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                       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, 2004

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

      For the transition period from _________________ to _________________

                        Commission File Number: 000-50265

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

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

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

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

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

      Securities registered under Section 12(g) of the Exchange Act: Common
Stock, $1.00 par value per share.

      Check whether the Issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes [X]
No [ ]

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

      The Issuer's revenue for the fiscal year ended December 31, 2004, was
approximately $18,664,000.

      The aggregate market value of the voting and nonvoting common equity held
by persons other than directors and executive officers of the Registrant as of
March 15, 2005, was $23,879,866, based on a private sale price of $17.00 per
share.

      There were 1,741,608 shares of the Registrant's common stock outstanding
as of March 15, 2005.

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

                       DOCUMENT INCORPORATED BY REFERENCE

      Portions of the Proxy Statement for the 2005 Annual Meeting of
Shareholders to be filed with the Securities and Exchange Commission within 120
days of the Registrant's 2004 fiscal year end are incorporated by reference into
Part III of this Report.

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                               TABLE OF CONTENTS

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

   ITEM 1.   DESCRIPTION OF BUSINESS.............................................................................      1

   ITEM 2.   DESCRIPTION OF PROPERTY.............................................................................     10

   ITEM 3.   LEGAL PROCEEDINGS...................................................................................     10

PART II..........................................................................................................     10

   ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS............................................     10

   ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION...........................................     10

   ITEM 7.   FINANCIAL STATEMENTS................................................................................     27

   ITEM 8A.  CONTROLS AND PROCEDURES.............................................................................     27

PART III.........................................................................................................     28

   ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF
             THE EXCHANGE ACT....................................................................................     28

   ITEM 10.  EXECUTIVE COMPENSATION..............................................................................     28

   ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS......     28

   ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......................................................     28

   ITEM 13.  EXHIBITS............................................................................................     28

   ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES..............................................................     30

SIGNATURES.......................................................................................................     31
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                                        S

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                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

GBC BANCORP

      GBC Bancorp, Inc. ("we" or the "Company") was organized in August 1996 as
a Georgia corporation for the purpose of acquiring all of the common stock of
Gwinnett Banking Company, a Georgia bank that opened for business in October
1997 (the "Bank"). We are a bank holding company within the meaning of the Bank
Holding Company Act of 1956, and the Georgia Bank Holding Company Act. We were
organized to facilitate the Bank's ability to serve its customers' requirements
for financial services. The holding company structure provides flexibility for
expansion of our banking business through the possible acquisition of other
financial institutions and the provision of additional banking-related services
that the traditional commercial bank may not provide under present laws. We have
no present plans to acquire any operating subsidiaries other than the Bank. It
is expected, however, that we may make additional acquisitions in the future if
such acquisitions are deemed to be in the best interest of our shareholders. Any
acquisitions will be subject to certain regulatory approvals and requirements.

GWINNETT BANKING COMPANY

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

INDUSTRY AND COMPETITION

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

EMPLOYEES

      The Bank had 40 total employees as of March 15, 2005, all of whom were
full-time employees. We do not have any employees who are not also employees of
the Bank.

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ENVIRONMENTAL LAWS

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

SUPERVISION AND REGULATION

General

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

      Legislative changes and the policies of various regulatory authorities may
affect our operations. We are unable to predict the nature or the extent of the
effect on our business and earnings that fiscal or monetary policies, economic
control or new federal or state legislation may have in the future.

The Company

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

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

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

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

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

      The Bank Holding Company Act further provides that the Federal Reserve may
not approve any transaction that would result in a monopoly or would be in
furtherance of any combination or conspiracy to monopolize or attempt to
monopolize the business of banking in any part of the United States. In
addition, the Federal Reserve will not approve a transaction the effect of which
may be substantially to lessen competition or to tend to create a monopoly, or
that in any other manner would be in restraint of trade. However, such
transactions may be approved in the event the anti-

                                     - 2 -
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competitive effects of the proposed transaction are clearly outweighed by the
public interest in meeting the convenience and needs of the communities to be
served. The Federal Reserve is also required to consider the financial and
managerial resources and future prospects of the bank holding companies and
banks involved and the convenience and needs of the communities to be served.
Consideration of financial resources generally focuses on capital adequacy, and
consideration of convenience and needs issues generally focuses on the parties'
performance under the Community Reinvestment Act of 1977.

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

      Although the activities of bank holding companies have traditionally been
limited to the business of banking and activities closely related or incidental
to banking (as discussed above), the Gramm-Leach-Bliley Act of 1999 relaxed the
previous limitations thus permitting bank holding companies to engage in a
broader range of financial activities. Specifically, bank holding companies may
elect to become financial holding companies which may affiliate with securities
firms and insurance companies and engage in other activities that are financial
in nature. Among the activities that are deemed "financial in nature" include:

      -     lending, exchanging, transferring, investing for others or
            safeguarding money or securities;

      -     insuring, guaranteeing, or indemnifying against loss, harm, damage,
            illness, disability, or death, or providing and issuing annuities,
            and acting as principal, agent, or broker with respect thereto;

      -     providing financial, investment, or economic advisory services,
            including advising an investment company;

      -     issuing or selling instruments representing interests in pools of
            assets permissible for a bank to hold directly; and

      -     underwriting, dealing in or making a market in securities.

      A bank holding company may become a financial holding company under this
statute only if each of its subsidiary banks is well capitalized, is well
managed and has at least a satisfactory rating under the Community Reinvestment
Act. A bank holding company that falls out of compliance with

                                     - 3 -
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such requirement may be required to cease engaging in certain activities. Any
bank holding company that does not elect to become a financial holding company
remains subject to the current restrictions of the Gramm-Leach-Bliley Act.

      Under this legislation, the Federal Reserve Board serves as the primary
"umbrella" regulator of financial holding companies with supervisory authority
over each parent company and limited authority over its subsidiaries. The
primary regulator of each subsidiary of a financial holding company will depend
on the type of activity conducted by the subsidiary. For example, broker-dealer
subsidiaries will be regulated largely by securities regulators and insurance
subsidiaries will be regulated largely by insurance authorities.

      We have no immediate plans to register as a financial holding company.

The Bank

      The Bank is incorporated under the laws of the State of Georgia and is
subject to examination by the Georgia Department of Banking and Finance. The
Georgia Department of Banking and Finance regulates all areas of the Bank's
commercial banking operations, including, without limitation, loans, deposits,
reserves, mergers, reorganizations, issuance of securities, payment of
dividends, and the establishment of branches. The Bank is also a member of the
Federal Deposit Insurance Corporation (the "FDIC"), and as such, the FDIC, to
the maximum extent provided by law, insures its deposits. The Bank is also
subject to numerous state and federal statutes and regulations that affect its
business, activities, and operations. The FDIC and the Georgia Department of
Banking and Finance regularly examine the operations of the Bank and have the
power to prevent the continuance or development of unsafe or unsound banking
practices or other violations of law.

Payment of Dividends

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

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

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

                                     - 4 -
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      -     that dividends of cash or property may be paid only out of the
            retained earnings of the Bank;

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

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

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

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

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

      Applying these dividend restrictions, and without prior approval of the
Georgia Department of Banking and Finance, as of December 31, 2004, the Bank
could pay a $1,687,500 dividend to us. Our ability to pay dividends may also be
affected or limited by other factors, such as the requirement to maintain
adequate capital above regulatory guidelines.

Transactions with Affiliates and Insiders

      Various legal limitations restrict the Bank from lending or otherwise
supplying funds to us and our non-bank subsidiaries, all of which are deemed to
be "affiliates" of the Bank for the purposes of these restrictions. We are
subject to Section 23A of the Federal Reserve Act. Section 23A defines "covered
transactions," which include extensions of credit, and limits a bank's covered
transactions with any affiliate to 10% of such bank's capital and surplus and
with all affiliates to 20% of such bank's capital and surplus. All covered and
exempt transactions between a bank and its affiliates must be on terms and
conditions consistent with safe and sound banking practices, and banks and their
subsidiaries are prohibited from purchasing low-quality assets from the bank's
affiliates. Finally, Section 23A requires that all of a bank's extensions of
credit to an affiliate be appropriately secured by acceptable collateral,
generally U.S. government or agency securities. We are also subject to Section
23B of the Federal Reserve Act, which generally limits covered and other
transactions between a bank and its affiliates to terms and under circumstances,
including credit standards, that are substantially the same or at least as
favorable to the bank as prevailing at the time for transactions with
unaffiliated companies.

Capital Adequacy

      We are required to comply with the capital adequacy standards established
by the Federal Reserve, 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 profiles among banks and bank
holding companies, to account for off-

                                     - 5 -
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balance sheet exposure, and to minimize disincentives for holding liquid,
low-risk assets. Assets and off-balance-sheet items are assigned to broad risk
categories, each with appropriate weights. The resulting capital ratios
represent capital as a percentage of total risk-weighted assets and off-balance
sheet items.

      The minimum guideline for the ratio of total capital to risk-weighted
assets is 8.0%. At least half of total capital must be comprised of Tier 1
Capital, which is common stock, undivided profits, minority interests in the
equity accounts of consolidated subsidiaries and noncumulative perpetual
preferred stock, less goodwill and certain other intangible assets. The
remainder may consist of Tier 2 Capital, which is subordinated debt, other
preferred stock and a limited amount of loan loss reserves. As of December 31,
2004, our total risk-based capital ratio and our Tier 1 risk-based capital ratio
were 11.18% and 9.93%, respectively.

      In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 Capital to average assets, less goodwill and certain other
intangible assets, of 3.0% for bank holding companies that meet specified
criteria. All other bank holding companies generally are required to maintain a
leverage ratio of at least 3.0%, plus an additional cushion of 100 to 200 basis
points. Our leverage ratio as of December 31, 2004, was 8.75%. The guidelines
also provide that bank holding companies experiencing internal growth or making
acquisitions will be expected to maintain strong capital positions substantially
above the minimum supervisory levels without significant reliance on intangible
assets. Furthermore, the Federal Reserve has indicated that it will consider a
"tangible Tier 1 Capital leverage ratio" and other indicia of capital strength
in evaluating proposals for expansion or new activities. The Federal Reserve has
not advised us of any specific minimum leverage ratio or tangible Tier 1
leverage ratio applicable to us.

      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, 2004. We have not
been advised by any federal banking agency of any specific capital ratio
requirement applicable to the Bank.

      Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including issuance of a capital directive, the termination
of deposit insurance by the FDIC, a prohibition on the taking of brokered
deposits, and certain other restrictions on its business. Substantial additional
restrictions can be imposed upon FDIC-insured depository institutions that fail
to meet applicable capital requirements.

      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 recently adopted
regulations requiring regulators to consider interest rate risk in the
evaluation of a bank's capital adequacy. The bank regulatory agencies have
recently established a methodology for evaluating interest rate risk which sets
forth guidelines for banks with excessive interest rate risk exposure to hold
additional amounts of capital against such exposures.

      In addition to the capital standards imposed by federal banking
regulators, the Georgia Department of Banking and Finance imposed a requirement
for the Bank to maintain a primary capital ratio of not less than 8.0% during
the first three years of the Bank's operation. Following the expiration of this
initial period, the Bank became subject to a 6.0% primary capital ratio. Such

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standard is calculated as the ratio of total equity to total assets, each as
adjusted for unrealized gains and losses on securities and allowance for loan
losses.

Support of Subsidiary Institution

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

      In the event of a bank holding company's bankruptcy, any commitment by a
bank holding company to a federal bank regulatory agency to maintain the capital
of a banking subsidiary will be assumed by the bankruptcy trustee and entitled
to a priority of payment.

FDIC Insurance Assessments

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

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

Safety and Soundness Standards

      The federal bank regulatory agencies have adopted a set of guidelines
prescribing safety and soundness standards. The guidelines establish general
standards relating to internal controls and information systems, internal audit
systems, loan documentation, credit underwriting, interest rate exposure, asset
growth, asset quality, earnings and compensation, fees and benefits. In general,
the guidelines require, among other things, appropriate systems and practices to
identify and manage the risks and exposures specified in the guidelines. The
guidelines prohibit excessive compensation as an unsafe and unsound practice and
describe compensation as excessive when the amounts paid are unreasonable or
disproportionate to the services performed by an executive officer, employee,
director or principal shareholder. In addition, the agencies adopted regulations
that authorize, but do not require, an agency to order an institution that has
been given notice by an agency that it is not satisfying any of such safety and
soundness standards to submit a compliance plan. If an institution

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fails to submit or implement such a plan, the agency must issue an order
directing action to correct the deficiency and may require other actions of the
types to which an undercapitalized institution is subject under the "prompt
corrective action" provisions described above. If an institution fails to comply
with such an order, the agency may seek to enforce such order in judicial
proceedings and to impose civil money penalties.

