<PAGE>


                     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 September 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 November  8, 2001
Common Stock, $.001 Par Value                             939,377 shares


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




<PAGE>


                        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 September 30, 2001
           and December 31, 2000                                                   1

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

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

          Condensed Consolidated Statements of Cash Flows for the Nine
           Months Ended September 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                                                    12

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

          SIGNATURES                                                               13
</TABLE>





<PAGE>



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


<TABLE>
<CAPTION>
                                                             September 30,       December 31,
ASSETS                                                           2001                 2000
                                                             -------------       ------------
<S>                                                          <C>                 <C>
Cash and due from banks                                        $  4,259            $   5,522
Federal funds sold                                                1,015                   --
Securities available-for-sale                                    20,383               14,320
Loans, net of allowance for loan losses                          96,635               71,987
Loans, held for sale                                             36,677               17,610
Bank premises and fixed assets                                    5,974                5,549
Accrued interest receivable                                       1,081                  596
Foreclosed real estate, net of allowance                            498                  483
Deferred tax asset, net                                             184                  202
Other assets                                                        361                  240
                                                               --------            ---------

      TOTAL ASSETS                                             $167,067            $ 116,509
                                                               ========            =========

LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
    Non-interest bearing                                       $ 23,387            $  16,269
    Interest bearing:
      NOW accounts                                                9,657               10,342
      Savings                                                     7,945                5,045
      Money market accounts                                      10,398                9,223
      Time deposits of $100,000, and over                        35,424               10,696
      Other time deposits                                        51,786               33,913
                                                               --------            ---------
        TOTAL DEPOSITS                                          138,597               85,488

Other liabilities, borrowings and retail agreements              15,763               19,794
                                                               --------            ---------

        TOTAL LIABILITIES                                       154,360              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; 938,517 and
    935,750 shares issued and
    outstanding at September 30, 2001 and
    December 31, 2000, respectively                                   1                    1
  Additional paid-in capital                                     10,256               10,228
  Retained earnings                                               2,148                1,091
  Accumulated other comprehensive income (loss)                     302                  (93)
                                                               --------            ---------
        TOTAL SHAREHOLDERS' EQUITY                               12,707               11,227
                                                               --------            ---------

        TOTAL LIABILITIES AND SHAREHOLDERS'
          EQUITY                                               $167,067            $ 116,509
                                                               ========            =========
</TABLE>

See notes to condensed consolidated financial statements.


                                       1
<PAGE>

                        GEORGIA-CAROLINA BANCSHARES, INC.

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




<TABLE>
<CAPTION>
                                                         Three Months Ended           Nine Months Ended
                                                            September 30,               September 30,
                                                        --------------------        ---------------------

                                                         2001          2000          2001          2000
                                                        ------        ------        ------        -------
<S>                                                     <C>           <C>           <C>           <C>
INTEREST INCOME
   Interest and fees on loans                           $2,631        $1,739        $7,715        $ 4,242
   Interest on taxable securities                          300           201           816            582
   Interest on nontaxable securities                        --             6            --             25
   Interest on Federal funds sold                            7            13            17            158
                                                        ------        ------        ------        -------
        TOTAL INTEREST INCOME                            2,938         1,959         8,548          5,007
                                                        ------        ------        ------        -------

INTEREST EXPENSE
   Interest on time deposits of $100,000 or more           508           177         1,295            375
   Interest on other deposits                              920           725         2,583          1,758
   Interest on funds purchased and other
      Borrowings                                           165           183           862            335
                                                        ------        ------        ------        -------
        TOTAL INTEREST EXPENSE                           1,593         1,085         4,740          2,468
                                                        ------        ------        ------        -------

        NET INTEREST INCOME                              1,345           874         3,808          2,539

PROVISIONS FOR LOAN LOSSES                                 137            93           507            237
                                                        ------        ------        ------        -------

        NET INTEREST INCOME AFTER PROVISIONS FOR
           LOAN LOSSES                                   1,208           781         3,301          2,302
                                                        ------        ------        ------        -------

