<PAGE>   1
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                   FORM 10-QSB

[X]      Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
         Act of 1934

                  For the quarterly period ended June 30, 2001

[ ]      Transition Report Pursuant to 13 or 15(d) of the Securities Exchange
         Act of 1934

                         For the transition period of to

                         Commission File Number 0-22891.
                                                -------

                        GEORGIA-CAROLINA BANCSHARES, INC.
                        ---------------------------------
        (Exact name of small business issuer as specified in its charter)

           Georgia                                    58-2326075
           -------                                  --------------
(State or other Jurisdiction of         (I.R.S. Employer Identification Number)
Incorporation or Organization)

                  2805 Wrightsboro Road, Augusta, Georgia 30909
                  ---------------------------------------------
                    (Address of Principal Executive Offices)

                     Issuers Telephone Number (706) 736-2100
                                              --------------


--------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Year)

Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

                              YES [X]    NO [ ]

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

           Class                              Outstanding at August 13, 2001
           -----                              ------------------------------
Common Stock, $.001 Par Value                           938,669 shares


Transitional Small Business Disclosure Format:  YES [ ]    NO [X]


<PAGE>   2

                        GEORGIA-CAROLINA BANCSHARES, INC.
                                   Form 10-QSB

                                      Index


<TABLE>
<S>        <C>                                                                    <C>
PART I     FINANCIAL INFORMATION

Item 1.    Financial Statements (Unaudited)

           Condensed Consolidated Balance Sheets as of June 30, 2001
           and December 31, 2000                                                   1

           Condensed Consolidated Statements of Income (Loss) for the Three
           Months Ended June 30, 2001 and 2000, and the Six Months Ended
           June 30, 2001 and 2000                                                  2

           Condensed Consolidated Statements of Comprehensive Income (Loss)
           for the Three Months Ended June 30, 2001 and 2000, and the Six
           Months Ended June 30, 2001 and 2000                                     3

           Condensed Consolidated Statements of Cash Flows for the Six
           Months Ended June 30, 2001 and 2000                                     4

           Notes to Condensed Consolidated Financial Statements                    5

Item 2.    Management's Discussion and Analysis of Financial Condition and
           Results of Operations                                                   7

PART II    OTHER INFORMATION

Item 2.    Changes in Securities                                                  11

Item 4.    Submission of Matters to a Vote of Security Holders                    11

Item 6.    Exhibits and Reports on Form 8-K                                       12

           SIGNATURES                                                             13
</TABLE>


<PAGE>   3

                                     PART I
                              FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS
                        GEORGIA-CAROLINA BANCSHARES, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                 June 30,      December 31,
ASSETS                                                             2001            2000
                                                                ---------      -----------
<S>                                                             <C>            <C>
Cash and due from banks                                         $   4,539       $   5,522
Federal funds sold                                                     --              --
Securities available-for-sale                                      19,684          14,320
Loans, net of allowance for loan losses                            92,330          71,987
Loans, held for sale                                               39,514          17,610
Bank premises and fixed assets                                      6,051           5,549
Accrued interest receivable                                         1,024             596
Foreclosed real estate, net of allowance                              498             483
Deferred tax asset, net                                               263             202
Other assets                                                          409             240
                                                                ---------       ---------

          TOTAL ASSETS                                          $ 164,312       $ 116,509
                                                                =========       =========

LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
     Non-interest bearing                                       $  20,388       $  16,269
     Interest bearing:
          NOW accounts                                              9,005          10,342
          Savings                                                   7,209           5,045
          Money market accounts                                     8,771           9,223
          Time deposits of $100,000, and over                      31,925          10,696
          Other time deposits                                      43,957          33,913
                                                                ---------       ---------
               TOTAL DEPOSITS                                     121,255          85,488

Other liabilities, borrowings and retail agreements                31,073          19,794
                                                                ---------       ---------

               TOTAL LIABILITIES                                  152,328         105,282
                                                                ---------       ---------

SHAREHOLDERS' EQUITY:
     Preferred stock, par value $.001; 1,000,000
        shares authorized; none issued                                 --              --
     Common stock, par value $.001; 9,000,000
      shares authorized; 937,350 and
      935,750 shares issued and
      outstanding at June 30, 2001 and
      December 31, 2000, respectively                                   1               1
     Additional paid-in capital                                    10,246          10,228
     Retained earnings                                              1,647           1,091
     Accumulated other comprehensive income
        (loss)                                                         90             (93)
                                                                ---------       ---------
               TOTAL SHAREHOLDERS' EQUITY                          11,984          11,227
                                                                ---------       ---------

               TOTAL LIABILITIES AND SHAREHOLDERS'
                    EQUITY                                      $ 164,312       $ 116,509
                                                                =========       =========
</TABLE>

See notes to condensed consolidated financial statements.