Community Reinvestment Act

      The Community Reinvestment Act requires federal bank regulatory agencies
to encourage financial institutions to meet the credit needs of low-and
moderate-income borrowers in their local communities. An institution's size and
business strategy determines the type of examination that it will receive.

      Large, retail-oriented institutions will be examined using a
performance-based lending, investment and service test. Small institutions will
be examined using a streamlined approach. All institutions may opt to be
evaluated under a strategic plan formulated with community input and
pre-approved by the bank regulatory agency.

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

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

Financial Privacy

      In accordance with the Gramm-Leach-Bliley Act, federal banking regulators
adopted rules that limit the ability of banks and other financial institutions
to disclose non-public information about consumers to nonaffiliated third
parties. These limitations require disclosure of privacy policies to consumers
and, in some circumstances, allow consumers to prevent disclosure of certain
personal information to a nonaffiliated third party. The privacy provisions of
the Gramm-Leach-Bliley Act affect how consumer information is transmitted
through diversified financial companies and conveyed to outside vendors.

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Anti-Terrorism Legislation

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

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

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

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

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

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

      -     the development of internal policies, procedures and controls;

      -     the designation of a compliance officer;

      -     an ongoing employee training program; and

      -     an independent audit function to test the programs.

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

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

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ITEM 2. DESCRIPTION OF PROPERTY

      The Bank leases its main office located at 165 Nash Street, Lawrenceville,
Gwinnett County, Georgia. The Bank also leases its branch banking offices
located at 11675 Rainwater Drive, Suite 150, Alpharetta, Fulton County, Georgia
30004. All leased property is in good order and condition.

ITEM 3. LEGAL PROCEEDINGS

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

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      There is currently no public trading market for shares of our common stock
and it is not likely that a public trading market will develop for our common
stock in the future. There are no present plans for our common stock to be
traded on any stock exchange or over-the-counter market.

      As of March 15, 2005, there were approximately 750 holders of our common
stock.

      We have not paid any dividends to date. Under the Georgia Business
Corporation Code, we may from time to time make distributions, including the
payment of dividends, to our shareholders in money, indebtedness or other
property (except our own shares) unless, after giving effect to such
distribution, we would not be able to pay our debts as they become due in the
usual course of business or our total assets would be less than the sum of our
total liabilities plus the amount that would be needed, if we were to be
dissolved at the time of distribution, to satisfy the preferential rights upon
dissolution of shareholders whose preferential rights are superior to those
receiving the distribution.

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

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

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

      The following is management's discussion and analysis of certain
significant factors that have affected the financial position and operating
results of GBC Bancorp, Inc. and its bank subsidiary, Gwinnett Banking Company,
during the periods included in the accompanying audited consolidated financial
statements. The purpose of this discussion is to focus on information about our
financial condition and results of operations that are not otherwise apparent
from our audited consolidated financial statements as of and for the year ended
December 31, 2004. Reference should

                                     - 10 -

<PAGE>

be made to those statements and the selected financial data presented elsewhere
in this Annual Report for an understanding of the following discussion and
analysis.

FORWARD-LOOKING STATEMENTS

      We may from time to time make written or oral forward-looking statements,
including statements contained in our filings with the Securities and Exchange
Commission and reports to shareholders. Statements made in the Annual Report,
other than those concerning historical information, should be considered
forward-looking and subject to various risks and uncertainties. Forward-looking
statements are made based on management's belief as well as assumptions made by,
and information currently available to, management pursuant to "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. Our actual
results may differ materially from the results anticipated in forward-looking
statements due to a variety of factors, including governmental monetary and
fiscal policies, deposit levels, loan demand, loan collateral values, securities
portfolio values, interest rate risk management, the effects of competition in
the banking business from other commercial banks, thrifts, mortgage banking
firms, consumer finance companies, credit unions, securities brokerage firms,
insurance companies, money market funds and other financial institutions
operating in our market area and elsewhere, including institutions operating
through the Internet, changes in governmental regulation relating to the banking
industry, including regulations relating to branching and acquisitions, failure
of assumptions underlying the establishment of reserves for loan losses,
including the value of collateral underlying delinquent loans and other factors.
We caution that these factors are not exclusive. We do not undertake to update
any forward-looking statement that may be made from time to time by, or on
behalf of, us.

OVERVIEW

      Our 2004 results were highlighted by improved profitability and continued
loan and deposit growth. Our net income increased to approximately $3,323,000,
as compared to approximately $1,975,000 in 2003, primarily due to an increase in
loan interest income associated with a substantial growth in loans, increase in
gain on sale of U.S. Small Business Administration, or "SBA", loans due to
increased SBA volume, with only a slight increase in interest expense even
though deposits grew substantially.

CRITICAL ACCOUNTING POLICIES

      We have adopted various accounting policies that govern the application of
accounting principles generally accepted in the United States in the preparation
of our financial statements. Our significant accounting policies are described
in the footnotes to the audited consolidated financial statements included in
this report.

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

                                     - 11 -

<PAGE>

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

FINANCIAL CONDITION AT DECEMBER 31, 2004 AND 2003

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

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                          ----------------------
                                                             2004        2003
                                                          ----------   ---------
                                                          (DOLLARS IN THOUSANDS)
<S>                                                       <C>          <C>
Cash and due from banks.................................   $   5,390   $   3,373
Federal funds sold......................................      17,694       1,536
Securities..............................................      31,000      22,501
Loans, net..............................................     248,801     212,108
Premises and equipment..................................         378         496
Other assets............................................      10,672       7,442
                                                           ---------   ---------
                                                           $ 313,935   $ 247,456
                                                           =========   =========
Total deposits..........................................   $ 282,336   $ 222,051
Securities sold under repurchase agreements.............       1,820         353
Other liabilities.......................................       3,040       1,735
Stockholders' equity....................................      26,739      23,317
                                                           ---------   ---------
                                                           $ 313,935   $ 247,456
                                                           =========   =========
</TABLE>

      As of December 31, 2004, we had total assets of approximately $314
million, an increase of 27% over December 31, 2003. Total interest-earning
assets were approximately $297 million at December 31, 2004, or 96% of total
assets, as compared to 97% of total assets at December 31, 2003. Our primary
interest-earning assets at December 31, 2004, were loans, which made up 84% of
total interest-earning assets, as compared to 90% at December 31, 2003. Our loan
to deposit ratio was 89% at December 31, 2004, as compared to 97% at December
31, 2003. Deposit growth of approximately $60 million funded the increase in
federal funds sold of approximately $16 million, increase in investments of
approximately $8 million and loan growth of approximately $36 million.

      Our securities portfolio, consisting of U.S. Agency, State and municipal,
and mortgage-backed securities, amounted to approximately $31 million at
December 31, 2004. Net unrealized gains on securities amounted to approximately
$82,000 at December 31, 2004, as compared to a net unrealized gain of
approximately $157,000 at December 31, 2003. Management has not specifically
identified any securities for sale in future periods that, if so designated,
would require a charge to operations if the market value would not be reasonably
expected to recover prior to the time of sale.

      Approximately 77% of our loan portfolio is collateralized by real estate
located in our primary market area of Gwinnett County, Georgia and surrounding
counties. Our real estate construction portfolio consists of loans
collateralized by loans to build one- to four-family residential properties. We
generally require that loans collateralized by real estate not exceed 80%-85% of
the collateral value.

                                     - 12 -

<PAGE>

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

      The specific economic and credit risks associated with our loan portfolio,
especially the real estate portfolio, include, but are not limited to, a general
downturn in the economy which could affect unemployment rates in our market
area, general real estate market deterioration, interest rate fluctuations,
deteriorated or non-existing collateral, title defects, inaccurate appraisals,
financial deterioration of borrowers, fraud, and any violation of banking
protection laws. Construction lending can also present other specific risks to
the lender such as whether the builders can obtain financing for the
construction, whether the builders can sell the home to a buyer, and whether the
buyer can obtain permanent financing. Currently, real estate values and
employment trends in our market area are stable with no indications of a
significant downturn in the local economy.

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

LIQUIDITY AND CAPITAL RESOURCES

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

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

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

      At December 31, 2004, our capital ratios were considered adequate based on
regulatory minimum capital requirements. Our stockholders' equity increased by
approximately $3,422,000 due to net income in 2004 of approximately $3,323,000
and proceeds from the exercise of stock options of $145,000. These increases are
partially offset by a decrease in other comprehensive

                                     - 13 -

<PAGE>

income related to our securities of approximately $46,000. For regulatory
purposes, the net unrealized gains on securities available-for-sale are excluded
in the computation of the capital ratios.

      In the future, the primary source of funds available to us will be the
payment of dividends by the Bank. Banking regulations limit the amount of the
dividends that may be paid without prior approval of the Bank's regulatory
agency. Currently, the Bank could pay us a $1,687,500 dividend without
regulatory approval.

      The minimum capital requirements to be considered well capitalized under
prompt corrective action provisions and the actual capital ratios for the
holding company and the Bank as of December 31, 2004, are as follows:

<TABLE>
<CAPTION>
                                                   ACTUAL          REGULATORY
                                            --------------------     MINIMUM
                                            CONSOLIDATED   BANK    REQUIREMENT
                                            ------------   -----   -----------
<S>                                         <C>            <C>     <C>
Leverage capital ratios..................           8.75%   8.53%         5.00%
Risk-based capital ratios:
   Core capital..........................           9.93%   9.68%         6.00%
   Total capital.........................          11.18%  10.93%        10.00%
</TABLE>

      At December 31, 2004, we had no material commitments for capital
expenditures.

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

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

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

Off-Balance Sheet Arrangements

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

      Our exposure to credit loss in the event of nonperformance by the other
party to the financial instrument for commitments to extend credit and standby
letters of credit is represented by the contractual amount of those instruments.
We use the same credit policies in making commitments

                                     - 14 -

<PAGE>

and conditional obligations as we do for on-balance sheet instruments. A summary
of our commitments is as follows:

<TABLE>
<CAPTION>
                                                          DECEMBER 31,
                                                 -----------------------------
                                                     2004             2003
                                                 -------------   -------------
<S>                                              <C>             <C>
Letters of credit.............................   $   4,607,425   $   7,920,996
Commitments to extend credit..................      98,888,244      81,459,639
                                                 -------------   -------------
          Total...............................   $ 103,495,669   $  89,380,635
                                                 =============   =============
</TABLE>

      Letters of credit are conditional commitments that we issue to guarantee
the performance of a customer to a third party. Those letters of credit are
primarily issued to support public and private borrowing arrangements. The
credit risk involved in issuing letters of credit is essentially the same as
that involved in extending loans to customers. Collateral is required in
instances which we deem necessary. At December 31, 2004, we had arrangements
with four commercial banks for additional short-term advances of $25,200,000.

      Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract. Because
these commitments generally have fixed expiration dates and many will expire
without being drawn on, the total commitment amounts do not necessarily
represent future cash requirements. The amount of collateral obtained, if we
deem it necessary in connection with the extension of credit, is based on our
credit evaluation of the borrower. If needed, we have the ability on a
short-term basis to borrow funds and purchase Federal funds from other financial
institutions.

Effects of Inflation

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

      We do not engage in any transactions or have relationships or other
arrangements with an unconsolidated entity. These include special purpose and
similar entities or other off-balance sheet arrangements. We also do not trade
in energy, weather or other commodity-based contracts.

Related Party Transactions

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

                                     - 15 -

<PAGE>

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

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

<TABLE>
<CAPTION>
                                                    DECEMBER 31,
                                              -----------------------
                                                2004          2003
                                              ---------     ---------
                                               (DOLLARS IN THOUSANDS)
                                              -----------------------
<S>                                           <C>           <C>
Interest income..........................     $  16,849     $  13,042
Interest expense.........................         5,625         4,830
                                              ---------     ---------
Net interest income......................        11,224         8,212
Provision for loan losses................           798         1,033
Other income.............................         1,815         1,466
Other expenses...........................         7,209         5,675
                                              ---------     ---------
Pretax income............................         5,032         2,970
                                              ---------     ---------
Income taxes.............................         1,709           995
                                              ---------     ---------
          Net income.....................     $   3,323     $   1,975
                                              =========     =========
</TABLE>

Net Interest Income

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

      Our net yield on average interest-earning assets was 4.17% in 2004, as
compared to 3.85% in 2003. Average loans increased by approximately $49 million,
which accounted for the most significant change in the approximately $56 million
increase in total average interest-earning assets. Average interest-bearing
liabilities increased by approximately $50 million, with average
interest-bearing demand and time deposits accounting for the vast majority of
this increase. The rate earned on average interest-earning assets increased to
6.26% in 2004 from 6.11% in 2003. The rate paid on average interest-bearing
liabilities decreased to 2.47% in 2004 from 2.71% in 2003. The increase in net
yield was due primarily to the rising rate environment experienced during 2004.
As our rates continue to increase on average interest-earning assets, we expect
to see our net yield continue to increase.

