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                                                                    EXHIBIT 10.1

                                   AGREEMENT

         THIS EMPLOYMENT AGREEMENT (the "Agreement") made and entered into on
the 6th day of October, 1997 by and among McDuffie Bank and Trust, Thomson,
Georgia, a bank chartered under the laws of the State of Georgia, (hereinafter
the "Bank"), Pinnacle Bancshares, Inc., a corporation chartered under the laws
of the State of Georgia (hereinafter the "Company") (the Bank and the Company
collectively referred to as the "Employer"), and Patrick G. Blanchard, Sr., an
individual residing in Richmond County, Georgia (hereinafter the "Executive").

                              W I T N E S S E T H:

         WHEREAS, the Board of Directors (hereinafter the "Board") of the
Employer recognizing the experience and knowledge of the Executive in the
banking industry, desire to retain the services and business counsel of the
Executive, therefore, it being in the best interest of the Employer to arrange
terms of employment for the Executive with the Employer for the term hereof; and

         WHEREAS, the Executive is willing to provide his services to the
Employer in accordance with the terms and conditions hereinafter set forth:

         NOW, THEREFORE, for and in consideration of the mutual premises and
covenants herein contained, the parties hereto agree as follows:

         1.       EMPLOYMENT - For the Term of Employment, as hereinafter
defined, the Employer hereby employs the Executive as President and Chief
Executive Officer of the Company and Vice-Chairman of the Bank during the term
of this Agreement, and the Executive agrees to accept such employment and to
perform such duties and functions as may be assigned to the Executive from time
to time, commensurate with the Executive's past experience and performance
level. Executive agrees to devote such of his time and energy to the business of
the Employer as is needed, and shall perform his duties in a trustworthy and
businesslike manner. Additionally, the Executive will be elected to the Board of
Directors of both the Bank and the Company.

                  The Board of the Bank shall review the Executive's performance
annually. The Board of the Bank shall also have the authority to terminate the
Executive, subject to the terms of this Agreement as outlined in Paragraph 2.1
of this Agreement.

         2.       TERM OF EMPLOYMENT - The term of employment of the Executive
under this Agreement shall be the period commencing as of October 6, 1997 and
continuing through December 31, 2000. On February 28, 1998, and on the last day
of February of each succeeding calendar year, the term of employment under this
Agreement shall be automatically extended to the last day of December of the
third calendar year thereafter, unless earlier terminated in accordance with
Section 2.1 of this Agreement, or unless either party shall have elected to fix
the expiration date of the Executive's term of employment hereunder. Each party
to this Agreement shall have the right, exercisable by written notice to the
other, to terminate the automatic renewal of this Agreement and thereby fix the
expiration of the term of employment under this Section 2, provided that such
notice be delivered by January 31 in any calendar year. Upon notice of
termination of automatic renewal of this Agreement, the term of employment of
the Executive under this Section 2 shall continue until the end of February of
the second calendar year from the year in which such notice is given.


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         2.1 TERMINATION OF EMPLOYMENT - Notwithstanding the Term of Employment
stated above, the employment of the Executive under this Agreement shall be
terminated by the earliest to occur of any of the following:

         (A) the death of the Executive;

         (B) the disability of the Executive ("Disability" as used herein shall
         be defined as the inability of the Executive whether due to physical or
         mental impairment to perform his normal duties);

         (C) voluntary retirement by the Executive or mandatory retirement at
         age 65;

         (D) the discharge of the Executive by the Employer

                  (i) "For Cause" - This Agreement may be terminated by the
Board without further obligation other than for monies already due to be paid,
for any of the following reasons:

                           (a) gross negligence or willful misconduct by the
                  Executive which is materially damaging to the business of the
                  Employer;

                           (b) conviction of the Executive of any crime
                  involving breach of trust or moral turpitude;

                           (c) a consistent pattern of failure by the Executive
                  to follow the reasonable written instructions or policies of
                  the Board of Directors of the Employer; or

                           (d) receipt of any written notice from the Georgia
                  Department of Banking and Finance or the Federal Deposit
                  Insurance Corporation, or the Board of Governors of the
                  Federal Reserve System requiring the removal of the Executive.

