##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 31, 2011
 - or -
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission File Number 0-22981
 GEORGIA-CAROLINA BANCSHARES, INC.
  Georgia
    
    58-2326075(State or other Jurisdiction of
    
    (I.R.S. Employer Identification Number)Incorporation or Organization)
 (Address of principal executive offices, including zip code)
 (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 o þ
  Class
    
    Outstanding at May 12, 2011Common Stock, $.001 Par Value
    
    3,551,780 shares




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##### 



GEORGIA-CAROLINA BANCSHARES, INC.
  PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Condensed Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010
    
    
    2Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2011 and 2010
    
    
    3Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2011 and 2010
    
    
    4Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011 and 2010
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    28Item 4. Controls and Procedures
    
    
    28PART II. OTHER INFORMATIONItem 6. Exhibits
    
    
    29SIGNATURES
    
    
    30EXHIBIT INDEX
    
    
    31CERTIFICATIONSEX-31.1EX-31.2EX-32.1




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##### Table of Contents



Part I  FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements.
 GEORGIA-CAROLINA BANCSHARES, INC.
 
 Condensed Consolidated Balance Sheets
(Unaudited)
 (dollars in thousands)
 March 31,
    
    
    December 31,2011
    
    
    2010ASSETSCash and due from banks
    
    $
    46,957
    
    
    $
    31,696Securities available-for-sale
    
    
    100,984
    
    
    
    76,904Loans, net of allowance for loan losses of $7,398 and $7,866, respectively
    
    
    316,169
    
    
    
    308,943Loans, held for sale
    
    
    15,528
    
    
    
    46,570Bank premises and equipment
    
    
    9,147
    
    
    
    9,271Accrued interest receivable
    
    
    1,848
    
    
    
    1,679Foreclosed real estate
    
    
    2,931
    
    
    
    2,751Deferred tax asset, net
    
    
    2,494
    
    
    
    2,475Federal Home Loan Bank stock
    
    
    2,527
    
    
    
    2,527Bank-owned life insurance
    
    
    9,295
    
    
    
    9,210Other assets
    
    
    2,869
    
    
    
    3,267Total assets
    
    $
    510,749
    
    
    $
    495,311LIABILITIES AND SHAREHOLDERS EQUITYDeposits:Non-interest bearing
    
    $
    45,974
    
    
    $
    41,602Interest-bearing:NOW accounts
    
    
    40,620
    
    
    
    38,668Savings
    
    
    58,112
    
    
    
    53,880Money market accounts
    
    
    42,751
    
    
    
    36,013Time deposits of $100,000 or more
    
    
    169,726
    
    
    
    171,843Other time deposits
    
    
    71,549
    
    
    
    72,743Total deposits
    
    
    428,732
    
    
    
    414,749Borrowings:Repurchase agreements
    
    
    3,068
    
    
    
    3,467Long-term debt
    
    
    25,000
    
    
    
    25,000Other borrowings
    
    
    3,625
    
    
    
    3,625Other liabilities
    
    
    4,032
    
    
    
    3,494Total liabilities
    
    
    464,457
    
    
    
    450,335Shareholders equity:Preferred stock, par value $.001; 1,000,000 shares authorized; 
none issued
    
    
    
    
    
    
    Common stock, par value $.001; 9,000,000 shares authorized; 
3,546,125 and 3,536,715 shares issued and outstanding
    
    
    4
    
    
    
    4Additional paid-in-capital
    
    
    15,927
    
    
    
    15,847Retained earnings
    
    
    30,280
    
    
    
    28,889Accumulated other comprehensive income
    
    
    81
    
    
    
    236Total shareholders equity
    
    
    46,292
    
    
    
    44,976Total liabilities and shareholders equity
    
    $
    510,749
    
    
    $
    495,311
   2




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GEORGIA-CAROLINA BANCSHARES, INC.
 
 Condensed Consolidated Statements of Income
(Unaudited)
 (dollars in thousands, except per share amounts)
 Three Months EndedMarch 31,2011
    
    
    2010Interest incomeInterest and fees on loans
    
    $
    5,069
    
    
    $
    5,552Interest on taxable securities
    
    
    520
    
    
    
    394Interest on nontaxable securities
    
    
    103
    
    
    
    97Interest on Federal funds sold and other interest
    
    
    25
    
    
    
    7Total interest income
    
    
    5,717
    
    
    
    6,050Interest expenseInterest on time deposits of $100,000 or more
    
    
    673
    
    
    
    936Interest on other deposits
    
    
    725
    
    
    
    722Interest on funds purchased and other borrowings
    
    
    276
    
    
    
    223Total interest expense
    
    
    1,674
    
    
    
    1,881Net interest income
    
    
    4,043
    
    
    