Provision for Loan Losses

      The provision for loan losses was $798,000 in 2004, as compared to
$1,033,000 in 2003. The decrease in the amounts provided were due primarily to
the change in the inherent risk in the loan portfolio. We had $52,000 in net
charge-offs in 2004, as compared to $178,000 in net charge-offs in 2003. As of
December 31, 2004, we had $2,145,000 of nonperforming loans or assets, as
compared to $1,449,000 at December 31, 2003. Through our seventh full year of
operations, we have incurred no significant loan losses. Based on our evaluation
of the loan portfolio, we believe the allowance for loan losses to be adequate
to absorb losses on existing loans that may become

                                     - 16 -

<PAGE>

uncollectible. Our evaluation considers significant factors relative to the
credit risk and loss exposure in the loan portfolio, including past due and
classified loans, past experience, underlying collateral values, and current
economic conditions that may affect the borrower's ability to repay. The
allowance for loan losses is evaluated by segmenting the loan portfolio into
unclassified and classified loans. The unclassified loans are further segmented
by loan type with an allowance percentage applied to each type in order to
establish a general allowance for loan losses. The allowance percentage
determined is based on our experience specifically and the historical experience
of the banking industry generally. The classified loans, including impaired
loans, are analyzed individually in order to establish a specific allowance for
losses. The allowance for loan losses as a percentage of total loans at December
31, 2004 was 1.49%, as compared to 1.41% at December 31, 2003. The increase in
this percentage is primarily the result of having more of our own historical
experience on which to base our evaluation of the adequacy of the allowance for
loan losses.

Other Income

      Other income consists of service charges on deposit accounts, mortgage
loan origination fees, gain on sale of SBA loans and other miscellaneous revenue
and fees. Other income of approximately $1,815,000 increased by approximately
$349,000 in 2004 from approximately $1,466,000 in 2003. This net increase is due
to a decrease in service charges on deposit accounts of approximately $9,000, a
decrease in mortgage loan origination fees of approximately $84,000, an increase
in gains on sale of SBA loans of approximately $425,000, an increase in income
recognized on life insurance policies of approximately $30,000, and a decrease
in other miscellaneous revenues and fees of approximately $20,000.

Other Expenses

      Other expenses were approximately $7,209,000 in 2004, as compared to
approximately $5,675,000 in 2003, an increase of approximately $1,534,000.
Salaries and employee benefits increased by approximately $1,268,000 due to the
annual salary increase to all employees and the increase in commissions paid on
SBA premiums. Equipment and occupancy expenses decreased by approximately
$63,000, due primarily to decreased property taxes and decrease in depreciation.
Other operating expenses increased by approximately $330,000, due primarily to a
$31,000 increase in data processing costs, $83,000 increase in broker fees,
$47,000 increase in professional fees, $33,000 increase in business license,
$29,000 increase in business development and a $107,000 increase in other
operating costs. The overall increase in other expenses is primarily
attributable to the growth of the Bank.

Income Tax

      We have reported income tax expense for 2004 of $1,709,000, as compared to
$995,000 in 2003. Our effective income tax rate was 34% in 2004 and 33% in 2003.

Asset/Liability Management

      Our objective is to manage assets and liabilities to provide a
satisfactory, consistent level of profitability within the framework of
established cash, loan, investment, borrowing and capital policies. Specific
officers are charged with the responsibility for monitoring policies and
procedures that are designed to ensure acceptable composition of the
asset/liability mix. Our management's

                                     - 17 -

<PAGE>

overall philosophy is to support asset growth primarily through growth on core
deposits of all categories made by local individuals, partnerships and
corporations.

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

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

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

      At December 31, 2004, our cumulative one year interest rate-sensitivity
gap ratio was 1.11%. Our targeted ratio is .80% to 1.20% in this time horizon.
This indicates that our interest-earning assets will reprice during this period
at a rate faster than our interest-bearing liabilities.

      The following table sets forth the distribution of the repricing of our
interest-earning assets and interest-bearing liabilities as of December 31,
2004, the interest rate-sensitivity gap, the cumulative interest
rate-sensitivity gap, the interest rate-sensitivity gap ratio and the cumulative
interest rate-sensitivity gap ratio. The table also sets forth the time periods
in which interest-earning assets and interest-bearing liabilities will mature or
may reprice in accordance with their contractual

                                     - 18 -
<PAGE>

terms. However, the table does not necessarily indicate the impact of general
interest rate movements on the net interest margin as the repricing of various
categories of assets and liabilities is subject to competitive pressures and the
needs of our customers. In addition, various assets and liabilities indicated as
repricing within the same period may in fact, reprice at different times within
such period and at different rates.

<TABLE>
<CAPTION>
                                                                 AFTER THREE     AFTER ONE
                                                  WITHIN         MONTHS BUT       YEAR BUT
                                                  THREE          WITHIN ONE        WITHIN        AFTER FIVE
                                                  MONTHS            YEAR         FIVE YEARS         YEARS          TOTAL
                                                ----------       -----------     ----------      ----------      ----------
                                                                          (DOLLARS IN THOUSANDS)
<S>                                             <C>              <C>             <C>             <C>             <C>
Interest-earning assets:
   Federal funds sold.....................      $   17,694       $        0      $        0      $        0      $   17,694
   Securities.............................               0                0          11,334          19,666          31,000
   Loans..................................         208,525           16,187          24,206           3,658         252,576
                                                ----------       ----------      ----------      ----------      ----------
     Total................................         226,219           16,187          35,540          23,324         301,270
                                                ----------       ----------      ----------      ----------      ----------
Interest-bearing liabilities:
   Interest-bearing demand deposits.......          35,443                0               0               0          35,443
   Savings................................           7,995                0               0               0           7,955
   Certificates, less than $100,000.......          19,659           99,783          16,073               0         135,515
   Certificates, $100,000 and over........          13,145           41,180          25,531               0          79,856
   Repurchase agreements..................           1,819                0               0               0           1,819
                                                ----------       ----------      ----------      ----------      ----------
     Total................................          78,021          140,963          41,604               0         260,588
                                                ----------       ----------      ----------      ----------      ----------
   Interest rate sensitivity gap..........      $  148,198       $ (124,776)     $   (6,064)     $   23,324      $   40,682
                                                ==========       ==========      ==========      ==========      ==========
   Cumulative interest rate sensitivity
      gap.................................      $  148,198       $   23,422      $   17,358      $   40,682
                                                ==========       ==========      ==========      ==========
   Interest rate sensitivity gap ratio....            2.90              .11             .85              .0
   Cumulative interest rate sensitivity
      gap ratio...........................            2.90             1.11            1.07            1.16
</TABLE>

SELECTED FINANCIAL INFORMATION AND STATISTICAL DATA

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

                                     - 19 -
<PAGE>

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

AVERAGE BALANCES

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

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                        ------------------------------
                                                           2004               2003
                                                        -----------        -----------
                                                            (DOLLARS IN THOUSANDS)
<S>                                                     <C>                <C>
Cash and due from banks........................         $     4,049        $     3,211
Securities.....................................              26,572             19,254
Securities valuation account...................                  27                118
Federal funds sold.............................               8,373              8,528
Loans (2)......................................             234,025            185,261
Allowance for loan losses......................              (3,389)            (2,581)
Other assets...................................               9,697              7,430
                                                        -----------        -----------
         Total.................................         $   279,354        $   221,221
                                                        ===========        ===========
Total interest-earning assets..................         $   268,970        $   213,043
                                                        ===========        ===========
Deposits:
     Noninterest-bearing demand................         $    25,060        $    19,274
     Interest-bearing demand...................              36,156             27,272
     Savings...................................               8,668              9,562
     Time......................................             182,009            140,247
                                                        -----------        -----------
         Total deposits........................         $   251,893        $   196,355
Repurchase agreements..........................                 910                598
Other liabilities..............................               2,707              1,894
                                                        -----------        -----------
         Total liabilities.....................             255,510            198,847
Stockholders' equity...........................              23,844             22,374
                                                        -----------        -----------
         Total.................................         $   279,354        $   221,221
                                                        -----------        -----------
Total interest-bearing liabilities.............         $   227,743        $   177,679
                                                        ===========        ===========
</TABLE>

(1)   For each category, average balances were determined using the daily
      average balances during the year.

(2)   The average balance of nonaccrual loans included in average loans for 2004
      and 2003 was $1,602,000 and $149,000, respectively.

INTEREST INCOME AND INTEREST EXPENSE

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

                                     - 20 -
<PAGE>

<TABLE>
<CAPTION>
                                                                       YEARS ENDED DECEMBER 31,
                                                        -------------------------------------------------------
                                                                    2004                        2003
                                                        --------------------------   --------------------------
                                                         INTEREST     AVERAGE RATE    INTEREST     AVERAGE RATE
<S>                                                     <C>           <C>            <C>           <C>
INTEREST INCOME:
   Interest and fees on loans (1).................      $    15,633       6.68%      $    12,224        6.60%
   Interest on securities.........................            1,103       4.15               732        3.80
   Interest on federal funds sold.................              113       1.35                86        1.01
                                                        -----------                  -----------
   Total interest income..........................           16,849       6.26            13,042        6.12
                                                        -----------                  -----------
INTEREST EXPENSE:
   Interest on interest-bearing demand deposits                 536       1.48               371        1.36
   Interest on savings deposits...................              130       1.50               144        1.51
   Interest on time deposits......................            4,944       2.72             4,304        3.07
   Interest on repurchase agreements..............               15       1.65                11        1.84
                                                        -----------                  -----------
   Total interest expense.........................            5,625       2.47             4,830        2.71
                                                        -----------                  -----------
Net interest income...............................      $    11,224                  $     8,212
                                                        ===========                  ===========
   Net interest spread............................                        3.79%                         3.41%
   Net yield on average interest-earning assets...                        4.17%                         3.85%
</TABLE>

(1)   Interest and fees on loans includes $2,590,000 and $2,107,000 of loan fee
      income for the years ended December 31, 2004 and 2003, respectively. There
      was no interest income recognized on nonaccrual loans during 2004 or 2003.

RATE AND VOLUME ANALYSIS

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

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

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

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

                                     - 21 -
<PAGE>

<TABLE>
<CAPTION>
                                                               YEARS ENDED DECEMBER 31,
                                                                     2004 VS. 2003
                                                                    CHANGES DUE TO:
                                                           --------------------------------
                                                            RATE       VOLUME      TOTAL(1)
                                                           -------     -------     --------
                                                                (DOLLARS IN THOUSANDS)
<S>                                                        <C>         <C>         <C>
Increase (decrease) in:
    Income from interest-earning assets:
    Interest and fees on loans......................       $   153     $ 3,256     $  3,409
    Interest on securities..........................            72         299          371
    Interest on federal funds sold..................            29          (2)          27
                                                           -------     -------     --------
        Total interest income.......................           254       3,553        3,807
                                                           -------     -------     --------
    Expense from interest-bearing liabilities:
    Interest on interest-bearing demand deposits....            36         129          165
    Interest on savings deposits....................            (1)        (13)         (14)
    Interest on time deposits.......................          (535)      1,175          640
    Interest on repurchase agreements...............            15         (11)           4
                                                           -------     -------     --------
        Total interest expense......................          (485)      1,280          795
                                                           -------     -------     --------
                  Net interest income...............       $   739     $ 2,273     $  3,012
                                                           =======     =======     ========
</TABLE>

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

                              INVESTMENT PORTFOLIO

TYPES OF INVESTMENTS

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

<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                   -----------------------------------------
                                                        2004                       2003
                                                   ---------------           ---------------
                                                            (DOLLARS IN THOUSANDS)
<S>                                                <C>                       <C>
Mortgage-backed securities................         $         4,673           $         4,446
U.S. Government agencies..................                  20,715                    12,430
State, County, & Municipals...............                   5,612                     5,625
                                                   ---------------           ---------------
         Total............................         $        31,000           $        22,501
                                                   ===============           ===============
</TABLE>

MATURITIES

      The amounts of securities, including the weighted average yield in each
category as of December 31, 2004, are shown in the following table according to
contractual maturity classifications one year or less, after one through five
years, after five through ten years and after ten years.