                               In the event that the Board discharges the
                  Executive alleging "cause" under this Paragraph 2.1(D)(i),
                  such notice of discharge shall be in writing and shall be
                  accompanied by a written description of the circumstances
                  alleging such "cause". The termination of the Executive for
                  "cause" shall entitle the Employer to enforcement of the Post
                  Termination Covenants as found in Paragraph 6 of this
                  Agreement. In the event that the Board discharges the
                  Executive alleging "cause" under this Paragraph 2.1(D)(i) and
                  it is subsequently determined judicially that the termination
                  was "without cause", then such discharge shall be deemed a
                  discharge "without cause" subject to the provisions of Section
                  2.1(D)(ii) hereof.


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                           (ii) "Without Cause": After the initial term of
                  employment, December 31, 2000, the Employer, subject to the
                  approval of a majority vote of the Board of Directors of the
                  Employer, may, upon thirty (30) days written notice to the
                  Executive, terminate this Agreement without cause at any time
                  during the term of this Agreement, upon the condition that the
                  Executive shall be entitled, as liquidated damages in lieu of
                  all claims to not less than twelve (12) months salary at the
                  then prevailing Base Salary level, with all insurance benefits
                  as identified in Paragraph 3.3 of this Agreement to be
                  maintained for a period of twelve (12) months, or until the
                  Executive is employed in a full-time position, whichever first
                  occurs. The termination of the Executive "without cause" shall
                  entitle the Employer to enforcement of the Post Termination
                  Covenants contained in Paragraph 6 hereof.

         (E) the voluntary termination of employment by the Executive, whether
or not due to the Employer's Material Breach ("Employer's Material Breach" as
used herein means the material breach of the terms of the Agreement by the
Employer which remains uncured after the expiration of 30 days following the
delivery of written notice of such breach to the Employer by the Executive);

         (F) the Execution of a mutual, written agreement of the Employer and
the Executive terminating the Executive's employment.

2.2      EFFECT OF TERMINATION

         (A) Executive shall have the right to receive compensation and other
benefits under Paragraph 2.1(D)(ii) if terminated without cause.

         (B) Executive shall have no right to receive any compensation or other
benefits under this Agreement, if terminated;

                           (i)   by the Board "for cause" (as defined in
                  Paragraph 2.1(D)(i) "for cause");

                           (ii)  voluntarily by the Executive in writing, if not
                  due to the Employer's Material Breach,

                           (iii) by mutual, written agreement of the Employer
                  and the Executive, or

                           (iv)  because of the Executive's death or disability.

3.       COMPENSATION

         3.1 BASE SALARY - During the term of employment, the Executive shall be
paid an annual salary (hereinafter "Base Salary") which shall be paid in equal
installments not less frequently than monthly, and subject to such deductions as
may be required by law. Executive's annual Base Salary shall not be less than
$120,000 per year unless agreed to in writing by both parties. Base Salary will
be reviewed by the compensation committee of the Board and annual increase
determined, if any, on or before January 31st of each year beginning January 31,
1999.


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         3.2      INCENTIVE BONUSES

                  (A) For the period ending December 31, 1998, or 12 months from
         the opening of branches in Richmond and Columbia County, the Employer
         will pay a cash bonus to the Executive of $12,000 upon the achievement
         of the following:

                           1. Opening of two branches of the Bank in Richmond
                  and Columbia Counties by December 31, 1998;

                           2. By December 31, 1998, or 12 months from the
                  opening of branches in Richmond and Columbia County, the
                  Richmond and Columbia County branches having total deposits of
                  $30,000,000 and $24,000,000 in loans;

                           3. A prorated part of the bonus will be paid if at
                   least 80% of Item 2 is achieved. No bonus will be paid if
                   less than 80% of goals in Item 2 are not achieved.

                           4. An increase in the $12,000 bonus may be paid if
                  goals in Item 2 are exceeded.

                  (B) Incentive bonuses for the subsequent years will be
         determined by the compensation committee of the Board.