                                        1
<PAGE>   4

                        GEORGIA-CAROLINA BANCSHARES, INC.

               CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                                   (UNAUDITED)
                (dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>

                                                             Three Months Ended          Six Months Ended
                                                                   June 30,                  June 30,
                                                            --------------------       --------------------
                                                             2001          2000          2001        2000
                                                            -------      -------       -------      -------
<S>                                                         <C>          <C>           <C>          <C>
INTEREST INCOME
     Interest and fees on loans                             $ 2,822      $ 1,564       $ 5,084      $ 2,503
     Interest on taxable securities                             240          192           472          381
     Interest on nontaxable securities                           27           10            44           19
     Interest on Federal funds sold                               2            7            10          145
                                                            -------      -------       -------      -------
          TOTAL INTEREST INCOME                               3,091        1,773         5,610        3,048
                                                            -------      -------       -------      -------
INTEREST EXPENSE
     Interest on time deposits of $100,000 or more              447           87           787          198
     Interest on other deposits                                 854          566         1,663        1,033
     Interest on funds purchased and other
        borrowings                                              410          140           697          152
                                                            -------      -------       -------      -------
          TOTAL INTEREST EXPENSE                              1,711          793         3,147        1,383
                                                            -------      -------       -------      -------
          NET INTEREST INCOME                                 1,380          980         2,463        1,665

PROVISIONS FOR LOAN LOSSES                                      168           28           370          144
                                                            -------      -------       -------      -------
          NET INTEREST INCOME AFTER PROVISIONS FOR
             LOAN LOSSES                                      1,212          952         2,093        1,521
                                                            -------      -------       -------      -------
NONINTEREST INCOME
     Service charges on deposits                                114           85           220          157
     Gain on sale of mortgage loans and other
        income                                                2,089          212         3,289          276
                                                            -------      -------       -------      -------
                                                              2,203          297         3,509          433
                                                            -------      -------       -------      -------
NONINTEREST EXPENSE
     Salaries and employee benefits                           1,792          866         3,197        1,290
     Occupancy expenses                                         232          167           444          255
     Other expenses                                             605          349         1,094          594
                                                            -------      -------       -------      -------
                                                              2,629        1,382         4,735        2,139
                                                            -------      -------       -------      -------
INCOME (LOSS) BEFORE INCOME TAXES                               786         (133)          867         (185)
                                                            -------      -------       -------      -------
INCOME TAX EXPENSE (BENEFIT)                                    284          (49)          311          (66)
                                                            -------      -------       -------      -------
          NET INCOME (LOSS)                                 $   502      $   (84)      $   556      $  (119)
                                                            =======      =======       =======      =======
NET INCOME(LOSS) PER SHARE OF COMMON STOCK:
     Basic                                                  $  0.54      $ (0.09)      $  0.59      $ (0.13)
                                                            =======      =======       =======      =======
     Diluted                                                $  0.51      $ (0.09)      $  0.56      $ (0.13)
                                                            =======      =======       =======      =======
DIVIDENDS PER SHARE OF COMMON STOCK                         $    --      $    --       $    --      $    --
                                                            =======      =======       =======      =======
</TABLE>



See notes to condensed consolidated financial statements.


                                        2
<PAGE>   5

                        GEORGIA-CAROLINA BANCSHARES, INC.

        CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                                   (UNAUDITED)
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                           Three Months Ended      Six Months Ended
                                                                 June 30,               June 30,
                                                           ------------------      -----------------
                                                             2001       2000        2001       2000
                                                           -------     ------      ------     ------
<S>                                                        <C>         <C>         <C>        <C>
NET INCOME (LOSS)                                           $ 502      $ (84)      $ 556      $(119)

Unrealized holding gains and (losses) arising
    during period, less reclassification adjustment
    for gains and losses included in net income,
    net of tax                                                 37         18         183        (80)
                                                            -----      -----       -----      -----

Comprehensive income (loss)                                 $ 539      $ (66)      $ 739      $(199)
                                                            =====      =====       =====      =====
</TABLE>




See notes to condensed consolidated financial statements.