                                     - 22 -
<PAGE>

<TABLE>
<CAPTION>
                                                             AFTER ONE THROUGH              AFTER FIVE THROUGH
                                                                 FIVE YEARS                       TEN YEARS
                                                        ---------------------------     ---------------------------
                                                           AMOUNT         YIELD (1)       AMOUNT          YIELD (1)
                                                        ----------        ---------     ----------        ---------
                                                                           (DOLLARS IN THOUSANDS)
<S>                                                     <C>               <C>           <C>               <C>
Mortgage-backed securities........................      $    3,606          4.55%       $    1,067          4.45%
U.S. Government agencies..........................           6,436          3.79%           14,279          4.57%
State, County, & Municipal........................             255          4.77%            4,916          5.00%
                                                        ----------          ----        ----------          ----
           Total..................................      $   10,267          4.08%       $   20,262          4.67%
                                                        ==========          ====        ==========          ====
</TABLE>

<TABLE>
<CAPTION>
                                                             AFTER TEN YEARS                       TOTAL
                                                          AMOUNT          YIELD (1)       AMOUNT          YIELD (1)
                                                        ----------        ---------     ----------        ---------
<S>                                                     <C>               <C>           <C>               <C>
Mortgage-backed securities........................      $        0          0.00%       $    4,673          4.52%
U.S. Government agencies..........................               0          0.00%           20,715          4.33%
State, County, & Municipal........................             471          4.99%            5,612          4.97%
                                                        ----------          ----        ----------          ----
           Total..................................      $      471          4.99%       $   31,000          4.47%
                                                        ==========          ====        ==========          ====
</TABLE>

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

                                 LOAN PORTFOLIO

TYPES OF LOANS

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

<TABLE>
<CAPTION>
                                                     DECEMBER 31,
                                               ------------------------
                                                  2004           2003
                                               ---------      ---------
                                                (DOLLARS IN THOUSANDS)
<S>                                            <C>            <C>
Commercial..................................   $  49,989      $  49,921
Construction loans secured by real estate...     137,329        111,931
Commercial loans secured by real estate.....      57,786         47,510
Consumer installment loans and other........       7,472          5,775
                                               ---------      ---------
          Total............................      252,576        215,137
Less allowance for loan losses.............       (3,775)        (3,029)
                                               ---------      ---------
          Net loans........................    $ 248,801      $ 212,108
                                               =========      =========
</TABLE>

MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST RATES

      Total loans as of December 31, 2004, are shown in the following table
according to contractual maturity classifications one year or less, after one
year through five years, and after five years.

                                     - 23 -
<PAGE>

<TABLE>
<CAPTION>
                                                                                     (DOLLARS IN THOUSANDS)
<S>                                                                                  <C>
Commercial
     One year or less...........................................................         $        42,663
     After one through five years...............................................                   4,783
     After five years...........................................................                   2,543
                                                                                         ---------------
             Total commercial...................................................                  49,989
                                                                                         ---------------
Construction and other real estate loans
     One year or less...........................................................                 175,644
     After one through five years...............................................                  18,426
     After five years...........................................................                   1,045
                                                                                         ---------------
             Total construction.................................................                 195,115
                                                                                         ---------------
Other
     One year or less...........................................................                   6,404
     After one through five years...............................................                     997
     After five years...........................................................                      71
                                                                                         ---------------
             Total other........................................................                   7,472
                                                                                         ---------------
                            Total...............................................         $       252,576
                                                                                         ===============
</TABLE>

      The following table summarizes loans at December 31, 2004, with the due
dates after one year that have predetermined and floating or adjustable interest
rates.

<TABLE>
<CAPTION>
                                                                                     (DOLLARS IN THOUSANDS)
<S>                                                                                  <C>
Predetermined interest rates....................................................         $        27,865
Floating or adjustable interest rates...........................................                  43,710
                                                                                         ---------------
             Total..............................................................         $        71,575
                                                                                         ===============
</TABLE>

RISK ELEMENTS

      Information with respect to nonaccrual, past due, and restructured loans
at December 31, 2004 and 2003 is as follows:

<TABLE>
<CAPTION>
                                                                                       DECEMBER 31,
                                                                                ------------------------
                                                                                  2004           2003
                                                                                ----------     ---------
                                                                                 (DOLLARS IN THOUSANDS)
<S>                                                                             <C>            <C>
Nonaccrual loans............................................................    $    2,145     $   1,449
Loans contractually past due ninety days or more as to interest
        or principal payments and still accruing............................            34             0
Restructured loans..........................................................             0             0
Potential problem loans.....................................................             0             0
Interest income that would have been recorded on nonaccrual
       and restructured loans under original terms..........................            64            17
Interest income that was recorded on nonaccrual and restructured loans......             0             0
</TABLE>

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

      It is our policy to discontinue the accrual of interest income when, in
the opinion of management, collection of interest becomes doubtful. This status
is accorded interest when (1) there is a significant deterioration in the
financial condition of the borrower and full repayment of principal

                                     - 24 -

<PAGE>

and interest is not expected and (2) the principal or interest is more than 90
days past due, unless the loan is both well-secured and in the process of
collection.

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

                         SUMMARY OF LOAN LOSS EXPERIENCE

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

<TABLE>
<CAPTION>
                                                                                       DECEMBER 31,
                                                                                 -----------------------
                                                                                   2004          2003
                                                                                 ---------     ---------
                                                                                  (DOLLARS IN THOUSANDS)
<S>                                                                              <C>           <C>
Average amount of loans outstanding..........................................    $ 234,025     $ 185,261
                                                                                 =========     =========
Balance of allowance for loan losses at beginning of period..................    $   3,029     $   2,174
                                                                                 ---------     ---------
Loans charged off:
   Commercial and financial..................................................           28           178
   Real estate mortgage......................................................           24             0
   Installment...............................................................           12             0
                                                                                 ---------     ---------
         Total...............................................................           64           178
                                                                                 ---------     ---------
Loans recovered:
   Commercial and financial..................................................           12             0
   Real estate mortgage......................................................            0             0
   Installment...............................................................            0             0
                                                                                 ---------     ---------
Net charge-offs..............................................................           52           178
                                                                                 ---------     ---------
Additions to allowance charged to operating expense during year..............          798         1,033
                                                                                 ---------     ---------
Balance of allowance for loan losses at end of year..........................    $   3,775     $   3,029
                                                                                 =========     =========
Ratio of net loans charged off during year to average loans outstanding......          .02%          .01%
                                                                                 =========     =========
</TABLE>

ALLOWANCE FOR LOAN LOSSES

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

      As of December 31, 2004 and 2003, the allocation of our allowance for loan
losses does not specifically correspond to the categories of loans listed below.
Based on our best estimate, the allocation of the allowance for loan losses to
types of loans, as of the indicated dates, is as follows:

                                     - 25 -

<PAGE>

<TABLE>
<CAPTION>
                                                                           DECEMBER 31,
                                                  -----------------------------------------------------------------
                                                             2004                                 2003
                                                  ----------------------------        -----------------------------
                                                                   PERCENT OF                           PERCENT OF
                                                                 LOANS IN EACH                        LOANS IN EACH
                                                                  CATEGORY TO                          CATEGORY TO
                                                   AMOUNT         TOTAL LOANS          AMOUNT          TOTAL LOANS
                                                  --------       -------------        --------        -------------
                                                                      (DOLLARS IN THOUSANDS)
<S>                                               <C>            <C>                  <C>             <C>
Commercial..................................      $  1,030                  27%       $    325                   23%
Construction loans secured by real estate...         1,373                  36           1,679                   52
Commercial loans secured by real estate.....         1,297                  34             967                   22
Consumer installment loans and other........            75                   3              58                    3
                                                  --------       -------------        --------        -------------
                                                  $  3,775                 100%       $  3,029                  100%
                                                  ========       =============        ========        =============
</TABLE>

                                    DEPOSITS

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

<TABLE>
<CAPTION>
                                                                         YEARS ENDED DECEMBER 31,
                                                          ----------------------------------------------------------
                                                                   2004                             2003
                                                          -------------------------       --------------------------
                                                           AMOUNT        PERCENTAGE        AMOUNT         PERCENTAGE
                                                          --------       ----------       ---------       ----------
                                                                           (Dollars in Thousands)
<S>                                                       <C>            <C>              <C>             <C>
Noninterest-bearing demand deposits................       $ 23,440              .00%         19,274              .00%
Interest-bearing demand deposits...................         36,156             1.48          27,272             1.36
Savings deposits...................................          8,668             1.50           9,562             1.51
Time deposits......................................        182,009             2.72         140,247             3.07
                                                          --------                        ---------
         Total.....................................       $250,273                        $ 196,355
                                                          ========                        =========
</TABLE>

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

      The amounts of time certificates of deposit issued in amounts of $100,000
or more as of December 31, 2004, are shown below by category, which is based on
time remaining until maturity of three months or less, over three through six
months, over six through twelve months, and over twelve months.

<TABLE>
<CAPTION>
                                                                       (DOLLARS IN THOUSANDS)
                                                                       ----------------------
<S>                                                                    <C>
Three months or less..............................................           $     13,145
Over three months through six months..............................                 19,701
Over six months through twelve months.............................                 21,478
Over twelve months................................................                 25,431
                                                                             ------------
        Total.....................................................           $     79,755
                                                                             ============
</TABLE>

                                     - 26 -

<PAGE>

                           RETURN ON ASSETS AND EQUITY

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

<TABLE>
<CAPTION>
                                                                    YEARS ENDED DECEMBER 31,
                                                                    ------------------------
                                                                     2004            2003
                                                                    -----          ---------
<S>                                                                 <C>            <C>
Return on assets (1)......................................           1.19%              0.89%
Return on equity (2)......................................          13.94               8.83
Dividend payout ratio (3).................................             --                 --
Equity to assets ratio (4)................................           8.54              10.11
</TABLE>

(1)   Net income divided by average total assets.

(2)   Net income divided by average equity.

(3)   Dividends declared per share of common stock divided by net income per
      share.

(4)   Average common equity divided by average total assets.

ITEM  7. FINANCIAL STATEMENTS

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

                          INDEX TO FINANCIAL STATEMENTS

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

Consolidated Balance Sheets as of December 31, 2004 and December 31, 2003......................................        F-2

Consolidated Statements of Income for the Years Ended December 31, 2004 and December 31, 2003..................        F-3

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2004 and December 31, 2003....        F-4

Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2004 and December 31, 2003....        F-5

Consolidated Statements of Cash Flows for the Years Ended December 31, 2004 and December 31, 2003..............        F-6

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

ITEM  8A. CONTROLS AND PROCEDURES

      As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of our Chief
Executive Officer and the Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures in accordance
with Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the

                                     - 27 -

<PAGE>

"Exchange Act"). Based on this evaluation, our Chief Executive and Chief
Financial Officer concluded that our disclosure controls and procedures are
effective for gathering, analyzing and disclosing the information that we are
required to disclose in the reports we file under the Exchange Act, within the
time periods specified in the SEC's rules and forms. Our Chief Executive Officer
and Chief Financial Officer also concluded that our disclosure controls and
procedures are effective in timely alerting them to material information
relating to our company that is required to be included in our periodic SEC
filings. We are in the process of further reviewing and documenting our
disclosure controls and procedures, including our internal controls and
procedures for financial reporting, and may from time to time make changes
designed to enhance their effectiveness and to ensure that our systems evolve
with our business.

      There have been no significant changes in our internal control over
financial reporting that occurred during the last fiscal quarter of 2004 that
have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.

                                    PART III

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

      The information set forth under the captions "Election of Directors" and
"Executive Officers" in the Proxy Statement used in connection with our 2005
Annual Shareholders' meeting is incorporated herein by reference.

ITEM 10. EXECUTIVE COMPENSATION

      The information set forth under the caption "Executive Compensation" in
the Proxy Statement used in connection with our 2005 Annual Shareholders'
meeting is incorporated herein by reference.