                  5. STOCK OPTIONS - As of the date of the Company's successful
                  completion of its proposed public offering, referred to in
                  Section 4, below, the Employer will grant to the Executive a
                  stock option to purchase, at a per-share purchase price equal
                  to the Company's public offering price, a number of shares of
                  the Company's common equal to 2.5% of the number of shares of
                  the Company's common stock which are sold in its public
                  offering. The option will become exercisable in one-fourth
                  (1/4) increments as follows:

                           a. One-fourth (1/4) at the closing of the public
                  offering

                           b. One-fourth (1/4) at the end of the calender year
                  when the Bank's average assets exceed $100,000,000

                           c. One-fourth (1/4) at the end of the calendar year
                  when the Bank's average assets exceed $150,000,000

                           d. One-fourth (1/4) at the end of the calendar year
                  when the Bank's average assets exceed $200,000,000

                  The option shall expire on the tenth anniversary of the date
                  of grant; provided, however, that in the event of the
                  termination of employment of Executive, Executive shall have
                  ninety (90) days to exercise all of the then presently
                  exercisable options. On the ninety-first day after the
                  termination of employment of Executive, all unexercised
                  options shall terminate.


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         3.3 OTHER BENEFITS - During the term of this Agreement, the Employer
shall furnish for the benefit of the Executive the following:

                  (A) Automobile - Employer shall furnish to the Executive a
         mutually acceptable automobile. The cost of maintenance, fuel,
         insurance and upkeep to be borne by the Employer.

                  (B) Life Insurance - The Employer shall provide for the
         Executive term life insurance as presently exists or like coverage
         under any subsequent plan which may replace the current plan, with the
         beneficiary to be designated by the Executive.

                  (C) Health Insurance - The Employer shall provide for the
         Executive and his dependents major medical health insurance coverage
         through such insurance provider as the Employer may choose.

                  (D) Long-Term Disability - The Employer shall provide for the
         Executive a long-term disability insurance policy for benefits of at
         least 60% of the Executive's Base Salary.

                  (E) Club Dues - The Employer shall pay the monthly Club dues
         for three (3) organizations and business related charges during the
         Executive's employment with the Employer. The Employer will also
         provide the Executive with membership in other civic, service and
         professional organizations.

                  (F) Other Expenses - The Employer shall reimburse the
         Executive for reasonable expenses incurred in promoting the business of
         the Employer, and continuing his banking or professional education
         including expenses for attending bank meetings, conventions and
         seminars, and other reasonable expenses incurred for continuing
         education, business entertainment, and travel.

                  (G) Vacation - The Executive shall be entitled to four (4)
         weeks paid vacation or such period as may be provided by the Board or
         the Employer's Personnel Policy and he shall also be entitled to
         vacation days on all official holidays observed by the Bank.

         4.       CHANGE IN CONTROL

                  For the purposes of this Section 4, the term "change in
control" shall mean the first to occur of any of the following:

                           (A) The effective date of any transaction or series
                  of transactions (other than a transaction to which only the
                  Company and one or more of its subsidiaries or its parent
                  holding company, if any, are parties) pursuant to which the
                  Company becomes a subsidiary of a bank holding company, or
                  substantially all of the assets of the Company are sold to or
                  acquired by a person, corporation, or group of associated


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                  persons acting in concert who are not members of the present
                  Board of Directors of the Company; or

                           (B) The date upon which any person, corporation, or
                  group of associated persons acting in concert becomes a direct
                  or indirect beneficial owner of shares of stock of the Company
                  representing an aggregate of more than twenty-five percent
                  (25%) of the votes then entitled to be cast at an election of
                  Directors of the Company; or

                           (C) The date upon which the persons who were members
                  of the Board of Directors of the Company as of the date of
                  this Agreement (the "Original Directors") cease to constitute
                  a majority of the Board of Directors; provided, however, that
                  any new director whose nomination or selection has been
                  approved by the unanimous affirmative vote of the Original
                  Directors then in office shall also be deemed an Original
                  Director.

                  If, during the three-year period immediately following a
"change in control" of the Company, as defined in this Section 4, the
Executive's employment with the Employer is terminated either; (a) by the
Company for no reason or for any reason other than "for cause" as defined in
Section 2.1(D)(i); (b) by the Executive as a result of and within thirty (30)
days following; (i) a reduction in his rate of regular compensation from the
Employer to an amount below the rate of his regular compensation as in effect
immediately prior to the change in control; or (ii) a requirement that the
Executive relocate to a county other than Richmond, Columbia and McDuffie County
in which he was employed immediately prior to the change in control; or (iii) a
reduction in the Executive's duties, title, and/or responsibilities, as were
previously set prior to the change in control, then the Employer shall pay the
Executive an amount equal to two (2) times his Base Salary, as defined in
Section 3.1, as in effect immediately prior to the change in control, plus an
amount representing the "in-the-money" portion (defined as the excess, if any,
of the fair market value of the common stock underlying the Executive's stock
options minus the option price) of any unexercised stock options, whether or not
then exercisable, granted to the Executive; or (c) by the Executive for no
reason, then the Employer shall pay the Executive an amount equal to his Base
Salary, as then in effect, plus the in-the-money portion of any unexercised
stock options whether or not then exercisable. Such compensation shall be paid
in a lump sum within thirty (30) days after such termination.