    4,169Provision for loan losses
    
    
    99
    
    
    
    1,086Net interest income after provision for loan losses
    
    
    3,944
    
    
    
    3,083Non-interest incomeService charges on deposits
    
    
    385
    
    
    
    343Gain on sale of mortgage loans
    
    
    2,091
    
    
    
    2,419Other income
    
    
    384
    
    
    
    268Total non-interest income
    
    
    2,860
    
    
    
    3,030Non-interest expenseSalaries and employee benefits
    
    
    2,969
    
    
    
    3,052Occupancy expenses
    
    
    394
    
    
    
    420Other expenses
    
    
    1,383
    
    
    
    1,613Total non-interest expense
    
    
    4,746
    
    
    
    5,085Income before income taxes
    
    
    2,058
    
    
    
    1,028Income tax expense
    
    
    667
    
    
    
    190Net income
    
    $
    1,391
    
    
    $
    838Net income per share of common stockBasic
    
    $
    0.39
    
    
    $
    0.24Diluted
    
    $
    0.39
    
    
    $
    0.24Dividends per share of common stock
    
    $
    
    
    
    $
    See notes to condensed consolidated financial statements.
  3




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GEORGIA-CAROLINA BANCSHARES, INC.
 
 Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
 (dollars in thousands)
 Three Months EndedMarch 31,2011
    
    
    2010Net Income
    
    $
    1,391
    
    
    $
    838Other comprehensive income (loss):Unrealized holding gain (loss) arising during the period
    
    
    (204
    )
    
    
    113Reclassification for gain (loss) included in net income
    
    
    
    
    
    
    Reclassification for other-than-temporary impairment included in net income
    
    
    (38
    )
    
    
    Tax effect
    
    
    87
    
    
    
    (41
    )Total other comprehensive income (loss)
    
    
    (155
    )
    
    
    72Comprehensive income
    
    $
    1,236
    
    
    $
    910
   4




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GEORGIA-CAROLINA BANCSHARES, INC.
 
 Condensed Consolidated Statements of Cash Flows
(Unaudited)
 (dollars in thousands)
 Three Months Ended March 31,2011
    
    
    2010Cash flows from operating activitiesNet income
    
    $
    1,391
    
    
    $
    838Adjustments to reconcile net income
to net cash provided by operating activities:Depreciation and amortization
    
    
    155
    
    
    
    165Provision for loan losses
    
    
    99
    
    
    
    1,086Stock option expense
    
    
    27
    
    
    
    22Stock compensation
    
    
    40
    
    
    
    45Increase in cash value of bank-owned life insurance
    
    
    (85
    )
    
    
    (85
    )Gain on sales of foreclosed real estate
    
    
    (178
    )
    
    
    (45
    )Loss on sales of premises and equipment
    
    
    10
    
    
    
    Other-than-temporary impairment of security
    
    
    38
    
    
    
    Gain on loans held for sale
    
    
    (2,091
    )
    
    
    (2,419
    )Proceeds from sale of loans held for sale
    
    
    114,029
    
    
    
    147,778Originations of loans held for sale
    
    
    (80,896
    )
    
    
    (117,398
    )Increase in accrued interest receivable
    
    
    (151
    )
    
    
    (4
    )Decrease in accrued interest payable
    
    
    (157
    )
    
    
    (14
    )(Increase) decrease in deferred income tax asset, net
    
    
    68
    
    
    
    (229
    )Decrease in other assets
    
    
    372
    
    
    
    1,060Increase in other liabilities
    
    
    695
    
    
    
    276Net cash provided by operating activities
    
    
    33,366
    
    
    
    31,076Cash flows from investing activitiesDecrease in federal funds sold
    
    
    
    
    
    
    3,175Loan originations and collections, net
    
    
    (7,975
    )
    
    
    (4,148
    )Purchases of available-for-sale securities
    
    
    (27,617
    )
    
    
    (19,252
    )Proceeds from maturities, sales & calls of
available-for-sale securities, net
    
    
    3,257
    
    
    
    7,541Proceeds from sales of foreclosed real estate
    
    
    648
    
    
    
    941Net additions to bank premises and fixed assets
    
    
    (15
    )
    
    
    (27
    )Net cash used in investing activities
    
    
    (31,702
    )
    
    
    (11,770
    )Cash flows from financing activitiesIncrease (decrease) in deposits
    
    
    13,983
    
    
    
    (1,470
    )Decrease in FHLB borrowings
    
    
    
    
    
    
    (3,600
    )Increase (decrease) in repurchase agreements and other borrowings
    
    
    (399
    )
    
    
    199Proceeds from stock options exercised
    
    
    13
    
    
    
    Net cash provided by (used in) financing activities
    
    
    13,597
    
    
    
    (4,871
    )Net increase in cash and due from banks
    
    
    15,261
    
    
    
    14,435Cash and due from banks at beginning of period
    
    
    31,696
    
    
    
    13,055Cash and due from banks at end of period
    
    $
    46,957
    
    
    $
    27,490
   5




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GEORGIA-CAROLINA BANCSHARES, INC.
 