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

      The information set forth under the captions "Security Ownership of
Principal Shareholders and Management" and "Equity Compensation Plan
Information" in the Proxy Statement used in connection with our 2005 Annual
Shareholders' meeting is incorporated herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The information set forth under the caption "Certain Relationships and
Related Transactions" in the Proxy Statement used in connection with our 2005
Annual Shareholders' meeting is incorporated herein by reference.

ITEM 13. EXHIBITS

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

                                     - 28 -
<PAGE>

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

4.1               Specimen Common Stock Certificate (filed as Exhibit 4.2 to the
                  Registration Statement on Form SB-2, as amended (Registration
                  No. 333-97087)).

10.1              1998 Stock Option Plan (filed as Exhibit 99 to the
                  Registration Statement on Form S-8 Registration Statement
                  filed July 25, 2002 (Registration No. 333-97087)).

10.2              Amendment to 1998 Stock Option Plan (filed as Appendix A to
                  the Company's definitive proxy statement filed on April 30,
                  2004).

10.3              Director Deferred Stock Unit Plan (filed as Exhibit 10.2 to
                  the Annual Report on Form 10-KSB for the year ended December
                  31, 2002).

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

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

14.1              Code of Ethics (filed as Exhibit 14.1 to the Annual Report on
                  Form 10-KSB for the year ended December 31, 2003).

21.1              Subsidiaries of the Company.

23.1              Consent of Mauldin & Jenkins, LLC.

31.1              Certification of Chief Executive Officer Pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002.

31.2              Certification of Chief Financial Officer Pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002.

32.1              Certification of Chief Executive Officer and Chief Financial
                  Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002.
</TABLE>

(b)   Reports on Form 8-K filed in the fourth quarter of 2004: None.

                                     - 29 -

<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

      The information set forth under the caption "Independent Auditors" in the
Proxy Statement used in connection with our 2005 Annual Shareholders' meeting is
incorporated herein by reference.

                                     - 30 -

<PAGE>

                                   SIGNATURES

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

                                                GBC BANCORP, INC.

Date:  March 21, 2005                           By: /s/ Larry D. Key
                                                    ----------------------------
                                                    Larry D. Key, President and
                                                    Chief Executive Officer

         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant in the capacities on March
21, 2005.

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

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


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

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

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

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

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

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

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

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

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

                                     - 31 -

<PAGE>

                                GBC BANCORP, INC.
                                 AND SUBSIDIARY

                          CONSOLIDATED FINANCIAL REPORT

                                DECEMBER 31, 2004

<PAGE>

                                GBC BANCORP, INC.
                                 AND SUBSIDIARY

                          CONSOLIDATED FINANCIAL REPORT
                                DECEMBER 31, 2004

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                       PAGE
                                                                       -----
<S>                                                                    <C>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.........        F-1

FINANCIAL STATEMENTS

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

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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, 2004 and 2003, and the related
consolidated statements of income, comprehensive income, stockholders' equity,
and cash flows for each of the two years in the period ended December 31, 2004.
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 the standards of the
Public Company Accounting Oversight Board (United States). 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, 2004 and 2003, and the results
of their operations and their cash flows for each of the two years in the period
ended December 31, 2004, in conformity with accounting principles generally
accepted in the United States of America.

                                          /s/ MAULDIN & JENKINS, LLC

Atlanta, Georgia
February 11, 2005

                                      F-1
<PAGE>

                                GBC BANCORP, INC.
                                 AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                                          2004                      2003
                                                                                  --------------------     --------------------
<S>                                                                               <C>                      <C>
                                     ASSETS
Cash and due from banks                                                           $          5,390,288     $          3,373,507
Federal funds sold                                                                          17,694,000                1,536,000
Securities available for sale                                                               31,000,002               22,501,224

Loans, net of unearned income                                                              252,576,451              215,137,455
Less allowance for loan losses                                                               3,775,167                3,029,508
                                                                                  --------------------     --------------------
          Loans, net                                                                       248,801,284              212,107,947

Premises and equipment, net                                                                    377,698                  495,617
Cash surrender value of life insurance                                                       5,531,553                4,671,616
Other real estate owned                                                                      1,194,430                        -
Other assets                                                                                 3,945,566                2,770,365
                                                                                  --------------------     --------------------

          TOTAL ASSETS                                                            $        313,934,821     $        247,456,276
                                                                                  ====================     ====================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits

    Noninterest-bearing                                                           $         23,566,177     $         24,241,631
    Interest-bearing                                                                       258,769,949              197,809,410
                                                                                  --------------------     --------------------
           Total deposits                                                                  282,336,126              222,051,041
    Securities sold under repurchase agreements                                              1,819,469                  352,799
    Other liabilities                                                                        3,040,151                1,735,358
                                                                                  --------------------     --------------------
          TOTAL LIABILITIES                                                                287,195,746              224,139,198
                                                                                  --------------------     --------------------

Commitments and contingencies

Stockholders' equity

    Common stock, par value $1; 3,000,000 shares authorized;
       1,726,608 and 1,712,408 issued and outstanding, respectively                          1,726,608                1,712,408
    Surplus                                                                                 18,214,005               18,083,004
    Retained earnings                                                                        6,747,782                3,424,631
    Accumulated other comprehensive income                                                      50,680                   97,035
                                                                                  --------------------     --------------------

          TOTAL STOCKHOLDERS' EQUITY                                                        26,739,075               23,317,078
                                                                                  --------------------     --------------------

          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                              $        313,934,821     $        247,456,276
                                                                                  ====================     ====================
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                      F-2
<PAGE>

                                GBC BANCORP, INC.
                                 AND SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF INCOME
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                              2004                2003
                                                                          -------------       -------------
<S>                                                                       <C>                 <C>
INTEREST INCOME
    Loans, including fees                                                 $  15,632,590       $  12,223,593
    Securities:
      Taxable                                                                   908,496             595,016
      Nontaxable                                                                194,575             136,876
    Federal funds sold                                                          113,090              86,534
                                                                          -------------       -------------
          TOTAL INTEREST INCOME                                              16,848,751          13,042,019
                                                                          -------------       -------------
INTEREST EXPENSE
      Deposits                                                                5,610,440           4,819,010
      Securities sold under repurchase agreements                                14,733              11,391
                                                                          -------------       -------------
          TOTAL INTEREST EXPENSE                                              5,625,173           4,830,401
                                                                          -------------       -------------
          NET INTEREST INCOME                                                11,223,578           8,211,618
PROVISION FOR LOAN LOSSES                                                       797,824           1,033,118
                                                                          -------------       -------------
          NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                10,425,754           7,178,500
                                                                          -------------       -------------
OTHER INCOME
    Service charges on deposit accounts                                         183,843             192,553
    Gain (Loss) on sale of securities available for sale                         20,254              (2,098)
    Gain on sale of loans                                                     1,182,888             758,178
    Other operating income                                                      428,457             517,162
                                                                          -------------       -------------
          TOTAL OTHER INCOME                                                  1,815,442           1,465,795
                                                                          -------------       -------------
OTHER EXPENSES
    Salaries and employee benefits                                            4,691,778           3,423,968
    Equipment and occupancy expenses                                            860,683             923,536
    Other operating expenses                                                  1,656,960           1,327,007
                                                                          -------------       -------------
          TOTAL OTHER EXPENSES                                                7,209,421           5,674,511
                                                                          -------------       -------------
          INCOME BEFORE INCOME TAXES                                          5,031,775           2,969,784

INCOME TAX EXPENSE                                                            1,708,624             994,843
                                                                          -------------       -------------
                    NET INCOME                                            $   3,323,151       $   1,974,941
                                                                          =============       =============
BASIC EARNINGS PER SHARE                                                  $        1.93       $        1.15
                                                                          =============       =============
DILUTED EARNINGS PER SHARE                                                $        1.84       $        1.11
                                                                          =============       =============
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                      F-3

<PAGE>

                                GBC BANCORP, INC.
                                 AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                              2004                2003
                                                                          -------------       -------------
<S>                                                                       <C>                 <C>
NET INCOME                                                                $   3,323,151       $   1,974,941

OTHER COMPREHENSIVE LOSS:

        Unrealized holding losses on securities
            available-for-sale arising during period, net of
            tax benefits of $20,715 and $49,109, respectively                   (33,797)           (104,437)

        Reclassification adjustment for (gains) losses realized in net
            income, net of tax (benefits) of $7,696 and $(797)                  (12,558)              1,301
                                                                          -------------       -------------
    OTHER COMPREHENSIVE LOSSES                                                  (46,355)           (103,136)
                                                                          -------------       -------------
COMPREHENSIVE INCOME                                                      $   3,276,796       $   1,871,805
                                                                          =============       =============
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                      F-4

<PAGE>

                                GBC BANCORP, INC.
                                 AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                    COMMON STOCK
                                            -----------------------------
                                               SHARES         PAR VALUE
                                            ------------    -------------
<S>                                         <C>             <C>
BALANCE, DECEMBER 31, 2002                     1,711,083    $   1,711,083
    Net income                                         -                -
    Stock options exercised                        1,325            1,325
    Other comprehensive loss                           -                -
                                            ------------    -------------
BALANCE, DECEMBER 31, 2003                     1,712,408        1,712,408
    Net income                                         -                -
    Stock options exercised                       14,200           14,200
    Other comprehensive loss                           -                -
                                            ------------    -------------
BALANCE, DECEMBER 31, 2004                     1,726,608    $   1,726,608
                                            ============    =============
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                      F-5
<PAGE>

                                GBC BANCORP, INC.
                                 AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                                2004           2003
                                                                            ------------   ------------
<S>                                                                         <C>            <C>
OPERATING ACTIVITIES
    Net income                                                              $  3,323,151   $  1,974,941
    Adjustments to reconcile net income to net cash
      provided by operating activities:
      Depreciation                                                               189,869        255,950
      Deferred income taxes                                                     (623,674)      (513,540)
      (Gain) loss on sale of other real estate                                    24,190         (2,458)
      Gain on sale of loans                                                   (1,182,888)      (758,178)
      (Gain) loss on sale of securities available for sale                       (20,254)         2,098
      Provision for loan losses                                                  797,824      1,033,118
      Increase  in interest receivable                                          (505,665)      (105,135)
      Increase (decrease) in interest payable                                     41,924        (76,684)
      Increase in income taxes payable                                            20,690         23,874
      Net other operating activities                                           1,133,538        248,817
                                                                            ------------   ------------

          Net cash provided by operating activities                            3,198,705      2,082,803
                                                                            ------------   ------------

INVESTING ACTIVITIES
    Purchases of securities available for sale                               (15,887,002)   (15,901,589)
    Proceeds from maturities of securities available for sale                  5,709,976     12,425,679
    Proceeds from sale of  securities available for sale                       1,623,736      1,103,511
    Net (increase) decrease in federal funds sold                            (16,158,000)     9,291,000
    Net increase in loans                                                    (37,502,703)   (54,851,746)
    Purchase of premises and equipment                                           (71,950)      (126,019)
    Proceeds from sale of other real estate                                       67,001        353,000
    Purchase of life insurance policies                                         (859,937)    (1,458,000)
                                                                            ------------   ------------

          Net cash used in investing activities                              (63,078,879)   (49,164,164)
                                                                            ------------   ------------

FINANCING ACTIVITIES
    Net increase in deposits                                                  60,285,085     47,267,588
    Net increase (decrease) in securities sold under repurchase agreements     1,466,670       (188,415)
    Net proceeds from exercise of stock options                                  145,200         15,350
                                                                            ------------   ------------

          Net cash provided by financing activities                           61,896,955     47,094,523
                                                                            ------------   ------------

Net increase in cash and due from banks                                        2,016,781         13,162

Cash and due from banks at beginning of year                                   3,373,507      3,360,345
                                                                            ------------   ------------

Cash and due from banks at end of year                                      $  5,390,288   $  3,373,507
                                                                            ============   ============

SUPPLEMENTAL DISCLOSURES
    Cash paid for:
          Interest                                                          $  5,583,249   $  4,907,085

          Income taxes                                                      $  2,316,608   $  1,484,509

NONCASH TRANSACTION
    Principal balances of loans transferred to other real estate owned      $  1,194,430   $    892,404
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                      F-6
<PAGE>

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

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          NATURE OF OPERATIONS

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

          BASIS OF PRESENTATION AND ACCOUNTING ESTIMATES

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

            In preparing the consolidated financial statements in accordance
            with accounting principles generally accepted in the United States
            of America, management is required to make estimates and assumptions
            that affect the reported amounts of assets and liabilities and the
            disclosure of contingent assets and liabilities as of the balance
            sheet date and the reported amounts of revenues and expenses during
            the reporting period. Actual results could differ from those
            estimates.