                                        3


<PAGE>   6

                        GEORGIA-CAROLINA BANCSHARES, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                Six Months Ended June 30,
                                                                -------------------------
                                                                   2001            2000
                                                                ---------       ---------
<S>                                                             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income (loss)                                          $     556       $    (119)
     Adjustments to reconcile net income (loss)
         to net cash provided by (used in)
         operating activities
          Depreciation and amortization                               190             128
          Provision for loan losses                                   370             144
          Deferred income tax                                        (155)             31
          Net increase in accrued interest receivable                (428)           (317)
          Net change in other assets and liabilities                1,475            (131)
                                                                ---------       ---------
               NET CASH PROVIDED BY (USED IN)
                  OPERATING ACTIVITIES                              2,008            (264)
                                                                ---------       ---------

CASH FLOWS FROM INVESTING ACTIVITIES
     Net decrease in federal funds sold                                --          15,380
     Net increase in loans                                        (42,632)        (45,580)
     Net transactions, available-for-sale securities               (5,087)           (254)
     Net purchase of premises and equipment                          (692)         (1,257)
                                                                ---------       ---------
               NET CASH PROVIDED BY (USED IN)
                  INVESTING ACTIVITIES                            (48,411)        (31,711)
                                                                ---------       ---------

CASH FLOWS FROM FINANCING ACTIVITIES
     Net increase (decrease) in deposits and
        funds purchased                                            45,420          31,405
                                                                ---------       ---------
               NET CASH PROVIDED BY (USED IN)
                  FINANCING ACTIVITIES                             45,420          31,405
                                                                ---------       ---------

NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS                   (983)           (570)

CASH AND DUE FROM BANKS AT BEGINNING OF PERIOD                      5,522           3,271
                                                                ---------       ---------

CASH AND DUE FROM BANKS AT END OF PERIOD                        $   4,539       $   2,701
                                                                =========       =========
</TABLE>




See notes to condensed consolidated financial statements.



                                        4


<PAGE>   7

                        GEORGIA-CAROLINA BANCSHARES, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001
                                   (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements include the
accounts of Georgia-Carolina Bancshares, Inc. (the "Company") and its wholly
owned subsidiary, First Bank of Georgia (the "Bank"). Significant intercompany
transactions and accounts are eliminated in consolidation.

The financial statements as of June 30, 2001 and December 31, 2000 and for the
six months ended and three months ended June 30, 2001 and 2000 are unaudited and
have been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. These condensed consolidated financial statements should be read in
conjunction with the audited financial statements and notes thereto included in
the Company's annual report for the year ended December 31, 2000.

The financial information included herein reflects all adjustments (consisting
of normal recurring adjustments) which are, in the opinion of management,
necessary to a fair presentation of the financial position and results of
operations for interim periods.

The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities and
income and expense amounts. Actual results could differ from those estimates.

NOTE 2 - EARNINGS PER SHARE

Earnings per share are calculated on the basis of the weighted average number of
shares outstanding. As the Company has granted stock options to certain officers
of the Company, diluted earnings per share has been presented in the Statements
of Income.

The following reconciles the numerators and denominators of the basic and
diluted earnings per share computations:

<TABLE>
<CAPTION>
                                               For the Six Months Ended June 30, 2001
                                          -------------------------------------------------
                                                               Weighted
                                                            Average Shares       Per-Share
                                         (Numerator)        (Denominator)          Amount
                                         -----------        --------------       ----------
<S>                                       <C>               <C>                  <C>
NET INCOME                                $ 556,000

BASIC EPS
     Income available to common
        shareholders'                       556,000              936,417          $ 0.59

EFFECT OF DILUTIVE SECURITIES
     Options                                                      52,306
                                          ---------            ---------          ------
DILUTED EPS
     Income available to common
        shareholders' and assumed
        conversions                       $ 556,000              988,723          $ 0.56
                                          =========            =========         =======
</TABLE>



                                        5

<PAGE>   8

                        GEORGIA-CAROLINA BANCSHARES, INC.