                           (D) Notwithstanding anything to the contrary set
                  forth in this Section 4, "change in control" shall not include
                  any sale of common stock by the Company in connection with the
                  proposed expansion of the Bank's business into Columbia and
                  Richmond Counties.

         5.       POST TERMINATION COVENANTS - Executive agrees that for a
period of twelve (12) months after leaving the employment of the Employer,
except a provided in Paragraph 2.1 of this Agreement or a termination of this
Agreement as provided in Paragraph 5(ii) of this Agreement, he will adhere to
the following:

                  (A) Executive agrees that he will not, without the prior
         written consent of the Board of Directors of the Employer, serve as an
         executive officer of any bank or other financial institution in
         McDuffie, Richmond, and Columbia Counties, Georgia and Aiken 


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         County, South Carolina.

                  (B) Executive agrees that he will not without prior written
         consent of the Employer solicit directly or indirectly any business
         from any of the customers of the Employer.



         6.  SEVERABILITY - The Employer and the Executive agree that each of
the provisions included in this Agreement is separate, distinct, and severable
from the other provisions of this Agreement, and that the invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement. Further, if
any provision of this Agreement is ruled invalid or unenforceable by a court of
competent jurisdiction because of a conflict between the provisions and any
applicable law, both parties to this Agreement will make every reasonable effort
to redraw the provision so as to make the provision consistent with the original
intent of this Agreement and consistent, valid and enforceable under such law.

         7.  ASSIGNMENT - Neither the Employer nor the Executive may assign nor
delegate this Agreement or any of its rights and obligations hereunder without
the prior written consent of the other party hereto.

         8.  AMENDMENT - This Agreement may only be amended in writing duly
executed by both parties hereto.

         9.  WAIVER - A waiver by either party or any breach of this Agreement
by the other party shall not be effective unless in writing, and no waiver shall
operate or be construed as a waiver of the same or another breach on a
subsequent occasion.

         10. GOVERNING LAW - This Agreement shall in all respects be
interpreted, construed and governed by and in accordance with the laws of the
State of Georgia.

         11. NOTICES - Any notice or other document or communication permitted
or required to be given to the Executive pursuant to the terms hereof shall be
deemed given if personally delivered to the Executive or sent to him certified
mail at 2802 Hillcrest Avenue, Augusta, GA 30909, or any such other address as
the Executive shall have provided to the Employer in writing. Any notice or
other document or other communication permitted or required to be given to the
Employer pursuant to the terms hereof shall be deemed given if personally
delivered to the Employer or sent certified mail to 110 E. Hill Street, Thomson,
Georgia, 30824 or at such other address as the Employer shall have notified the
Executive in writing.

         12. ENTIRE AGREEMENT - This Agreement embodies the entire and final
agreement of the parties on the subject matter stated in this Agreement.


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         IN WITNESS WHEREOF, the Bank and the Executive have executed and
delivered this Agreement as of the date first shown above.

                                    "Bank"

                                    MCDUFFIE BANK & TRUST


                              By:   /s/ David W. Joesbury, Sr.
                                    -------------------------------------
                                    Chairman


                                    ATTEST: /s/ Heyward Horton, Jr.
                                           ------------------------------


                                    "Company"

                                    PINNACLE BANCSHARES, INC.


                              By:   /s/ David W. Joesbury, Sr.
                                    -------------------------------------
                                    Chairman


                                    ATTEST: /s/ Heyward Horton, Jr.
                                           ------------------------------


                                    EXECUTIVE


                                    /s/ Patrick G. Blanchard, Sr.
                                    -------------------------------------
                                    Patrick G. Blanchard, Sr.


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