            Material estimates that are particularly susceptible to significant
            change relate to the determination of the allowance for loan losses,
            the valuation of foreclosed real estate, and contingent assets and
            liabilities. The determination of the adequacy of the allowance for
            loan losses is based on estimates that are susceptible to
            significant changes in the economic environment and market
            conditions. In connection with the determination of the estimated
            losses on loans and the valuation of foreclosed real estate,
            management obtains independent appraisals for significant
            collateral.

          CASH, DUE FROM BANKS AND CASH FLOWS

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

            The Bank is required to maintain reserve balances in cash or on
            deposit with the Federal Reserve Bank, based on a percentage of
            deposits. The total of those reserve balances was approximately
            $183,000 and $224,000 at December 31, 2004 and 2003.

          SECURITIES SOLD UNDER REPURCHASE AGREEMENTS

            Securities sold under repurchase agreements are generally accounted
            for as collateralized financing transactions. They are recorded at
            the amount the security was sold plus accrued interest. The Company
            monitors its exposure with respect to securities sold under
            repurchase agreements, and request for the return of excess
            securities held by the counterparty is made when deemed necessary.

                                      F-7
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          SECURITIES

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

            The amortization of premiums and accretion of discounts are
            recognized in interest income using the interest method over the
            life of the securities. Realized gains and losses, determined on the
            basis of the cost of specific securities sold, are included in
            earnings on the settlement date. Declines in the fair value of
            securities below their cost that are deemed to be other than
            temporary are reflected in earnings as realized losses. In
            estimating other-than-temporary impairment losses, management
            considers (1) the length of time and the extent to which the fair
            value has been less than cost, (2) the financial condition and
            near-term prospects of the issuer, and (3) the intent and ability of
            the Company to retain its investment in the issuer for a period of
            time sufficient to allow for any anticipated recovery in fair value.

          LOANS

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

            The accrual of interest on loans is discontinued when, in
            management's opinion, the borrower may be unable to meet payments as
            they become due, unless the loan is well-secured. All interest
            accrued but not collected for loans that are placed on nonaccrual or
            charged off is reversed against interest income, unless management
            believes that the accrued interest is recoverable through the
            liquidation of collateral. Interest income on nonaccrual loans is
            recognized on the cash-basis or cost-recovery method, until the
            loans are returned to accrual status. Loans are returned to accrual
            status when all the principal and interest amounts are brought
            current and future payments are reasonably assured.

            A loan is considered impaired when it is probable, based on current
            information and events, the Company will be unable to collect all
            principal and interest payments due in accordance with the
            contractual terms of the loan agreement. Impaired loans are measured
            by either the present value of expected future cash flows discounted
            at the loan's effective interest rate, the loan's obtainable market
            price, or the fair value of the collateral if the loan is collateral
            dependent. The amount of impairment, if any, and any subsequent
            changes are included in the allowance for loan losses. Interest on
            accruing impaired loans is recognized as long as such loans do not
            meet the criteria for nonaccrual status.

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

          ALLOWANCE FOR LOAN LOSSES

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

                                      F-8
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          ALLOWANCE FOR LOAN LOSSES (CONTINUED)

            The allowance is an amount that management believes will be adequate
            to absorb estimated losses relating to specifically identified
            loans, as well as probable credit losses inherent in the balance of
            the loan portfolio, based on an evaluation of the collectibility of
            existing loans and prior loss experience. This evaluation also takes
            into consideration such factors as changes in the nature and volume
            of the loan portfolio, overall portfolio quality, review of specific
            problem loans, concentrations and current economic conditions that
            may affect the borrower's ability to pay. This evaluation does not
            include the effects of expected losses on specific loans or groups
            of loans that are related to future events or expected changes in
            economic conditions. While management uses the best information
            available to make its evaluation, future adjustments to the
            allowance may be necessary if there are significant changes in
            economic conditions. In addition, regulatory agencies, as an
            integral part of their examination process, periodically review the
            Bank's allowance for loan losses, and may require the Bank to make
            additions to the allowance based on their judgment about information
            available to them at the time of their examinations.

            The allowance consists of specific, general and unallocated
            components. The specific component relates to loans that are
            classified as either doubtful, substandard or special mention. For
            such loans that are also classified as impaired, an allowance is
            established when the discounted cash flows (or collateral value or
            observable market price) of the impaired loan is lower than the
            carrying value of that loan. The general component covers
            non-classified loans and is based on historical loss experience
            adjusted for qualitative factors. An unallocated component is
            maintained to cover uncertainties that could affect management's
            estimate of probable losses. The unallocated component of the
            allowance reflects the margin of imprecision inherent in the
            underlying assumptions used in the methodologies for estimating
            specific and general losses in the portfolio.

          PREMISES AND EQUIPMENT

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

          OTHER REAL ESTATE OWNED

            Other real estate owned represents properties acquired through or in
            lieu of foreclosure and is initially recorded at the lower of cost
            or fair value less estimated costs to sell. Any write-down to fair
            value at the time of transfer to other real estate owned is charged
            to the allowance for loan losses. Costs of improvements are
            capitalized, whereas costs relating to holding other real estate
            owned and subsequent adjustments to the value are expensed. The
            carrying amount of other real estate owned at December 31, 2004, was
            $1,194,430. There was no other real estate owned at December 31,
            2003.

          GAIN ON SALE OF LOANS

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

                                      F-9
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          INCOME TAXES

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

          STOCK-BASED COMPENSATION

            Statement of Financial Accounting Standards (SFAS) No. 123,
            Accounting for Stock-Based Compensation, encourages all entities to
            adopt a fair value based method of accounting for employee stock
            compensation plans whereby compensation cost is measured at the
            grant date based on the value of the award and is recognized over
            the service period, which is usually the vesting period. However, it
            also allows an entity to continue to measure compensation cost for
            those plans using the intrinsic value based method of accounting
            prescribed by Accounting Principles Board Opinion No. 25, Accounting
            for Stock Issued to Employees, whereby compensation cost is the
            excess, if any, of the quoted market price of the stock at the grant
            date over the amount an employee must pay to acquire the stock. The
            Company has elected to continue with the accounting methodology of
            Opinion No. 25. No stock-based employee compensation cost is
            reflected in net income, as all options granted under the plans had
            an exercise price equal to the market value of the underlying stock
            on the date of grant.

            The following table illustrates the effect on net income and
            earnings per share if the Company had applied the fair value
            recognition provisions of FASB Statement No. 123 to stock-based
            employee compensation.

<TABLE>
<CAPTION>
                                                           YEARS ENDED DECEMBER 31,
                                                           -------------------------
                                                               2004         2003
                                                           -----------   -----------
<S>                                                        <C>           <C>
Net income, as reported                                    $ 3,323,151   $ 1,974,941
Deduct: Total stock-based employee compensation
      expense determined under fair value based
      method for all awards, net of related tax effects       (389,457)     (263,625)
                                                           -----------   -----------
Pro forma net income                                       $ 2,933,694   $ 1,711,316
                                                           ===========   ===========
Earnings per share:
   Basic - as reported                                     $      1.93   $      1.15
                                                           ===========   ===========
   Basic - pro forma                                       $      1.71   $      1.00
                                                           ===========   ===========
   Diluted - as reported                                   $      1.84   $      1.11
                                                           ===========   ===========
   Diluted - pro forma                                     $      1.62   $       .96
                                                           ===========   ===========
</TABLE>

          EARNINGS PER SHARE

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

                                      F-10
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         COMPREHENSIVE INCOME

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

         RECENT ACCOUNTING STANDARDS

            In December 2004, the Financial Accounting Standards Board (FASB)
            issued Statement No. 123R, Share-Based Payment, a revision of FASB
            Statement No. 123, Accounting for Stock-Based Compensation. This
            Statement supersedes APB Opinion No. 25, Accounting for Stock Issued
            to Employees, and its related implementation guidance. This
            Statement establishes standards for the accounting for transactions
            in which an entity exchanges its equity instruments for goods or
            services. It also addresses transactions in which an entity incurs
            liabilities in exchange for goods or services that are based on the
            fair value of the entity's equity instruments or that may be settled
            by the issuance of those equity instruments. This Statement focuses
            primarily on accounting for transactions in which an entity obtains
            employee services in share-based payment transactions such as the
            issuance of stock options in exchange for employee services. This
            Statement requires a public entity to measure the cost of employee
            services received in exchange for an award of equity instruments
            based on the grant-date fair value of the award (with limited
            exceptions). That cost will be recognized over the period during
            which an employee is required to provide service in exchange for the
            award - the requisite service period (usually the vesting period).
            The Company has elected to continue with the accounting methodology
            of Opinion No. 25 until adoption of this standard is required. The
            effects of this change are reflected, on a proforma basis above
            under the caption "Stock Based compensation."

NOTE 2.  SECURITIES

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

<TABLE>
<CAPTION>
                                                       GROSS            GROSS
                                  AMORTIZED         UNREALIZED        UNREALIZED           FAIR
                                     COST              GAINS            LOSSES             VALUE
                               ---------------      ----------      -------------     ---------------
<S>                            <C>                  <C>             <C>               <C>
DECEMBER 31, 2004:
U.S. TREASURY AND U.S.
   GOVERNMENT AGENCIES         $    20,705,016      $   94,883      $     (85,161)    $    20,714,738
STATE AND MUNICIPAL                  5,569,806          64,529            (22,178)          5,612,157
MORTGAGE-BACKED SECURITIES           4,643,439          36,469             (6,801)          4,673,107
                               ---------------      ----------      -------------     ---------------
                               $    30,918,261      $  195,881      $    (114,140)    $    31,000,002
                               ===============      ==========      =============     ===============
December 31, 2003:
U.S. Treasury and U.S.
   Government agencies         $    12,398,663      $   55,774      $     (24,464)    $    12,429,973
State and municipal                  5,597,923          64,847            (37,226)          5,625,544
Mortgage-backed securities           4,348,131          97,576                  -           4,445,707
                               ---------------      ----------      -------------     ---------------
                               $    22,344,717      $  218,197      $     (61,690)    $    22,501,224
                               ===============      ==========      =============     ===============
</TABLE>

                                      F-11
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.  SECURITIES (CONTINUED)

         Securities with a carrying value of $3,657,364 and $1,499,790 at
         December 31, 2004 and 2003, respectively, were pledged to secure public
         deposits and for other purposes required or permitted by law.

         Gains and losses on sales of securities available for sale consist of
         the following:

<TABLE>
<CAPTION>
                                           DECEMBER 31,
                                     -----------------------
                                       2004          2003
                                     ---------     ---------
<S>                                  <C>           <C>
Gross Gains                          $  20,254     $   4,316
Gross losses                                 -        (6,414)
                                     ---------     ---------
Net realized gains (losses)          $  20,254     $  (2,098)
                                     =========     =========
</TABLE>

         The amortized cost and fair value of securities as of December 31, 2004
         by contractual maturity are shown below. Actual maturities may differ
         from contractual maturities because the mortgages underlying the
         securities may be called or repaid without penalty; therefore, these
         securities are not included in the maturity categories in the following
         summary.

<TABLE>
<CAPTION>
                                        AMORTIZED           FAIR
                                          COST              VALUE
                                     --------------     --------------
<S>                                  <C>                <C>
Due from one to five years           $    6,642,928     $    6,660,777
Due from five to ten years               19,171,895         19,194,251
Due after ten years                         459,999            471,867
Mortgage-backed securities                4,643,439          4,673,107
                                     --------------     --------------
                                     $   30,918,261     $   31,000,202
                                     ==============     ==============
</TABLE>

         The following table shows the gross unrealized losses and fair value of
         securities, aggregated by category and length of time that securities
         have been in a continuous unrealized loss position at December 31,
         2004.