NOTE 3 - RECENT DEVELOPMENTS

In June 2001, the Financial Accounting Standards Board issued two Statements of
Financial Accounting Standards, No. 141, Business Combinations (SFAS No. 141),
and No. 142, Goodwill and Other Intangible Assets (SFAS No. 142). SFAS No. 141
addresses financial accounting and reporting for business combinations and
supersedes APB Opinion No. 16, Business Combinations, and FASB Statement No. 38,
Accounting for Preacquisition Contingencies of Purchased Enterprises. All
business combinations in the scope of SFAS No. 141 are to be accounted for using
one method, the purchase method. The provisions of SFAS No. 141 apply to all
business combinations initiated after June 30, 2001. Use of the
pooling-of-interests method for those business combinations is prohibited. The
provisions of SFAS No. 141 also apply to all business combinations accounted for
by the purchase method for which the date of acquisition is July 1, 2001, or
later.

SFAS No. 142 addresses financial accounting and reporting for acquired goodwill
and other intangible assets and supersedes APB Opinion No. 17, Intangible
Assets. It addresses how intangible assets that are acquired individually or
with a group of other assets (but not those acquired in a business combination)
should be accounted for in financial statements upon their acquisition. SFAS No.
142 also addresses how goodwill and other intangible assets should be accounted
for after they have been initially recognized in the financial statements. Under
SFAS No. 142, goodwill and intangible assets that have indefinite useful lives
will not be amortized but rather will be tested at least annually for
impairment. Intangible assets that have finite useful lives will continue to be
amortized over their useful lives, but without the constraint of the 40-year
maximum life required by SFAS No. 142. The provisions of SFAS No. 142 are
required to be applied starting with fiscal years beginning after December 15,
2001.

The Company expects to adopt the provisions of SFAS No. 142 effective January 1,
2002. The Company is in the process of determining the impact the adoption of
the provisions of SFAS No. 142 will have on its financial condition and results
of operations.


                                        6

<PAGE>   9

                        GEORGIA-CAROLINA BANCSHARES, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

                              RESULTS OF OPERATIONS

OVERVIEW

The Company's net income was $502,000 for the second quarter of 2001, compared
to a net loss of $84,000 for the second quarter of 2000. Basic earnings per
share were $0.54 for the second quarter of 2001 compared to a loss of $(0.09)
per share for the second quarter of 2000. Total consolidated assets at June, 30,
2001 were $164,312,000, an increase of $47,803,000 (41.0%) from December 31,
2000 total consolidated assets of $116,509,000, and an increase of $60,273,000
(57.9%) from June 30, 2000 total consolidated assets of $104,039,000.

Through the establishment of additional banking offices in the Augusta, Georgia
area and through the development of mortgage lending operations in the Georgia
cities of Augusta, Warner Robins, Rincon and Savannah, the Bank has experienced
growth in net interest income, noninterest income and noninterest expense for
the three months and six months ended June 30, 2001 when compared to the same
periods in 2000. During the six months ended June 30, 2001, the Bank closed its
mortgage lending operations in Warner Robins, Georgia.

During the six months ended June 30, 2001, the Bank opened a new mortgage
lending location in Jacksonville, Florida and an additional full-service banking
location in Augusta, Georgia. The establishment of these new locations was also
a contributing factor to the Bank's increases in net interest income,
noninterest income and noninterest expense for the quarter ended June 30, 2001
when compared to the quarter ended June 30, 2000.

The Company's return on average assets was 0.79% (annualized) for the six months
ended June 30, 2001, compared to a negative (0.27%) (annualized) for the six
months ended June 30, 2000. The Company's return on average equity for the six
months ended June 30, 2001 was 9.58% (annualized) compared to a negative (2.22%)
(annualized) for the six months ended June 30, 2000.

Further discussion of significant items affecting net income are discussed in
detail below.

NET INTEREST INCOME

Net interest income is the difference between the interest and fees earned on
loans, securities, and other interest-earning assets (interest income) and the
interest paid on deposits and borrowed funds (interest expense). Higher net
interest income is a result of the relationship between the interest-earning
assets and interest-bearing liabilities.