 Notes to Condensed Consolidated Financial Statements
March 31, 2011
(Unaudited)
 Note 1  Basis of Presentation
    Note 2  Loans
  March 31,
    
    
    December 31,2011
    
    
    2010(in thousands)Commercial and industrial
    
    $
    19,827
    
    
    $
    20,298Real estate  construction
    
    
    90,233
    
    
    
    86,418Real estate  residential
    
    
    59,695
    
    
    
    61,194Real estate  commercial
    
    
    147,387
    
    
    
    142,351Consumer
    
    
    6,505
    
    
    
    6,606Total loans receivable
    
    
    323,647
    
    
    
    316,867Deferred loan fees
    
    
    (80
    )
    
    
    (58
    )Total loans
    
    
    323,567
    
    
    
    316,809Allowance for loan losses
    
    
    (7,398
    )
    
    
    (7,866
    )Loans, net of allowance for loan losses
    
    $
    316,169
    
    
    $
    308,943
  6




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Credit Risk Profile by Risk Grade Category:
 As of March 31, 2011  (in thousands)
 Commercialand
    
    
    Real Estate 
    
    
    Real Estate 
    
    
    Real Estate Industrial
    
    
    Construction
    
    
    Residential
    
    
    Commercial
    
    
    Consumer
    
    
    TotalGrade 1
    
    $
    277
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    950
    
    
    $
    1,227Grade 2
    
    
    133
    
    
    
    
    
    
    
    220
    
    
    
    803
    
    
    
    124
    
    
    
    1,280Grade 3
    
    
    15,823
    
    
    
    18,163
    
    
    
    49,161
    
    
    
    91,428
    
    
    
    5,088
    
    
    
    179,663Grade 4
    
    
    2,976
    
    
    
    64,938
    
    
    
    7,373
    
    
    
    48,542
    
    
    
    111
    
    
    
    123,940Grade 5
    
    
    
    
    
    
    3,270
    
    
    
    566
    
    
    
    284
    
    
    
    
    
    
    
    4,120Grade 6
    
    
    631
    
    
    
    3,957
    
    
    
    2,374
    
    
    
    6,330
    
    
    
    115
    
    
    
    13,407In process
    
    
    (13
    )
    
    
    (95
    )
    
    
    1
    
    
    
    
    
    
    
    117
    
    
    
    10Total loans
receivable
    
    $
    19,827
    
    
    $
    90,233
    
    
    $
    59,695
    
    
    $
    147,387
    
    
    $
    6,505
    
    
    $
    323,647
  7




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As of December 31, 2010  (in thousands)
 Commercialand
    
    
    Real Estate 
    
    
    Real Estate 
    
    
    Real Estate Industrial
    
    
    Construction
    
    
    Residential
    
    
    Commercial
    
    
    Consumer
    
    
    TotalGrade 1
    
    $
    251
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    794
    
    
    $
    1,045Grade 2
    
    
    133
    
    
    
    
    
    
    
    235
    
    
    
    1,059
    
    
    
    100
    
    
    
    1,527Grade 3
    
    
    15,939
    
    
    
    14,879
    
    
    
    48,901
    
    
    
    86,109
    
    
    
    5,370
    
    
    
    171,198Grade 4
    
    
    3,338
    
    
    
    62,594
    
    
    
    7,801
    
    
    
    44,126
    
    
    
    99
    
    
    
    117,958Grade 5
    
    
    
    
    
    
    4,375
    
    
    
    568
    
    
    
    2,862
    
    
    
    
    
    
    
    7,805Grade 6
    
    
    637
    
    
    
    4,348
    
    
    
    3,666
    
    
    
    8,195
    
    
    
    125
    
    
    
    16,971In process
    
    
    
    
    
    
    222
    
    
    
    23
    
    
    
    
    
    
    
    118
    
    
    
    363Total loans
receivable
    
    $
    20,298
    
    
    $
    86,418
    
    
    $
    61,194
    
    
    $
    142,351
    
    
    $
    6,606
    
    
    $
    316,867
  Allowance for Loan Losses Activity
For the Three Months Ended March 31, 2011 and 2010
 Commercialand
    
    
    Real Estate 
    
    
    Real Estate 
    
    
    Real Estate Industrial
    
    
    Construction
    
    
    Residential
    
    
    Commercial
    
    
    Consumer
    
    
    Unallocated
    
    
    TotalThree Months Ended
March 31, 2011:Beginning balance
    
    $
    227
    
    
    $
    3,908
    
    
    $
    1,070
    
    
    $
    1,617
    
    
    $
    251
    
    
    $
    793
    
    
    $
    7,866Charge-offs
    
    
    