NONINTEREST INCOME
   Service charges on deposits                             123            85           342            242
   Gain on sale of mortgage loans and other
      income                                             2,257           907         5,546          1,183
                                                        ------        ------        ------        -------
                                                         2,380           992         5,888          1,425
                                                        ------        ------        ------        -------

NONINTEREST EXPENSE
   Salaries and employee benefits                        1,806         1,019         5,002          2,309
   Occupancy expenses                                      241           173           684            428
   Other expenses                                          779           425         1,873          1,019
                                                        ------        ------        ------        -------
                                                         2,826         1,617         7,559          3,756
                                                        ------        ------        ------        -------

INCOME (LOSS) BEFORE INCOME TAXES                          762           156         1,630            (29)
                                                        ------        ------        ------        -------

INCOME TAX EXPENSE (BENEFIT)                               261            55           573            (11)
                                                        ------        ------        ------        -------

        NET INCOME (LOSS)                               $  501        $  101        $1,057        $   (18)
                                                        ======        ======        ======        =======

NET INCOME (LOSS) PER SHARE OF COMMON STOCK:
   Basic                                                $ 0.53        $ 0.11        $ 1.13        $ (0.02)
                                                        ======        ======        ======        =======
   Diluted                                              $ 0.51        $ 0.10        $ 1.07        $ (0.02)
                                                        ======        ======        ======        =======
DIVIDENDS PER SHARE OF COMMON STOCK                     $   --        $   --        $   --        $    --
                                                        ======        ======        ======        =======
</TABLE>


See notes to condensed consolidated financial statements.


                                       2
<PAGE>

                        GEORGIA-CAROLINA BANCSHARES, INC.

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


<TABLE>
<CAPTION>
                                                              Three Months Ended                Nine Months Ended
                                                                 September 30,                    September 30,
                                                             --------------------            ----------------------
                                                             2001            2000             2001             2000
                                                             ----            ----            ------            ----

<S>                                                          <C>             <C>             <C>               <C>
NET INCOME (LOSS)                                            $501            $101            $1,057            $(18)

Unrealized holding gains and (losses) arising
  during period, less reclassification adjustment
  for gains and losses included in net income,
  net of tax                                                  212             112               395              32
                                                             ----            ----            ------            ----

Comprehensive income (loss)                                  $713            $213            $1,452            $ 14
                                                             ====            ====            ======            ====
</TABLE>







See notes to condensed consolidated financial statements.


                                       3
<PAGE>


                        GEORGIA-CAROLINA BANCSHARES, INC.

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


<TABLE>
<CAPTION>
                                                              Nine Months Ended September 30,
                                                              -------------------------------
                                                                 2001                 2000
                                                               --------             --------
<S>                                                           <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income (loss)                                           $  1,057             $    (18)
   Adjustments to reconcile net income (loss)
       to net cash provided by (used in)
       operating activities
        Depreciation and amortization                               289                  203
        Provision for loan losses                                   507                  237
        Deferred income tax                                        (185)                  --
        Net increase in accrued interest receivable                (485)                (334)
        Net change in other assets and liabilities                2,533                  390
                                                               --------             --------
             NET CASH PROVIDED BY (USED IN)
                OPERATING ACTIVITIES                              3,716                  478
                                                               --------             --------

CASH FLOWS FROM INVESTING ACTIVITIES
   Net (increase) decrease in federal funds sold                 (1,015)              15,920
   Net increase in loans                                        (44,237)             (45,673)
   Net transactions, available-for-sale securities               (5,465)                (553)
   Net purchase of premises and equipment                          (714)              (1,349)
                                                               --------             --------
             NET CASH PROVIDED BY (USED IN)
                INVESTING ACTIVITIES                            (51,431)             (31,655)
                                                               --------             --------

CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase (decrease) in deposits and
      funds purchased                                            46,452               30,800
                                                               --------             --------
             NET CASH PROVIDED BY (USED IN)
                FINANCING ACTIVITIES                             46,452               30,800
                                                               --------             --------

NET INCREASE (DECREASE) IN CASH AND DUE FROM
  BANKS                                                          (1,263)                (377)

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

CASH AND DUE FROM BANKS AT END OF PERIOD                       $  4,259             $  2,894
                                                               ========             ========
</TABLE>




See notes to condensed consolidated financial statements.