Net interest income was $1,380,000 for the quarter ended June 30, 2001, an
increase of $400,000 (40.8%) over net interest income of $980,000 for the
quarter ended June 30, 2000. This increase was primarily the result of investing
increased deposit liability funds and other borrowed funds in loans.
Interest-earning assets were $151,528,000 at June 30, 2001 compared to
$94,083,000 at June 30, 2000, an increase of $57,445,000 (61.1%). Loans,
including loans held for sale, are the highest yielding component of
interest-earning assets. Total loans were $131,844,000 at June 30, 2001 compared
to $79,885,000 at June 30, 2000, an increase of $51,959,000 (65.0%). Total loans
increased $42,247,000 (47.2%) from December 31, 2000 to June 30, 2001. The
increase in deposit liability funds continues to be primarily attributable to
the Company's expansion to and continuing expansion in the Augusta, Georgia and
Columbia County, Georgia market areas. The increase in loans also continues to
be primarily attributable to this expansion. The Bank's increase in loans held
for sale also is a result of the Augusta and Columbia County expansion, and a
result of the expansion of the Bank's mortgage lending operations to other
Georgia and Florida locations.


                                        7

<PAGE>   10

                        GEORGIA-CAROLINA BANCSHARES, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)

Loans held for sale by the Bank are primarily funded by the Bank through
short-term borrowings and a line-of-credit. Substantially all loans originated
by the Bank's mortgage lending operation are sold in the secondary market
following origination. At June 30, 2001, loans represented 87.0% of
interest-earning assets compared to 86.2% at December 31, 2000, and 84.9% at
June 30, 2000. Investments in securities increased $5,364,000 (37.5%) from
December 31, 2000, and increased $7,116,000 (56.6%) from June 30, 2000.
Interest-bearing deposits at June 30, 2001 were $100,867,000. This represents an
increase of $31,648,000 (45.7%) from the December 31, 2000 balance of
$69,219,000, and an increase of $37,740,000 (59.8%) from the June 30, 2000
balance of $63,127,000. The Bank's mortgage funding line-of-credit was
$18,346,000 at June 30, 2001, an increase of $5,978,000 (48.3%) from the June
30, 2000 balance of $12,368,000. The Bank's balance of Federal funds purchased
was $3,864,000 at June 30, 2001, an increase of $3,864,000 from the Bank's June
30, 2000 balance of $0. The Bank's retail repurchase agreements were $6,000,000
at June 30, 2001, an increase of $100,000 (1.7%) from the June 30, 2000 balance
of $5,900,000.

INTEREST INCOME

Interest income for the three months ended June 30, 2001 was $3,091,000, an
increase of $1,318,000 (74.3%) from $1,773,000 for the three months ended June
30, 2000. The increase in interest income primarily resulted from an increase in
interest and fees on loans. Interest income and fees on loans was $2,822,000 for
the three months ended June 30, 2001, an increase of $1,258,000 (80.4%) from
$1,564,000 for the three months ended June 30, 2000. This increase in interest
income and fees from loans is a result of the Bank's increasing investment in
loans. The Bank's availability to increase the investment in loans continues to
be significantly attributable to the expansion into the Augusta and Columbia
County market areas. In addition, the Bank's mortgage lending operations are
significantly contributing to the growth in the investment in loans.

INTEREST EXPENSE

Interest expense for the three months ended June 30, 2001 was $1,711,000, an
increase of $918,000 (115.8%) from $793,000 for the three months ended June 30,
2000. This increase is primarily attributable to increased deposit liability
funds obtained from the expansion into Augusta and Columbia County. In addition,
interest expense for the three months ended June 30, 2001 has increased from the
three months ended June 30, 2000 as the Bank has increased utilization of
short-term borrowings and retail repurchase agreements to fund investments in
loans.

NONINTEREST INCOME

Noninterest income for the three months ended June 30, 2001 was $2,203,000, an
increase of $1,906,000 (641.8%) from $297,000 for the three months ended June
30, 2000. Service charges on deposit accounts were $114,000 for the three months
ended June 30, 2001, an increase of $29,000 (34.1%) from $85,000 for the three
months ended June 30, 2000. Gain on sale of mortgage loans originated and sold
by the Bank's mortgage division was $2,062,000 for the three months ended June
30, 2001, an increase of $1,881,000 (1,039.2%) from $181,000 for the three
months ended June 30, 2000. Substantially all loans originated by the mortgage
division are sold in the secondary market with servicing released.

NONINTEREST EXPENSE

Noninterest expense for the three months ended June 30, 2001 was $2,629,000, an
increase of $1,247,000 (90.2%) from $1,382,000 for the three months ended June
30, 2000. Salary and employee benefit costs were $1,792,000 for the three months
ended June 30, 2001, an increase of $926,000 (106.9%) from $866,000 for the
three months ended June 30, 2000.