    
    
    
    (319
    )
    
    
    (247
    )
    
    
    (116
    )
    
    
    (14
    )
    
    
    
    
    
    
    (696
    )Recoveries
    
    
    64
    
    
    
    
    
    
    
    42
    
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    129Provisions
    
    
    (170
    )
    
    
    288
    
    
    
    100
    
    
    
    34
    
    
    
    (72
    )
    
    
    (81
    )
    
    
    99Ending
Balance
    
    $
    121
    
    
    $
    3,877
    
    
    $
    965
    
    
    $
    1,535
    
    
    $
    188
    
    
    $
    712
    
    
    $
    7,398Ending Balances:Individually
evaluated for
impairment
    
    $
    25
    
    
    $
    100
    
    
    $
    179
    
    
    $
    
    
    
    $
    71
    
    
    $
    
    
    
    $
    375Collectively
evaluated for
impairment
    
    $
    96
    
    
    $
    3,777
    
    
    $
    786
    
    
    $
    1,535
    
    
    $
    117
    
    
    $
    712
    
    
    $
    7,023
  8




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##### Table of Contents



Commercialand
    
    
    Real Estate 
    
    
    Real Estate 
    
    
    Real Estate Industrial
    
    
    Construction
    
    
    Residential
    
    
    Commercial
    
    
    Consumer
    
    
    Unallocated
    
    
    TotalThree Months Ended
March 31, 2010:Beginning balance
    
    $
    259
    
    
    $
    2,364
    
    
    $
    827
    
    
    $
    1,319
    
    
    $
    176
    
    
    $
    127
    
    
    $
    5,072Charge-offs
    
    
    (3
    )
    
    
    (810
    )
    
    
    (159
    )
    
    
    
    
    
    
    (68
    )
    
    
    
    
    
    
    (1,040
    )Recoveries
    
    
    59
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    66
    
    
    
    
    
    
    
    127Provisions
    
    
    82
    
    
    
    41
    
    
    
    90
    
    
    
    331
    
    
    
    17
    
    
    
    525
    
    
    
    1,086Ending
Balance
    
    $
    397
    
    
    $
    1,595
    
    
    $
    760
    
    
    $
    1,650
    
    
    $
    191
    
    
    $
    652
    
    
    $
    5,245Ending Balances:Individually
evaluated for
impairment
    
    $
    170
    
    
    $
    279
    
    
    $
    132
    
    
    $
    500
    
    
    $
    46
    
    
    $
    
    
    
    $
    1,127Collectively
evaluated for
impairment
    
    $
    227
    
    
    $
    1,316
    
    
    $
    628
    
    
    $
    1,150
    
    
    $
    145
    
    
    $
    652
    
    
    $
    4,118
  Recorded Investment in Loans Receivable
As of March 31, 2011 and December 31, 2010
 Commercialand
    
    
    Real Estate 
    
    
    Real Estate 
    
    
    Real Estate Industrial
    
    
    Construction
    
    
    Residential
    
    
    Commercial
    
    
    Consumer
    
    
    Unallocated
    
    
    TotalMarch 31, 2011:Ending balance  total
    
    $
    19,827
    
    
    $
    90,233
    
    
    $
    59,695
    
    
    $
    147,387
    
    
    $
    6,505
    
    
    $
    
    
    
    $
    323,647Ending balances:Individually
evaluated for
impairment
    
    $
    622
    
    
    $
    4,426
    
    
    $
    1,623
    
    
    $
    6,286
    
    
    $
    115
    
    
    $
    
    
    
    $
    13,072Collectively
evaluated for
impairment
    
    $
    19,205
    
    
    $
    85,807
    
    
    $
    58,072
    
    
    $
    141,101
    
    
    $
    6,390
    
    
    $
    
    
    
    $
    310,575December 31, 2010:Ending balance  total
    
    $
    20,298
    
    
    $
    86,418
    
    
    $
    61,194
    
    
    $
    142,351
    
    
    $
    6,606
    
    
    $
    
    
    
    $
    316,867Ending balances:Individually
evaluated for
impairment
    
    $
    627
    
    
    $
    4,347
    
    
    $
    3,185
    
    
    $
    8,146
    
    
    $
    122
    
    
    $
    
    
    
    $
    16,427Collectively
evaluated for
impairment
    
    $
    19,671
    
    
    $
    82,071
    
    
    $
    58,009
    
    
    $
    134,205
    
    
    $
    6,484
    
    
    $
    
    
    