<TABLE>
<CAPTION>
                                             LESS THAN TWELVE MONTHS          OVER TWELVE MONTHS
                                             -----------------------          ------------------
                                              GROSS                           GROSS
                                            UNREALIZED         FAIR        UNREALIZED       FAIR
                                              LOSSES           VALUE         LOSSES         VALUE
                                          -------------    -------------   ----------    ------------
<S>                                       <C>              <C>             <C>           <C>
December 31, 2004:

   U.S. Government and federal agencies   $     (64,370)   $  11,980,018   $  (20,791)   $    972,900
   State and municipal securities                (7,029)         515,474      (15,149)        920,478
   Mortgage-backed securities                    (6,801)         784,092            -               -
                                          -------------    -------------   ----------    ------------
      Total securities                    $     (78,200)   $  13,279,584   $  (35,940)   $  1,893,378
                                          =============    =============   ==========    ============
</TABLE>

         The Company had no securities at December 31, 2003 that had been in an
         unrealized loss position for more than twelve months. Management
         evaluates securities for other-than-temporary impairment at least on a
         quarterly basis, and more frequently when economic or market concerns
         warrant such evaluation. Consideration is given to (1) the length of
         time and the extent to which the fair value has been less than cost,
         (2) the financial condition and near-term prospects of the issuer, and
         (3) the intent and ability of the Company to retain its investment in
         the issuer for a period of time sufficient to allow for any anticipated
         recovery in fair value. At December 31, 2004, no debt securities had
         unrealized losses with aggregate depreciation of 5% or more from the
         Company's amortized cost basis.

                                      F-12
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3.  LOANS

         The composition of loans is summarized as follows:

<TABLE>
<CAPTION>
                                                                            DECEMBER 31,
                                                               ------------------------------------
                                                                     2004                2003
                                                               ---------------     ----------------
<S>                                                            <C>                 <C>
   Commercial                                                  $    49,989,542     $     49,920,795
   Commercial loans secured by real estate                          57,785,798           47,510,237
   Construction loans secured by real estate                       137,698,199          112,259,526
   Consumer installment and other                                    7,472,078            5,774,679
                                                               ---------------     ----------------
                                                                   252,945,617          215,465,237
   Deferred fees                                                      (369,166)            (327,782)
   Allowance for loan losses                                        (3,775,167)          (3,029,508)
                                                               ---------------     ----------------
   Loans, net                                                  $   248,801,284     $    212,107,947
                                                               ===============     ================
</TABLE>

         Changes in the allowance for loan losses are as follows:

<TABLE>
<CAPTION>
                                                                      YEARS ENDED DECEMBER 31,
                                                               ------------------------------------
                                                                    2004                 2003
                                                               ---------------     ----------------
<S>                                                            <C>                 <C>
   Balance, beginning of year                                  $     3,029,508     $      2,174,339
     Provision for loan losses                                         797,824            1,033,118
     Loans charged off                                                 (64,513)            (177,949)
     Recoveries of loans previously charged off                         12,348                    -
                                                               ---------------     ----------------
   Balance, end of year                                        $     3,775,167     $      3,029,508
                                                               ===============     ================
</TABLE>

         The total recorded investment in impaired loans, consisting solely of
         loans on nonaccrual status, was $2,144,603 and $1,449,059 at December
         31, 2004 and 2003, respectively. There were no impaired loans that had
         related allowances for loan losses determined in accordance with SFAS
         No. 114, Accounting by Creditors for Impairment of a Loan, at December
         31, 2004 and 2003. The average recorded investment in impaired loans
         for 2004 and 2003 was $1,602,000 and $843,596, respectively. Interest
         income recognized on impaired loans for cash payments received was not
         material for the years ended 2004 and 2003. The reduction in interest
         income as a result of impaired loans was $63,747 and $17,036 for the
         years ended December 31, 2004 and 2003. Total loans past due ninety
         days or more and still accruing totaled $34,000 at December 31, 2004.
         There were no loans past due ninety days or more and still accruing
         interest at December 31, 2003.

         In the ordinary course of business, the Company has granted loans to
         certain related parties, including directors, executive officers, and
         their affiliates. The interest rates on these loans were substantially
         the same as rates prevailing at the time of the transaction and
         repayment terms are customary for the type of loan. Changes in related
         party loans for the year ended December 31, 2004 are as follows:

<TABLE>
<S>                           <C>
Balance, beginning of year    $     7,854,634
   Advances                         8,170,710
   Repayments                      (6,197,798)
                              ---------------
Balance, end of year          $     9,827,546
                              ===============
</TABLE>

                                      F-13
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4.  PREMISES AND EQUIPMENT

         Premises and equipment are summarized as follows:

<TABLE>
<CAPTION>
                                         DECEMBER 31,
                               -------------------------------
                                    2004              2003
                               -------------      ------------
<S>                            <C>                <C>
Equipment                      $   1,610,399      $  1,540,151
Leasehold improvements               322,342           320,635
                               -------------      ------------
                                   1,932,741         1,860,786
Accumulated depreciation          (1,555,043)       (1,365,169)
                               -------------      ------------
                               $     377,698      $    495,617
                               =============      ============
</TABLE>

NOTE 5.  DEPOSITS

         The aggregate amount of time deposits in denominations of $100,000 or
         more at December 31, 2004 and 2003 was $79,855,295 and $73,803,119,
         respectively. The Company had brokered and bulletin board certificates
         of deposit at December 31, 2004 and 2003 of $111,548,301 and
         $52,135,247, respectively. The scheduled maturities of time deposits at
         December 31, 2004 are as follows:

<TABLE>
<S>                     <C>
2005                    $   173,766,654
2006                         25,830,546
2007                          8,508,608
2008                          6,827,359
2009                            438,746
                        ---------------
                        $   215,371,913
                        ===============
</TABLE>

NOTE 6.  SECURITIES SOLD UNDER REPURCHASE AGREEMENTS

         Securities sold under repurchase agreements, which are secured
         borrowings, generally mature within one to four days from the
         transaction date. Securities sold under repurchase agreements are
         reflected at the amount of cash received in connection with the
         transactions. The Company may be required to provide additional
         collateral based on the fair value of the underlying securities. The
         Company monitors the fair value of the underlying securities on a daily
         basis. Securities sold under repurchase agreements at December 31, 2004
         and 2003 were $1,819,469 and $352,799, respectively.

NOTE 7.  DEFERRED COMPENSATION PLANS

         The Company has a deferred compensation plan providing for death and
         retirement benefits for its executive officers. The estimated amounts
         to be paid under the compensation plan are being funded through the
         purchase of life insurance policies on the executive officers. The
         balance of the policy cash surrender values at December 31, 2004 and
         2003 is $5,531,553 and $4,671,616, respectively. Income recognized on
         the policies amounted to $189,937 and $159,897 for the years ended
         December 31, 2004 and 2003, respectively. Deferred compensation expense
         recognized for the years ended December 31, 2004 and 2003 amounted to
         $560,090 and $219,031, respectively. Accrued deferred compensation of
         $901,742 and $341,652 is included in other liabilities as of December
         31, 2004 and 2003, respectively.

                                      F-14
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7.     DEFERRED COMPENSATION PLANS (CONTINUED)

            Effective January 1, 2001, the Company established a "Deferred Stock
            Unit" plan in which members of the Board of Directors and Executive
            Officers may choose to receive "deferred fee units" as consideration
            for their directors' fees in lieu of cash. The deferred fee units
            assigned to the members equal the number of shares of common stock
            that could be purchased at the fair market value with the amount of
            fees deferred. The units will be settled in cash when the member
            terminates service as a director or there is a change in control of
            the Company at the fair market value of the Company's common stock.
            The member may receive a lump sum cash payment for the value of the
            units or defer cash payments for a period of up to ten years. At
            December 31, 2004 and 2003, 36,605 and 22,096 units, respectively,
            have been assigned to the members under this plan. The fair market
            value of the units included in other liabilities amounted to
            $628,900 and $320,400 at December 31, 2004 and 2003, respectively.
            The units are not considered to be potential common shares.

NOTE 8.     INCOME TAXES

            Income tax expense consists of the following:

<TABLE>
<CAPTION>
                                YEARS ENDED DECEMBER 31,
                            --------------------------------
                                2004               2003
                            -------------      -------------
<S>                         <C>                <C>
Current                     $   2,332,298      $   1,508,383
Deferred                         (623,674)          (513,540)
                            -------------      -------------
     Income tax expense     $   1,708,624      $     994,843
                            =============      =============
</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>
                                             YEARS ENDED DECEMBER 31,
                                          -----------------------------
                                               2004            2003
                                          -------------    ------------
<S>                                       <C>              <C>
Income taxes at statutory federal rate    $   1,710,803    $  1,009,727
Tax-exempt income                              (130,550)       (100,724)
Other                                           128,371          85,840
                                          -------------    ------------
Income tax expense                        $   1,708,624    $    994,843
                                          =============    ============
</TABLE>

                                      F-15
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8.     INCOME TAXES (CONTINUED)

            The components of deferred income taxes are as follows:

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                           ----------------------------
                                                               2004            2003
                                                           ------------    ------------
<S>                                                        <C>             <C>
Deferred tax assets:
  Loan loss reserves                                       $  1,392,563    $  1,114,674
  Loan fees                                                     139,308         123,691
  Depreciation                                                   17,516          15,118
  Deferred compensation                                         577,600         249,830
                                                           ------------    ------------
                                                              2,126,987       1,503,313
                                                           ------------    ------------

Deferred tax liabilities, securities available for sale          31,061          59,472
                                                           ------------    ------------

Net deferred tax assets                                    $  2,095,926    $  1,443,841
                                                           ============    ============
</TABLE>

NOTE 9.     RELATED PARTY TRANSACTIONS AND LEASES

            The Company leases its main office banking facilities under a
            noncancelable operating lease agreement from GBC Properties, LLC, a
            partnership formed by the organizers of the Company. The lease term
            is for fifteen years with the monthly rental payment adjusting every
            fifth year for changes in the Consumer Price Index. The Company also
            leases its branch facilities under a noncancelable operating lease
            from a third party. The initial lease term is for five years with
            the monthly rental payment increasing every year by 3%. The lease
            also includes two five-year extension terms. Both lease agreements
            require the Company to pay normal operating and occupancy expenses
            of the facilities. The total minimum rental commitments under the
            leases at December 31, 2004 are due as follows:

<TABLE>
<S>                                         <C>
During the next five years                  $  1,990,680
During the remaining term of the leases        2,491,061
                                            ------------
                                            $  4,481,741
                                            ============
</TABLE>

            Total rental expense is summarized as follows:

<TABLE>
<CAPTION>
                          YEARS ENDED DECEMBER 31,
                       -----------------------------
                           2004             2003
                       -------------    ------------
<S>                    <C>              <C>
GBC Properties, LLC    $     286,596    $    286,596
Other third parties          115,042         120,378
                       -------------    ------------
                       $     401,638    $    406,974
                       =============    ============
</TABLE>

                                      F-16
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10.    STOCK-BASED COMPENSATION

            The Company has reserved 428,000 shares of common stock for issuance
            to employees and directors under an incentive stock option plan. The
            options granted are exercisable at a price equal to fair value on
            the date of grant and expire ten years from the grant date.

            Other pertinent information related to the options is as follows:

<TABLE>
<CAPTION>
                                                  YEARS ENDED DECEMBER 31,
                                      -----------------------------------------------
                                               2004                     2003
                                      ----------------------    ---------------------
                                                  WEIGHTED-                Weighted-
                                                   AVERAGE                  average
                                                  EXERCISE                  Exercise
                                      NUMBER        PRICE       Number       Price
                                      -------    -----------    -------    ----------
<S>                                   <C>        <C>            <C>        <C>
Under option, beginning of year       336,800    $     11.80    262,325    $    11.16
   Granted                             87,400          17.00     76,000         14.00
   Exercised                          (14,200)         10.23     (1,325)        11.58
   Terminated                               -              -       (200)        14.00
                                      -------    -----------    -------    ----------
Under option, end of year             410,000          12.97    336,800         11.80
                                      =======    -----------    =======    ==========
Exercisable, end of year              410,000          12.97    336,800         11.80
                                      =======    -----------    =======    ==========

Weighted average fair value of
   options granted during the year                      7.19                     5.57
</TABLE>

            Information pertaining to options outstanding at December 31, 2004
            is as follows:

<TABLE>
<CAPTION>
                                   OPTIONS OUTSTANDING                     OPTIONS EXERCISABLE
                       -------------------------------------------     ---------------------------
                                        WEIGHTED-
                                         AVERAGE         WEIGHTED-                      WEIGHTED-
                                        REMAINING        AVERAGE                        AVERAGE
    RANGE OF             NUMBER        CONTRACTUAL       EXERCISE        NUMBER         EXERCISE
EXERCISE PRICES        OUTSTANDING        LIFE            PRICE        EXERCISABLE       PRICE
---------------        -----------     -----------     -----------     -----------    ------------
<S>                    <C>             <C>             <C>             <C>            <C>
$10.00 - $17.00         410,000            6.91        $     12.97      410,000       $      12.97
</TABLE>