                                        8

<PAGE>   11

                        GEORGIA-CAROLINA BANCSHARES, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)

This increase in noninterest expense is the result of the Bank hiring additional
personnel to operate the expanded locations in Augusta and Columbia County, and
the hiring of personnel related to the Bank's mortgage lending operations.
Occupancy expenses and other expenses for the three months ended June 30, 2001
also increased from the three months ended June 30, 2000 primarily as a result
of the expanded locations and establishment of the mortgage operations as
occupancy and other costs are incurred to support these operations.

INCOME TAXES

The Company recorded income tax expense of $284,000 for the three months ended
June 30, 2001, resulting from the net income before taxes of $786,000 for the
quarter.

                          REVIEW OF FINANCIAL CONDITION

OVERVIEW

Management continuously monitors the financial condition of the Bank in order to
protect depositors, increase retained earnings and protect current and future
earnings. Further discussion of significant items affecting the Bank's financial
condition are discussed in detail below.

ASSET QUALITY

A major key to long-term earnings growth is the maintenance of a high-quality
loan portfolio. The Bank's directive in this regard is carried out through its
policies and procedures for extending credit to the Bank's customers. The goal
and result of these policies and procedures is to provide a sound basis for new
credit extensions and an early recognition of problem assets to allow the most
flexibility in their timely disposition.

Non-performing assets were $715,000 at June 30, 2001, compared to $644,000 at
December 31, 2000 and $890,000 at June 30, 2000. The composition of
non-performing assets for each date is shown below.

<TABLE>
<CAPTION>
                                               June 30,     December 31,     June 30,
                                                 2001           2000           2000
                                              ----------    -----------     ---------
<S>                                           <C>           <C>             <C>
Non-accrual loans                             $ 217,000     $   161,000     $ 247,000
OREO, net of valuation allowance                498,000         483,000       643,000
                                              ---------     -----------     ---------

                                              $ 715,000     $   644,000     $ 890,000
                                              =========     ===========     =========
</TABLE>

The ratio of non-performing assets to total loans and other real estate was 0.5%
at June 30, 2001, 0.7% at December 31, 2000, and 1.2% at June 30, 2000.

Reduction and disposition of non-performing assets is a management priority.

Additions to the allowance for loan losses are made periodically to maintain the
allowance at an appropriate level based upon management's analysis of potential
risk in the loan portfolio. The amount of the loan loss allowance and related
provision is determined by an evaluation of the level of loans outstanding, the
level of non-performing loans, historical loan loss experience, delinquency
trends, the amount of actual losses charged to the reserve in a given period,
and assessment of present and anticipated economic conditions.


                                        9

<PAGE>   12

                        GEORGIA-CAROLINA BANCSHARES, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)

From the previously described analysis, management determined that the allowance
for loan losses should be increased through a provision for loan losses of
$168,000 during the quarter ended June 30, 2001. The ratio of allowance for loan
losses to total loans was 1.1% at June 30, 2001. At December 31, 2000 the ratio
was 1.3% and was 1.4% at June 30, 2000. Excluding the balance of loans held for
sale by the Bank, the ratio of allowance for loan losses to loans was 1.7% at
June 30, 2001, and 1.9% at June 30, 2000. Management considers the current
allowance for loan losses appropriate based upon its analysis of the potential
risk in the portfolio, although there can be no assurance that the assumptions
underlying such analysis will continue to be correct.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is the ability of an organization to meet its financial commitments
and obligations on a timely basis. These commitments and obligations include
credit needs of customers, withdrawals by depositors, and payment of operating
expenses and dividends. The Bank does not anticipate any events which would
require liquidity beyond that which is available through deposit growth, federal
funds balances, warehouse lines and other funding sources or investment
portfolio maturities. The Bank actively manages the levels, types and maturities
of earning assets in relation to the sources available to fund current and
future needs to ensure that adequate funding will be available at all times.

The Bank's liquidity remains adequate to meet operating and loan funding
requirements. The Bank's liquidity ratio at June 30, 2001 was 42.6%, compared to
31.5% at December 31, 2000.