    $
    300,440
  9




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##### Table of Contents



Impaired Loans
For the Three Months Ended March 31, 2011
 Unpaid
    
    
    
    
    
    
    Average
    
    
    InterestRecorded
    
    
    Principal
    
    
    Related
    
    
    Recorded
    
    
    IncomeInvestment
    
    
    Balance
    
    
    Allowance
    
    
    Investment
    
    
    RecognizedWith no related allowance recorded:Commercial
and industrial
    
    $
    597
    
    
    $
    608
    
    
    $
    
    
    
    $
    538
    
    
    $
    8Real estate 
construction
    
    
    4,101
    
    
    
    8,008
    
    
    
    
    
    
    
    4,883
    
    
    
    14Real estate 
residential
    
    
    1,444
    
    
    
    1,547
    
    
    
    
    
    
    
    1,272
    
    
    
    11Real estate 
commercial
    
    
    6,286
    
    
    
    6,318
    
    
    
    
    
    
    
    6,245
    
    
    
    99Consumer
    
    
    44
    
    
    
    62
    
    
    
    
    
    
    
    44
    
    
    
    Total
    
    $
    12,472
    
    
    $
    16,543
    
    
    $
    
    
    
    $
    12,982
    
    
    $
    132With an allowance recorded:Commercial
and industrial
    
    $
    25
    
    
    $
    25
    
    
    $
    25
    
    
    $
    28
    
    
    
    Real estate 
construction
    
    
    325
    
    
    
    325
    
    
    
    100
    
    
    
    325
    
    
    
    6Real estate 
residential
    
    
    179
    
    
    
    179
    
    
    
    179
    
    
    
    179
    
    
    
    3Real estate 
commercial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer
    
    
    71
    
    
    
    71
    
    
    
    71
    
    
    
    74
    
    
    
    1Total
    
    $
    600
    
    
    $
    600
    
    
    $
    375
    
    
    $
    606
    
    
    $
    10Total:Commercial
and industrial
    
    $
    622
    
    
    $
    633
    
    
    $
    25
    
    
    $
    566
    
    
    $
    8Real estate 
construction
    
    
    4,426
    
    
    
    8,333
    
    
    
    100
    
    
    
    5,208
    
    
    
    20Real estate 
residential
    
    
    1,623
    
    
    
    1,726
    
    
    
    179
    
    
    
    1,451
    
    
    
    14Real estate 
commercial
    
    
    6,286
    
    
    
    6,318
    
    
    
    
    
    
    
    6,245
    
    
    
    99Consumer
    
    
    115
    
    
    
    133
    
    
    
    71
    
    
    
    118
    
    
    
    1Total
    
    $
    13,072
    
    
    $
    17,143
    
    
    $
    375
    
    
    $
    13,588
    
    
    $
    142
  10




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##### Table of Contents



Impaired Loans
For the Year Ended December 31, 2010
 Unpaid
    
    
    
    
    
    
    Average
    
    
    InterestRecorded
    
    
    Principal
    
    
    Related
    
    
    Recorded
    
    
    IncomeInvestment
    
    
    Balance
    
    
    Allowance
    
    
    Investment
    
    
    RecognizedWith no related allowance recorded:Commercial
and industrial
    
    $
    597
    
    
    $
    608
    
    
    $
    
    
    
    $
    481
    
    
    $
    30Real Estate 
Construction
    
    
    3,705
    
    
    
    7,330
    
    
    
    
    
    
    
    7,341
    
    
    
    97Real Estate 
Residential
    
    
    2,466
    
    
    
    2,628
    
    
    
    
    
    
    
    2,677
    
    
    
    81Real Estate 
Commercial
    
    
    7,680
    
    
    
    8,530
    
    
    
    
    
    
    
    8,534
    
    
    
    498Consumer
    
    
    49
    
    
    
    68
    
    
    
    
    
    
    
    77
    
    
    
    2Total
    
    $
    14,497
    
    
    $
    19,164
    
    
    $
    
    
    
    $
    19,110
    
    
    $
    708With an allowance recorded:Commercial
and industrial
    
    $
    30
    
    
    $
    30
    
    
    $
    30
    
    
    $
    36
    
    
    $
    2Real Estate 
Construction
    
    
    642
    
    
    
    703
    
    
    
    160
    
    
    
    703
    
    
    
    27Real Estate 
Residential
    
    
    719
    
    
    
    719
    
    
    
    271
    
    
    
    642
    
    
    
    37Real Estate 
Commercial
    
    
    466
    
    
    
    466
    
    
    
    149
    
    
    
    473
    
    
    
    32Consumer
    
    
    73
    
    
    
    73
    
    
    
    73
    
    
    
    77
    
    
    