                                       4
<PAGE>

                        GEORGIA-CAROLINA BANCSHARES, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 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 September 30, 2001 and December 31, 2000 and for
the three months ended and nine months ended September 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 on Form 10-KSB 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 Nine Months Ended September 30, 2001
                                         --------------------------------------------
                                                            Weighted
                                                         Average Shares      Per-Share
                                           (Numerator)    (Denominator)        Amount
                                          -----------    --------------      ---------
<S>                                      <C>             <C>                 <C>
  NET INCOME                              $ 1,057,000

  BASIC EPS
    Income available to common
       shareholders'                        1,057,000        937,117          $ 1.13

  EFFECT OF DILUTIVE SECURITIES
     Options                                                  52,323
                                          -----------       --------          ------

  DILUTED EPS
     Income available to common
        shareholders' and assumed
        conversions                       $ 1,057,000        989,440          $ 1.07
                                          ===========       ========          ======
</TABLE>


                                       5
<PAGE>


                        GEORGIA-CAROLINA BANCSHARES, INC.

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


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 financial position and results of
operations.

NOTE 4 - SUBSEQUENT EVENTS

On October 18, 2001, the Company announced a 20% common stock dividend on each
share of its outstanding common stock. The new shares will be distributed on
December 1, 2001 to shareholders of record as of the close of business on
November 15, 2001. The dividend will be effected in the form of a 6-for-5 stock
split. The stock dividend will increase the number of outstanding shares of
common stock from 939,377 shares (as of November 8, 2001) to approximately
1,127,252 shares. Any fractional shares created as a result of the stock split
will be paid in cash based on the fair market value of the common stock as of
the record date.


                                       6
<PAGE>


                        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 $501,000 for the third quarter of 2001, compared to
net income of $101,000 for the third quarter of 2000. Basic earnings per share
were $0.53 for the third quarter of 2001 compared to $0.11 per share for the
third quarter of 2000. Total consolidated assets at September 30, 2001 were
$167,067,000, an increase of $50,558,000 (43.4%) from December 31, 2000 total
consolidated assets of $116,509,000, and an increase of $62,859,000 (60.3%) from
September 30, 2000 total consolidated assets of $104,208,000.

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 nine months ended September 30, 2001 when compared to the
three months and nine months ended September 30, 2000. In June, 2001 the Bank
sold its mortgage lending operations in Warner Robins, Georgia.

In January, 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 nine and three months ended September 30,
2001 when compared to the comparable periods ended September 30, 2000.

The Company's return on average assets was 0.99% (annualized) for the nine
months ended September 30, 2001, compared to a negative (0.03%) (annualized) for
the nine months ended September 30, 2000. The Company's return on average equity
for the nine months ended September 30, 2001 was 11.78% (annualized) compared to
a negative (0.22%) (annualized) for the nine months ended September 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 $1,345,000 for the quarter ended September 30, 2001, an
increase of $471,000 (53.9%) compared to net interest income of $874,000 for the
quarter ended September 30, 2000. This increase was primarily the result of
investing increased deposit liability funds and other borrowed funds in loans.
Interest-earning assets were $154,710,000 at September 30, 2001 compared to
$94,013,000 at September 30, 2000, an increase of $60,697,000 (64.6%). Loans,
including loans held for sale are the highest yielding component of
interest-earning assets. Total loans increased $43,715,000 (48.8%) from December
31, 2000 to September 30, 2001. Total loans were $133,312,000 at September 30,
2001 compared to $79,886,000 at September 30, 2000, an increase of $53,426,000
(66.9%). 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.


                                       7
<PAGE>


The increase in loans is also 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.