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

<TABLE>
<CAPTION>
                           YEAR ENDED
                          DECEMBER 31,
                              2004
                          ------------
<S>                       <C>
Dividend yield                    0
Expected life                    10
Expected volatility           15.88%
Risk-free interest rate        5.00%
</TABLE>

                                      F-17
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11. EARNINGS PER SHARE

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

<TABLE>
<CAPTION>
                                                         YEARS ENDED DECEMBER 31,
                                                    ----------------------------------
                                                         2004                2003
                                                    --------------      --------------
<S>                                                 <C>                 <C>
Basic Earnings Per Share:
Weighted average common shares outstanding               1,720,330           1,711,816
                                                    ==============      ==============

Net income                                          $    3,323,151      $    1,974,941
                                                    ==============      ==============

Basic earnings per share                            $         1.93      $         1.15
                                                    ==============      ==============
</TABLE>

<TABLE>
<CAPTION>
                                                         YEARS ENDED DECEMBER 31,
                                                    ----------------------------------
                                                         2004                2003
                                                    --------------      --------------
<S>                                                 <C>                 <C>
Diluted Earnings Per Share:
   Weighted average common shares outstanding            1,720,330           1,711,816
   Net effect of the assumed exercise of stock
      options based on the treasury stock method
      using average market prices for the year              89,338              62,609
                                                    --------------      --------------
   Total weighted average common shares and
      common stock equivalents outstanding               1,809,668           1,774,425
                                                    ==============      ==============

   Net income                                       $    3,323,151      $    1,974,941
                                                    ==============      ==============

   Diluted earnings per share                       $         1.84      $         1.11
                                                    ==============      ==============
</TABLE>

NOTE 12. COMMITMENTS AND CONTINGENCIES

         LOAN COMMITMENTS

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

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

<TABLE>
<CAPTION>
                                                DECEMBER 31,
                                       ------------------------------
                                            2004             2003
                                       --------------   -------------
<S>                                    <C>              <C>
Financial standby letters of credit    $    4,607,425   $   7,920,996
Commitments to extend credit               98,888,244      81,459,639
                                       --------------   -------------
                                       $  103,495,669   $  89,380,635
                                       ==============   =============
</TABLE>

                                      F-18
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12. COMMITMENTS AND CONTINGENCIES (CONTINUED)

         LOAN COMMITMENTS (CONTINUED)

            Commitments to extend credit are agreements to lend to a customer as
            long as there is no violation of any condition established in the
            contract. Commitments 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 amount of collateral obtained, if deemed necessary
            by the Company upon extension of credit, is based on management's
            credit evaluation of the party. Collateral held varies, but may
            include accounts receivable, inventory, property and equipment,
            residential real estate and income-producing commercial properties.

            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
            loans to customers. Collateral held varies as specified above and is
            required in instances which the Company deems necessary.

         CONTINGENCIES

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

NOTE 13. CONCENTRATIONS OF CREDIT

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

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

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

NOTE 14. REGULATORY MATTERS

            The Bank is subject to certain restrictions on the amount of
            dividends that may be declared without prior regulatory approval. At
            December 31, 2004, approximately $1,687,500 of dividends could be
            declared without regulatory approval.

                                      F-19
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14. REGULATORY MATTERS (CONTINUED)

            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 consolidated
            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 Company and Bank's assets, liabilities, and certain
            off-balance sheet items as calculated under regulatory accounting
            practices. Capital amounts and classification are also subject to
            qualitative judgments by the regulators about components, risk
            weightings, and other factors.

            Quantitative measures established by regulation to ensure capital
            adequacy require the Company and the Bank to maintain minimum
            amounts and ratios of Total and Tier I capital to risk-weighted
            assets, as defined and of Tier I capital to average assets.
            Management believes, as of December 31, 2004 and 2003, the Company
            and the Bank met all capital adequacy requirements to which they are
            subject.

            As of December 31, 2004, the most recent notification from the
            Federal Deposit Insurance Corporation categorized the Bank as well
            capitalized under the regulatory framework for prompt corrective
            action. To be categorized as well capitalized, the Bank must
            maintain minimum total risk-based, Tier I risk-based, and Tier I
            leverage ratios as set forth in the following table. There are no
            conditions or events since that notification that management
            believes have changed the Bank's category. Prompt corrective
            provisions are not applicable to bank holding companies.

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

<TABLE>
<CAPTION>
                                                                                                  TO BE WELL
                                                                            FOR CAPITAL        CAPITALIZED UNDER
                                                                              ADEQUACY         PROMPT CORRECTIVE
                                                       ACTUAL                 PURPOSES         ACTION PROVISIONS
                                                --------------------     -------------------   -------------------
                                                 AMOUNT        RATIO      AMOUNT       RATIO    AMOUNT      RATIO
                                                ---------      -----     --------      -----   --------     -----
                                                                     (DOLLARS IN THOUSANDS)
<S>                                             <C>            <C>       <C>           <C>     <C>          <C>
DECEMBER 31, 2004:
TOTAL CAPITAL TO RISK WEIGHTED ASSETS:
   CONSOLIDATED                                 $  30,052      11.18%    $ 21,498        8%    $    N/A      N/A
   BANK                                         $  29,373      10.93%    $ 21,498        8%    $ 26,872       10%
TIER I CAPITAL TO RISK WEIGHTED ASSETS:
   CONSOLIDATED                                 $  26,688       9.93%    $ 10,749        4%    $    N/A      N/A
   BANK                                         $  26,009       9.68%    $ 10,749        4%    $ 16,123        6%
TIER I CAPITAL TO AVERAGE ASSETS:
   CONSOLIDATED                                 $  26,688       8.75%    $ 12,196        4%    $    N/A      N/A
   BANK                                         $  26,009       8.53%    $ 12,196        4%    $ 15,245        5%
</TABLE>

                                      F-20
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14.    REGULATORY MATTERS (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                      TO BE WELL
                                                                               FOR CAPITAL        CAPITALIZED UNDER
                                                                                 ADEQUACY         PROMPT CORRECTIVE
                                                          ACTUAL                 PURPOSES         ACTION PROVISIONS
                                                   --------------------     -----------------     -------------------
                                                    AMOUNT        RATIO      AMOUNT     RATIO      AMOUNT      RATIO
                                                   ---------     ------     --------    -----     --------    -------
                                                                         (DOLLARS IN THOUSANDS)
<S>                                                <C>           <C>        <C>         <C>       <C>         <C>
December 31, 2003:
Total Capital to Risk Weighted Assets:
   Consolidated                                    $  26,039      11.32%    $ 18,414      8%      $    N/A       N/A
   Bank                                            $  25,453      11.06%    $ 18,414      8%      $ 23,017        10%
Tier I Capital to Risk Weighted
Assets:
   Consolidated                                    $  23,220      10.09%    $  9,207      4%      $    N/A       N/A
   Bank                                            $  22,634       9.83%    $  9,207      4%      $ 13,810         6%
Tier I Capital to Average Assets:
   Consolidated                                    $  23,220       9.40%    $  9,881      4%      $    N/A       N/A
   Bank                                            $  22,634       9.16%    $  9,881      4%      $ 12,351         5%
</TABLE>

NOTE 15.    FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

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

            LOANS: The carrying amount of variable-rate loans that reprice
            frequently and have no significant change in credit risk
            approximates fair value. The fair value of fixed rate loans is
            estimated based on discounted contractual cash flows using interest
            rates currently being offered for loans with similar terms to
            borrowers with similar credit quality. The fair value for impaired
            loans is estimated based on discounted contractual cash flows or
            underlying collateral values, where applicable.

                                      F-21

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15.    FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

            DEPOSITS: The carrying amount of demand deposits, savings deposits,
            and variable-rate certificates of deposit approximates fair value.
            The fair value of fixed-rate certificates of deposit is estimated
            based on discounted contractual cash flows using interest rates
            currently being offered for certificates of similar maturities.

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

            ACCRUED INTEREST: The carrying amount of accrued interest
            approximates their fair values.

            OFF-BALANCE SHEET INSTRUMENTS: The carrying amount of commitments to
            extend credit and standby letters of credit approximates fair value.
            The carrying amount of the off-balance sheet financial instruments
            is based on fees charged to enter into such agreements. Since the
            majority of the Company's off-balance sheet instruments consist of
            nonfee-producing, variable-rate commitments, the Company has
            determined they do not have a distinguishable fair value.

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

<TABLE>
<CAPTION>
                                          DECEMBER 31, 2004                  December 31, 2003
                                   -------------------------------    -------------------------------
                                      CARRYING           FAIR            Carrying           Fair
                                       AMOUNT           VALUE             Amount           Value
                                   --------------   --------------    --------------   --------------
<S>                                <C>              <C>               <C>              <C>
FINANCIAL ASSETS:
   Cash, due from banks,
      and federal funds sold       $   23,084,288   $   23,084,288    $    4,909,507   $    4,909,507
   Securities available for sale       31,000,002       31,000,002        22,501,224       22,501,224
   Loans                              248,801,284      251,712,000       212,107,947      216,339,000
   Accrued interest receivable          1,593,159        1,593,159         1,087,494        1,087,494

FINANCIAL LIABILITIES:
   Deposits                           282,336,126      282,829,000       222,051,041      224,396,000
   Accrued interest payable               426,632          426,632           384,708          384,708
   Securities sold under
      repurchase agreements             1,819,469        1,819,469           352,799          352,799
</TABLE>

                                      F-22
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16. SUPPLEMENTAL FINANCIAL DATA

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

<TABLE>
<CAPTION>
                                                YEARS ENDED DECEMBER 31,
                                                ------------------------
                                                   2004          2003
                                                ----------    ----------
<S>                                             <C>           <C>
Other operating income:
   Mortgage origination fees                    $  168,683    $  166,240
   Income on life insurance policies               189,937       159,897

Other operating expenses:
   Professional and consulting                     227,775       188,728
   Directors fees                                  200,000       116,600
   Data processing                                 198,845       167,444
</TABLE>

NOTE 17. PARENT COMPANY FINANCIAL INFORMATION

      The following information presents the condensed balance sheets,
      statements of income and cash flows of GBC Bancorp, Inc., as of and for
      the years ended December 31, 2004 and 2003.

                            CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                         2004                2003
                                     -------------      -------------
<S>                                  <C>                <C>
ASSETS
 Cash                                $     647,817      $     556,646
 Investment in subsidiary               26,059,778         22,731,042
 Other assets                               31,480             29,390
                                     -------------      -------------

   Total assets                      $  26,739,075      $  23,317,078
                                     =============      =============

     TOTAL STOCKHOLDERS' EQUITY      $  26,739,075      $  23,317,078
                                     =============      =============
</TABLE>

                                      F-23
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17. PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)

                         CONDENSED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                         2004               2003
                                                     ------------       ------------
<S>                                                  <C>                <C>
EXPENSES, OTHER                                      $     83,419       $     77,850
                                                     ------------       ------------

       LOSS BEFORE INCOME TAX
           BENEFIT AND EQUITY IN
           UNDISTRIBUTED EARNINGS OF SUBSIDIARY           (83,419)           (77,850)

INCOME TAX BENEFIT                                        (31,480)           (29,390)
                                                     ------------       ------------

       LOSS BEFORE EQUITY IN UNDISTRIBUTED
           EARNINGS OF SUBSIDIARY                         (51,939)           (48,460)

EQUITY IN UNDISTRIBUTED EARNINGS
   OF SUBSIDIARY                                        3,375,090          2,023,401
                                                     ------------       ------------

        NET INCOME                                   $  3,323,151       $  1,974,941
                                                     ============       ============
</TABLE>

                       CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                              2004               2003
                                                          ------------       ------------
<S>                                                       <C>                <C>
OPERATING ACTIVITIES
   Net income                                             $  3,323,151       $  1,974,941
   Adjustments to reconcile net income to net
      cash used in operating activities:
      Equity in undistributed earnings of subsidiary        (3,375,090)        (2,023,401)
      Net other operating activities                            (2,090)             4,386
                                                          ------------       ------------

          Net cash used in operating activities                (54,029)           (44,074)
                                                          ------------       ------------

FINANCING ACTIVITIES
   Proceeds from exercise of stock options                     145,200             15,350
                                                          ------------       ------------

          Net cash provided by financing activities            145,200             15,350
                                                          ------------       ------------

Net increase (decrease) in cash                                 91,171            (28,724)

Cash at beginning of year                                      556,646            585,370
                                                          ------------       ------------

Cash at end of year                                       $    647,817       $    556,646
                                                          ============       ============
</TABLE>

                                      F-24