    6Total
    
    $
    1,930
    
    
    $
    1,991
    
    
    $
    683
    
    
    $
    1,931
    
    
    $
    104Total:Commercial
and industrial
    
    $
    627
    
    
    $
    638
    
    
    $
    30
    
    
    $
    517
    
    
    $
    32Real Estate 
Construction
    
    
    4,347
    
    
    
    8,033
    
    
    
    160
    
    
    
    8,044
    
    
    
    124Real Estate 
Residential
    
    
    3,185
    
    
    
    3,347
    
    
    
    271
    
    
    
    3,319
    
    
    
    118Real Estate 
Commercial
    
    
    8,146
    
    
    
    8,996
    
    
    
    149
    
    
    
    9,007
    
    
    
    530Consumer
    
    
    122
    
    
    
    141
    
    
    
    73
    
    
    
    154
    
    
    
    8Total
    
    $
    16,427
    
    
    $
    21,155
    
    
    $
    683
    
    
    $
    21,041
    
    
    $
    812
  11




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##### Table of Contents



Age Analysis of Past Due Loans Receivable
As of March 31, 2011
 Recorded30-59
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    InvestmentDays
    
    
    60-89
    
    
    Greater
    
    
    
    
    
    
    Current
    
    
    
    
    
    
    > 90 DaysPast
    
    
    Days
    
    
    Than 90
    
    
    Total
    
    
    and not
    
    
    Total Loans
    
    
    andDue
    
    
    Past Due
    
    
    Days
    
    
    Past Due
    
    
    Past Due
    
    
    Receivable
    
    
    AccruingCommercial
and industrial
    
    $
    136
    
    
    $
    34
    
    
    $
    4
    
    
    $
    174
    
    
    $
    19,653
    
    
    $
    19,827
    
    
    $
    Real estate  construction
    
    
    753
    
    
    
    375
    
    
    
    2,726
    
    
    
    3,854
    
    
    
    86,379
    
    
    
    90,233
    
    
    
    Real estate   residential
    
    
    1,876
    
    
    
    71
    
    
    
    546
    
    
    
    2,493
    
    
    
    57,202
    
    
    
    59,695
    
    
    
    Real estate  commercial
    
    
    3,439
    
    
    
    
    
    
    
    
    
    
    
    3,439
    
    
    
    143,948
    
    
    
    147,387
    
    
    
    Consumer
    
    
    46
    
    
    
    3
    
    
    
    51
    
    
    
    100
    
    
    
    6,405
    
    
    
    6,505
    
    
    
    Total
    
    $
    6,250
    
    
    $
    483
    
    
    $
    3,327
    
    
    $
    10,060
    
    
    $
    313,587
    
    
    $
    323,647
    
    
    $
    
 Age Analysis of Past Due Loans Receivable
As of December, 31, 2010
 Recorded30-59
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    InvestmentDays
    
    
    60-89
    
    
    Greater
    
    
    
    
    
    
    Current
    
    
    
    
    
    
    > 90 DaysPast
    
    
    Days
    
    
    Than 90
    
    
    Total
    
    
    and not
    
    
    Total Loans
    
    
    andDue
    
    
    Past Due
    
    
    Days
    
    
    Past Due
    
    
    Past Due
    
    
    Receivable
    
    
    AccruingCommercial
and industrial
    
    $
    152
    
    
    $
    30
    
    
    $
    9
    
    
    $
    191
    
    
    $
    20,107
    
    
    $
    20,298
    
    
    $
    Real estate  construction
    
    
    675
    
    
    
    943
    
    
    
    3,618
    
    
    
    5,236
    
    
    
    81,182
    
    
    
    86,418
    
    
    
    Real estate   residential
    
    
    1,177
    
    
    
    740
    
    
    
    691
    
    
    
    2,608
    
    
    
    58,586
    
    
    
    61,194
    
    
    
    Real estate  commercial
    
    
    55
    
    
    
    217
    
    
    
    90
    
    
    
    362
    
    
    
    141,989
    
    
    
    142,351
    
    
    
    Consumer
    
    
    16
    
    
    
    38
    
    
    
    50
    
    
    
    104
    
    
    
    6,502
    
    
    
    6,606
    
    
    
    Total
    
    $
    2,075
    
    
    $
    1,968
    
    
    $
    4,458
    
    
    $
    8,501
    
    
    $
    308,366
    
    
    $
    316,867
    
    
    $
    
  Loans Receivable on Nonaccrual Status
As of March 31, 2011 and December 31, 2010
 March 31,
    
    
    December 31,2011
    
    
    2010Commercial and industrial
    
    $
    36
    
    
    $
    34Real estate  construction
    
    
    3,351
    
    
    
    3,753Real estate  residential
    
    
    1,024
    
    
    
    1,979Real estate  commercial
    
    
    