Management is committed to maintaining capital at a level sufficient to protect
depositors, provide for reasonable growth, and fully comply with all regulatory
requirements. Management's strategy to achieve this goal is to retain sufficient
earnings while providing a reasonable return on equity. Federal banking
regulations establish certain capital adequacy standards required to be
maintained by banks. These regulations set minimum requirements for risk-based
capital of 4% for core capital ("Tier I"), 8% for total risk-based capital and
4% for the leverage ratio. At June 30, 2001, the Bank's Tier I capital was 9.69%
and total risk-based capital was 10.93%, compared to 10.51% and 13.95% at
year-ended December 31, 2000, respectively. At June 30, 2001, the Bank's
leverage ratio was 7.22% compared to 12.70% at December 31, 2000.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The Company may, from time to time, make written or oral forward-looking
statements, including statements contained in the Company's filings with the
Securities and Exchange Commission (the "Commission") and its reports to
stockholders. Such 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. The Company's actual results may differ
materially from the results anticipated in these forward-looking statements due
to a variety of factors, including governmental monetary and fiscal policies,
deposit levels, loan demand, loan collateral values, securities portfolio values
and interest rate risk management; the effects of competition in the banking
business from other commercial banks, savings and loan associations, mortgage
banking firms, consumer finance companies, credit unions, securities brokerage
firms, insurance companies, money market mutual funds and other financial
institutions operating in the Company's market area and elsewhere, including
institutions operating through the Internet; changes in government regulations
relating to the banking industry, including regulations relating to branching
and acquisitions; failure of assumptions underlying the establishment of
reserves for loan losses, including the value of collateral underlying
delinquent loans, and other factors. The Company cautions that such factors are
not exclusive. The Company does not undertake to update any forward-looking
statements that may be made from time to time by, or on behalf of, the Company.


                                       10

<PAGE>   13

                                     PART II
                                OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES

On April 16, 2001, the Company issued 100 shares to each of its outside
directors, or an aggregate of 1,600 shares, as an annual retainer in
consideration for their services as directors of the Company.

The issuances of the securities described above were made in reliance on the
exemption from registration provided in Section 4(2) of the Securities Act of
1933, as amended, as transactions by an issuer not involving a public offering.
All of the securities were acquired by the recipients thereof for investment
with no view toward the resale or distribution thereof. Each of the purchasers
has a pre-existing relationship with the Company and the offers and sales were
made without any public solicitation. No underwriter was involved in the
transaction and no commissions were paid.

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

The 2001 Annual Meeting of Shareholders of the Company (the "Annual Meeting")
was held on May 16, 2001. At the Annual Meeting, the following persons were
elected as directors to serve as Class I directors, for a term of three years
and until their successors are elected and qualified: Phillip G. Farr, Samuel A.
Fowler, Jr., Arthur J. Gay, Jr., Joseph D. Greene, Hugh L. Hamilton, Jr., and
William G. Hatcher.

The number of votes cast for and withheld in the election of each nominee for
director was as follows:

<TABLE>
<CAPTION>
                                               Votes               Votes
                                                FOR              WITHHELD
                                              -------            --------
<S>                                           <C>                <C>
Phillip G. Farr                               542,547                0
Samuel A. Fowler, Jr.                         542,547                0
Arthur J. Gay, Jr.                            542,547                0
Joseph D. Greene                              542,547                0
Hugh L. Hamilton, Jr.                         542,547                0
William G. Hatcher                            542,547                0
</TABLE>


No other matters were presented or voted for at the Annual Meeting.

The following persons did not stand for reelection to the Board at the 2001
Annual Meeting of Shareholders as their term of office continued after the
Annual Meeting: Patrick G. Blanchard, Larry DeMeyers, J. Randal Hall, George O.
Hughes, George H. Inman, David W. Joesbury, Sr., John W. Lee, James L. Lemley,
M.D., Julian W. Osbon, Robert N. Wilson, Jr. and Bennye M. Young.


                                       11

<PAGE>   14

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a) No exhibits are filed with this report.

         (b) No reports on Form 8-K were filed during the quarter ended June 30,
             2001.



                                       12
<PAGE>   15


                                   SIGNATURES


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


                        GEORGIA-CAROLINA BANCSHARES, INC.






By: /s/ Patrick G. Blanchard                                August 14, 2001
    -----------------------------------------------         --------------------
    Patrick G. Blanchard                                    Date
    President and Chief Executive Officer
    (principal executive officer)






By: /s/ J. Harold Ward, Jr.                                 August 14, 2001
    -----------------------------------------------         --------------------
    J. Harold Ward, Jr.                                     Date
    Senior Vice President, Chief Financial Officer
    (principal financial and accounting officer)



                                       13