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 September 30, 2001, loans represented 86.2% of
interest-earning assets compared to 86.2% at December 31, 2000, and 85.0% at
September 30, 2000. Investments in securities increased $6,063,000 (42.3%) from
December 31, 2000, and increased $7,346,000 (56.3%) from September 30, 2000.
Interest-bearing deposits at September 30, 2001 were $115,210,000. This
represents an increase of $45,991,000 (66.4%) from the December 31, 2000 balance
of $69,219,000, and an increase of $48,083,000 (71.6%) from the September 30,
2000 balance of $67,127,000. The Bank's mortgage funding line-of-credit was
$9,258,000 at September 30, 2001, an increase of $2,261,000 (32.3%) from the
December 31, 2000 balance of $6,997,000, and an increase of $2,850,000 (44.5%)
from the September 30, 2000 balance of $6,408,000. The Bank's retail repurchase
agreements and other repurchase agreements were $2,597,000 at September 30,
2001, a decrease of $5,417,000 (67.6%) from the December 31, 2000 balance of
$8,014,000, and a decrease of $1,975,000 (43.2%) from the September 30, 2000
balance of $4,572,000. In addition, at December 31, 2000 the Bank had purchased
funding of $3,500,000 of federal funds. Federal funds purchased by the Bank as
of September 30, 2001 were $0.

INTEREST INCOME

Interest income for the three months ended September 30, 2001 was $2,938,000, an
increase of $979,000 (50.0%) from $1,959,000 for the three months ended
September 30, 2000. Interest Income for the nine months ended September 30, 2001
was $8,548,000, an increase of $3,541,000 (70.7%) from $5,007,000 for the nine
months ended September 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 $2,631,000 for the three months ended September 30, 2001, an
increase of $892,000 (51.3%) from $1,739,000 for the three months ended
September 30, 2000. Interest income and fees on loans was $7,715,000 for the
nine months ended September 30, 2001, an increase of $3,473,000 (81.9%) from
$4,242,000 for the nine months ended September 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 September 30, 2001 was $1,593,000,
an increase of $508,000 (46.8%) from $1,085,000 for the three months ended
September 30, 2000. Interest expense for the nine months ended September 30,
2001 was $4,740,000, an increase of $2,272,000 (92.1%) from $2,468,000 for the
nine months ended September 30, 2000. This increase is primarily attributable to
increased deposit liability funds obtained from the expansion into Augusta and
Columbia County.

NONINTEREST INCOME

Noninterest income for the three months ended September 30, 2001 was $2,380,000,
an increase of $1,388,000 (139.9%) from $992,000 for the three months ended
September 30, 2000. Noninterest income for the nine months ended September 30,
2001 was $5,888,000, an increase of $4,463,000 (313.2%) from $1,425,000 for the
nine months ended September 30, 2000. Service charges on deposit accounts were
$123,000 for the three months ended September 30, 2001, an increase of $38,000
(44.7%) from $85,000 for the three months ended September 30, 2000. Service
charges for the nine months ended September 30, 2001 were $342,000, and increase
of $100,000 (41.3%) from $242,000 for the nine months ended


                                       8
<PAGE>

September 30, 2000. Gain on sale of mortgage loans originated and sold by the
Bank's mortgage division was $2,219,000 for the three months ended September 30,
2001, an increase of $1,312,000 (144.7%) from $907,000 for the three months
ended September 30, 2000. Gain on sale of mortgage loans was $5,453,000 for the
nine months ended September 30, 2001, an increase of $4,567,000 (515.5%) from
$886,000 for the nine months ended September 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 September 30, 2001 was
$2,826,000, an increase of $1,209,000 (74.8%) from $1,617,000 for the three
months ended September 30, 2000. Noninterest expense was $7,559,000 for the nine
months ended September 30, 2001, an increase of $3,803,000 (101.3%) from
$3,756,000 for the nine months ended September 30, 2000. Salary and employee
benefit costs were $1,806,000 for the three months ended September 30, 2001, an
increase of $787,000 (77.2%) from $1,019,000 for the three months ended
September 30, 2000. Salary and employee benefits were $5,002,000 for the nine
months ended September 30, 2001, an increase of $2,693,000 (116.6%) from
$2,309,000 for the nine months ended September 30, 2000.