    
    
    
    408Consumer
    
    
    79
    
    
    
    83Total
    
    $
    4,490
    
    
    $
    6,257
  12




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##### Table of Contents



Troubled Debt Restructurings
As of March 31, 2011
 Post-ModificationPre-Modification
    
    
    OutstandingNumber of
    
    
    Outstanding Recorded
    
    
    RecordedContracts
    
    
    Investment
    
    
    InvestmentCommercial and industrial
    
    
    1
    
    
    $
    546
    
    
    $
    548Real estate  construction
    
    
    4
    
    
    
    2,091
    
    
    
    1,572Real estate  residential
    
    
    3
    
    
    
    1,024
    
    
    
    1,019Real estate  commercial
    
    
    11
    
    
    
    7,260
    
    
    
    7,260Total
    
    
    19
    
    
    $
    10,921
    
    
    $
    10,399
 Troubled Debt Restructurings
As of December 31, 2010
 Post-ModificationPre-Modification
    
    
    OutstandingNumber of
    
    
    Outstanding Recorded
    
    
    RecordedContracts
    
    
    Investment
    
    
    InvestmentCommercial and industrial
    
    
    1
    
    
    $
    546
    
    
    $
    546Real estate  construction
    
    
    3
    
    
    
    1,569
    
    
    
    1,569Real estate  residential
    
    
    2
    
    
    
    1,190
    
    
    
    1,190Real estate  commercial
    
    
    9
    
    
    
    5,945
    
    
    
    5,945Total
    
    
    15
    
    
    $
    9,250
    
    
    $
    9,250
 Note 3  Stock-Based Compensation
 Compensation-Stock
Compensation,
  Note 4  Earnings Per Share
   13




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##### Table of Contents



For the Three Months Ended March 31, 2011WeightedAverage Shares-
    
    
    Per-ShareNumerator
    
    
    Denominator
    
    
    AmountBasic EPSIncome available to common stockholders
    
    $
    1,391,000
    
    
    
    3,545,428
    
    
    $
    0.39Effect of stock options outstanding
    
    
    
    
    
    
    
    
    
    
    Diluted EPSIncome available to common stockholders
    
    $
    1,391,000
    
    
    
    3,545,428
    
    
    $
    0.39
 For the Three Months Ended March 31, 2010WeightedAverage Shares-
    
    
    Per-ShareNumerator
    
    
    Denominator
    
    
    AmountBasic EPSIncome available to common
stockholders
    
    $
    838,000
    
    
    
    3,504,855
    
    
    $
    0.24Effect of stock options outstanding
    
    
    
    
    
    
    
    
    
    
    Diluted EPSIncome available to common
stockholders
    
    $
    838,000
    
    
    
    3,504,855
    
    
    $
    0.24
  Note 5  Fair Value Measurement
 Fair Value Measurements
and Disclosures.
   14




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##### Table of Contents



March 31, 2011
    
    
    December 31, 2010Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueLoans and loans held for
sale
    
    $
    339.1
    
    
    $
    367.5
    
    
    $
    363.4
    
    
    $
    400.5Time deposits
    
    $
    241.3
    
    
    $
    243.3
    
    
    $
    244.6
    
    
    $
    246.8
  Level 1
 Level 2
 Level 3
  Investment Securities Available-for-Sale
   15




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##### Table of Contents



Loans Held for Sale
  Loans
  Foreclosed Assets
   Fair Value Measurements atMarch 31, 2011, Using,QuotedPrices inAssets/
    
    
    Active
    
    
    Significant
    
    
    SignificantLiabilities
    
    
    Markets for
    
    
    Other
    
    
    OtherMeasured at
    
    
    Identical
    
    
    Observable
    
    
    UnobservableFair Value
    
    
    Assets
    
    
    Inputs
    
    
    InputsDescription
    
    03/31/2011
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Available-for-sale
securities
    
    $
    100,984
    
    
    $
    
    
    
    $
    100,984
    
    
    $
    
  16




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##### Table of Contents



Fair Value Measurements atDecember 31, 2010, Using,QuotedPrices inAssets/
    
    
    Active
    
    
    Significant
    
    
    SignificantLiabilities
    
    
    Markets for
    
    
    Other
    
    
    OtherMeasured at
    
    
    Identical
    
    
    Observable
    
    
    UnobservableFair Value
    
    
    Assets
    
    
    Inputs
    
    
    InputsDescription
    
    12/31/2010
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Available-for-sale
securities
    
    $
    76,904
    
    
    $
    
    
    
