTS FILED PURSUANT TO SECTION 15(D) OF THE
                      EXCHANGE ACT BY NON-REPORTING ISSUERS

         The Registrant has not sent the following to its security holders:

         (1) Any annual report to security holders covering the Registrant's
last fiscal year; or

         (2) Any proxy statement, form of proxy or other proxy soliciting
material with respect to any annual or other meeting of security holders.

         If such report or proxy material is furnished to security holders
subsequent to the filing of this Form 10-KSB, the Registrant shall furnish
copies of such material to the Securities and Exchange Commission when it is
sent to security holders.




                                     - 56 -

<PAGE>   59



                                   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 undersigned,
thereunto duly authorized.

                                    GBC BANCORP, INC.


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

                                    Date:  March 30, 1998

                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
on the signature pages to this Annual Report on Form 10-KSB constitutes and
appoints Larry D. Key and John T. Hopkins III, and each of them, his or her true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the undersigned and in his or her name, place, and stead, in
any and all capacities, to sign any and all amendments to this Form 10-KSB, and
to file the same, with all exhibits hereto and other documents in connection
herewith with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and each of them, full power and authority to do so
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

         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                                      Date
------------------------------          ----------------------------------                  --------------
<S>                                     <C>                                                 <C>
/s/ Larry D. Key                        President, Chief Executive Officer                  March 30, 1998
------------------------------          and Chairman of the Company and
Larry D. Key                            the Bank

/s/ John T. Hopkins III                 Executive Vice President, Chief                     March 30, 1998
------------------------------          Financial Officer, Secretary and
John T. Hopkins III                     Treasurer of the Company and the
                                        Bank

/s/ Michael A. Roy                      Executive Vice President and Chief                  March 30, 1998
------------------------------          Credit Officer of the Bank
Michael A. Roy

/s/ Paul C. Birkhead                    Senior Vice President and                           March 30, 1998
------------------------------          Commercial Loan Officer of the
Paul C. Birkhead                        Bank

/s/ Marcia N. Watkins                   Senior Vice President and Chief                     March 30, 1998
------------------------------          Operating Officer of the Bank
Marcia N. Watkins
</TABLE>


                                     - 57 -

<PAGE>   60


<TABLE>
<CAPTION>
          Signature                                   Title                                      Date
------------------------------          ----------------------------------                  --------------
<S>                                     <C>                                                 <C>
/s/ James B. Ballard                    Director of the Company and the                     March 30, 1998
------------------------------          Bank
James B. Ballard

/s/ Jerry M. Boles                      Director of the Company and the                     March 30, 1998
------------------------------          Bank
Jerry M. Boles

/s/ W. H. Britt                         Director of the Company and the                     March 30, 1998
------------------------------          Bank
W. H. Britt

/s/ Richard F. Combs                    Director of the Company and the                     March 30, 1998
------------------------------          Bank
Richard F. Combs

/s/ William G. Hayes                    Director of the Company and the                     March 30, 1998
------------------------------          Bank
William G. Hayes

/s/ Douglas A. Langley                  Director of the Company and the                     March 30, 1998
------------------------------          Bank
Douglas A. Langley

/s/ Norris J. Nash                      Director of the Company and the                     March 30, 1998
------------------------------          Bank
Norris J. Nash

/s/ James J. Powell                     Director of the Company and the                     March 30, 1998
------------------------------          Bank
James J. Powell

/s/ William S. Stanton, Jr.             Director of the Company and the                     March 30, 1998
------------------------------          Bank
William S. Stanton, Jr.
</TABLE>


                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
        Exhibit
        Number    Description
        -------   -----------
        <S>       <C>
         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      Bylaws of the Company (filed as Exhibit 3.2 to the
                  Registration Statement on Form SB-2, as amended (Registration
                  No. 333-19081)).

         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     Escrow Agreement between the Registrant and Columbus Bank and
                  Trust Company (filed as Exhibit 10.1 to the Registration
                  Statement on Form SB-2, as amended (Registration No.
                  333-19081)).

         10.2     Line of Credit Promissory Note in the amount of $500,000
                  having Registrant as Maker and Gwinnett Banking Company GBC
                  LLC as Holder (filed as Exhibit 10.2 to the Registration
                  Statement on Form SB-2, as amended (Registration No.
                  333-19081)).

         10.3     Provesa, Inc. Data Processing Agreement (filed as Exhibit 10.3
                  to the Registration Statement on Form SB-2, as amended
                  (Registration No. 333-19081)).

         10.4     Real Estate Commercial Lease Contract dated as of March 17,
                  1998, by and between GBC Properties, LLC and Gwinnett Banking
                  Company.

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

         27       Financial Data Schedule (for SEC use only).
</TABLE>


                                     - 58 -