These increases are the result of the Bank's hiring of additional personnel to
operate the new locations in Augusta and Columbia County, and the hiring of
personnel related to the Bank's mortgage lending operation. Occupancy expenses
and other expenses also increased primarily as a result of the new 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 $261,000 for the three months ended
September 30, 2001, resulting from the net income before taxes of $762,000 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 $755,000 at September 30, 2001, compared to $644,000
at December 31, 2000 and $845,000 at September 30, 2000. The composition of
non-performing assets for each date is shown below.

<TABLE>
<CAPTION>
                                          September 30,       December 31,        September 30,
                                              2001                2000                2000
                                          -------------       ------------        -------------

<S>                                       <C>                 <C>                 <C>
Non-accrual loans                           $257,000            $161,000            $202,000
OREO, net of valuation allowance             498,000             483,000             643,000
                                            --------            --------            --------

                                            $755,000            $644,000            $845,000
                                            ========            ========            ========
</TABLE>


                                       9
<PAGE>


The ratio of non-performing assets to total loans and other real estate was 0.6%
at September 30, 2001, 0.7% at December 31, 2000, and 1.0% at September 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.

From the previously described analysis, management determined that the allowance
for loan losses should be increased through a provision for loan losses of
$137,000 during the quarter ended September 30, 2001. The ratio of allowance for
loan losses to total loans was 1.2% at September 30, 2001. At December 31, 2000
the ratio was 1.3% and was 1.5% at September 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 September 30, 2001, 1.6% at December 31, 2000 and 1.9% at September
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 September 30, 2001 was 35.2%,
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 September 30, 2001, the Bank's Tier I capital was
9.78% and total risk-based capital was 11.03%, compared to 10.51% and 13.95% at
December 31, 2000, respectively. At September 30, 2001, the Bank's leverage
ratio was 7.60% compared to 12.70% at December 31, 2000.

RECENT DEVELOPMENTS

On October 18, 2001, the Company announced a 20% common stock dividend on each
share of its outstanding common stock. The new shares will be distributed on
December 1, 2001 to shareholders of record as of the close of business on
November 15, 2001. The dividend will be effected in the form of a 6-for-5 stock
split. The stock dividend will increase the number of outstanding shares of
common stock from 939,377 shares (as of November 8, 2001) to approximately
1,127,252 shares. Any fractional shares created as a result of the stock split
will be paid in cash based on the fair market value of the common stock as of
the record date.


                                       10
<PAGE>


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.


                                       11
<PAGE>


                                     PART II
                                OTHER INFORMATION

ITEM 2.CHANGES IN SECURITIES

On July 1, 2001, the Company issued an aggregate of 860 shares to nine of its
outside directors in connection with the Director Stock Purchase Plan (the
"Plan") which was adopted by the Board of Directors in June, 2001. The Plan
provides that outside directors of the Company and the Bank may elect to
purchase unregistered shares of the Company's common stock in lieu of receiving
director fees earned in each calendar quarter. The purchase price for shares
acquired under the Plan is $2.00 less than the closing market price of the
Company's common stock as reported in the NASDAQ Over-the-Counter National
Market Issues section of the Wall Street Journal on the last day of each
calendar quarter. All shares purchased under the Plan are held in a stock
account for the participating director with the Secretary of the Company serving
as Trustee of the account. Pursuant to the plan, any cash dividend payable on
the Company's common stock will be automatically reinvested on shares credited
to a director's account. An outside director may join the Plan at any time
during the last seven days of each calendar quarter.

The issuances of securities pursuant to the Plan 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 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits. No exhibits are filed with this report.

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


                                       12
<PAGE>


                                   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                          November 13, 2001
    ----------------------------------------------    --------------------------
    Patrick G. Blanchard                              Date
    President and Chief Executive Officer
    (principal executive officer)






By:  /s/ J. Harold Ward, Jr.                           November 13, 2001
    ----------------------------------------------    --------------------------
    J. Harold Ward, Jr.                               Date
    Senior Vice President, Chief Financial Officer
    (principal financial and accounting officer)


                                       13