    $
    76,904
    
    
    $
    
 Note 6  Impact of Other Recently Issued Accounting Standards
 A Creditors
Determination of Whether a Restructuring Is a Troubled Debt Restructuring Receivables  Troubled Debt Restructurings by Creditors.
 Deferral of the Effective Date of Disclosures about
Troubled Debt Restructurings in Update No. 2010-20, Receivables.
 , Receivables (Topic 310)  Disclosures about the
Credit Quality of Financing Receivables and the Allowance for Credit Losses
  17




---



##### Table of Contents



Fair Value Measurements and Disclosures (Topic
820)  Improving Disclosures About Fair Value Measurements
  Note 7  Commitments and Contingencies
     18




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Overview
   Critical Accounting Policies
    19




---



##### Table of Contents



Contingencies: Loss Contingencies, Receivables: Subsequent
Measurement.
  Results of Operations
 Overview
    20




---



##### Table of Contents



Interest Income
  Interest Expense
  Net Interest Income
    21




---



##### Table of Contents



Provision for Loan Losses
  Non-interest Income
  Non-interest Expense
  Income Taxes
   22




---



##### Table of Contents



Financial Condition
 Overview
   Asset Quality
   March 31,
    
    
    December 31,
    
    
    March 31,2011
    
    
    2010
    
    
    2010Non-accrual loans
    
    $
    4,490,000
    
    
    $
    6,257,000
    
    
    $
    6,582,000OREO, net of valuation allowance
    
    
    2,931,000
    
    
    
    2,751,000
    
    
    
    3,874,000Total non-performing assets
    
    $
    7,421,000
    
    
    $
    9,008,000
    
    
    $
    10,456,000
   23




---



##### Table of Contents



Liquidity and Capital Resources
     24




---



##### Table of Contents



Minimum RegulatoryMarch 31, 2011
    
    
    December 31, 2010
    
    
    RequirementTotal risk-based capital ratio
    
    
    13.40
    %
    
    
    12.91
    %
    
    
    8.00
    %Tier 1 risk-based capital
ratio
    
    
    12.14
    %
    
    
    11.65
    %
    
    
    4.00
    %Tier 1 leverage ratio
    
    
    9.13
    %
    
    
    9.17
    %
    
    
    4.00
    %
      Off-Balance Sheet Arrangements
   25




---



##### Table of Contents



March 31,
    
    
    December 31,2011
    
    
    2010(in thousands)Commitments to extend credit
    
    $
    49,043
    
    
    $
    49,477Standby letters of credit
    
    
    5,013
    
    
    
    5,154Total off-balance sheet financial instruments
    
    $
    54,056
    
    
    $
    54,631
 Supplemental Consolidated Cash Flow Information
  March 31,
    
    
    March 31,2011
    
    
    2010(in thousands)Interest received
    
    $
    5,566
    
    
    $
    6,047Interest paid
    
    
    1,831
    
    
    
    1,895Real estate acquired by foreclosure
    
    
    650
    
    
    
    303Unrealized gain/(loss) on securities
    
    
    (242
    )
    
    
    112Income taxes paid (refunded)
    
    
    950
    
    
    
    (298
    )$
    8,755
    
    
    $
    8,059
  26




---



##### Table of Contents



Cautionary Note Regarding Forward-Looking Statements
    27




---



##### Table of Contents



Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk.
  
 Item 4.
    
    Controls and Procedures.
     28




---



##### Table of Contents



Part II  OTHER INFORMATION
 
 Item 6.
    
    Exhibits.
  Exhibit No.

    
    Description3.1
    
    -
    Articles of Incorporation of the Company (incorporated herein by reference to Exhibit
3.1 of the Companys Registration Statement on Form SB-2 under the Securities Act of 1933,
as amended, Registration No. 333-69763).3.1.1
    
    -
    Articles of Amendment to the Articles of Incorporation of the Company (incorporated
herein by reference to Exhibit 3.1.1 of the Companys Annual Report on Form 10-KSB for the
year ended December 31, 2000).3.2
    
    -
    By-Laws of the Company (incorporated herein by reference to Exhibit 3.2 of the
Companys Registration Statement on Form SB-2 under the Securities Act of 1933, as amended,
Registration No. 333-69763).31.1
    
    -
    Certification of President and Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    -
    Certification of Senior Vice President and Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    -
    Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  29




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##### Table of Contents



SIGNATURES
  GEORGIA-CAROLINA BANCSHARES, INC.May 12, 2011
    By:
    /s/ Remer Y. Brinson, IIIRemer Y. Brinson, IIIPresident and Chief Executive Officer

(principal executive officer)May 12, 2011
    By:
    /s/ Thomas J. FlournoyThomas J. FlournoySenior Vice President and Chief Financial Officer
(principal financial and accounting officer)  30




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description of ExhibitExhibit 31.1
    
    Certification of President and Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.Exhibit 31.2
    
    Certification of Senior Vice President and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.Exhibit 32.1
    
    Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  31