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                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                            ----------------------

                                  FORM 10-KSB

                ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                                        

                For the fiscal year ended      June 30, 1997
                                          ---------------------

                    Commission file number       000-21881
                                          ---------------------

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


            North Carolina                            56-1981518
     -----------------------------                  --------------
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
    incorporation or organization)  
                               
         22 Winston Street       
     Thomasville, North Carolina                          27360 
     ----------------------------                       ----------
(Address of principal executive offices)                (Zip Code)


                                (910) 475-4663
                        ------------------------------
                          (Issuer's telephone number)

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:


Common Stock, no par value                     Nasdaq SmallCap Market          
----------------------------         -------------------------------------------
(Title of class)                     (Name of each exchange on which registered)
                

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.  
Yes X   No  
   ---     --- 

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.            [X]

State issuer's revenues for its most recent fiscal year $6,709,691.00
                                                         ------------

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days.

Common Stock, no par value -- $27,916,345 (based on the price at which the stock
                               ----------                                       
was sold on September 12, 1997).
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

  Common Stock, no par value                              407,330
  ----------------------------               ---------------------------------
            (Class)                         (Outstanding at September 12, 1997)
       


                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Annual Report to Stockholders for the year ended June 30, 1997
(the "1997 Annual Report"), are incorporated by reference into Part I and Part
II.

Portions of the Proxy Statement for the Annual Meeting of Stockholders to be
held on October 23, 1997 (the "Proxy Statement"), are incorporated by reference
into Part III.

     Transitional Small Business Disclosure Format (Check one):  Yes     No X
                                                                     ---   ---
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                                     PART I

ITEM 1.   DESCRIPTION OF BUSINESS

General

     Prior to December 20, 1996, Home Savings, Inc., SSB (the "Bank") operated
as a mutual North Carolina-chartered savings bank.  On December 20, 1996, the
Bank converted from a North Carolina-chartered mutual savings bank to a North
Carolina-chartered stock savings bank (the "Conversion").  In connection with
the Conversion, all of the issued and outstanding capital stock of the Bank was
acquired by Century Bancorp, Inc., a North Carolina corporation (the "Company")
which was organized to become the Bank's holding company.  At that time, the
Company had an initial public offering of its common stock, no par value (the
"Common Stock").

     The Company is a bank holding company registered with the Board of
Governors of the Federal Reserve System (the "Federal Reserve") under the Bank
Holding Company Act of 1956, as amended (the "BHCA") and the savings bank
holding company laws of North Carolina.  The Company's and the Bank's principal
office is located at 22 Winston Street, Thomasville, North Carolina.  The
Company's activities consist of investing the proceeds of the Conversion which
were retained at the holding company level, holding the indebtedness outstanding
from the ESOP, and owning the Bank.  The Company's principal sources of income
are earnings on capital retained by the Company, interest payments received from
the Home Savings, Inc., SSB Employee Stock Ownership Plan (the "ESOP") with
respect to the ESOP loan, and dividends paid by the Bank to the Company, if any.

     The Bank was organized in 1915, and has been a member of the Federal Home
Loan Bank (the "FHLB") system and its deposits have been federally insured since
the late 1950's.  The deposits of the Bank are insured by the Savings
Association Insurance Fund (the "SAIF") of the Federal Deposit Insurance
Corporation (the "FDIC") to the maximum amount permitted by law.

     The Bank conducts business through its full service office in Thomasville,
North Carolina.  The Bank's primary market area encompasses the communities
within a 10-mile radius of its office, which includes portions of Davidson,
Randolph and Guilford counties in North Carolina.  At June 30, 1997, the Company
had total assets of $100,640,000, net loans of $62,333,000, deposits of
$69,699,000, investment securities of $35,180,000 and stockholders' equity of
$30,303,000.

     At June 30, 1997, the Company and the Bank had a total of 11 full-time
employees.

     The Company has no operations and conducts no business of its own other
than owning the Bank, investing its portion of the net proceeds received in the
Conversion and lending funds to the ESOP.  Accordingly, the discussion of the
business which follows in this Form 10-KSB concerns the business conducted by
the Bank, unless indicated otherwise.

Lending Activities

     The Bank is engaged primarily in the business of attracting deposits from
the general public and using such deposits to make mortgage loans secured by
real estate.  The Bank's primary source of revenue is interest and fee income
from its lending activities, consisting primarily of mortgage loans for the
purchase or refinancing of one-to-four family residential real property located
in its primary market area.  The Bank also makes loans secured by multi-family
and commercial properties, construction loans, home equity loans, savings
account loans and various types of consumer loans.  Only 1% of the Bank's loan
portfolio, before net items, is not secured by real estate.  On June 30, 1997,
the Bank's largest single outstanding loan had a balance of approximately
$705,000.  In addition to interest earned on loans, the Bank receives fees in
connection with loan originations, loan servicing, loan modifications, late
payments, loan

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assumptions and other miscellaneous services.  The Bank generally does not sell
its loans; both fixed and adjustable rate loans are originated with the
intention that they will be held in the Bank's loan portfolio.

     The Bank's net loan portfolio totaled approximately $62.30 million at June
30, 1997 representing 61.9% of the Bank's total assets at such date.  At June
30, 1997, 75.3% of the Bank's loan portfolio, before net items, was composed of
one-to four-family residential mortgage loans.  Multi-family residential and
commercial real estate loans represented 14.5% of the Bank's loan portfolio,
before net items, on such date.  Construction loans and home equity loans
represented 6.4% and 1.8%, respectively, of the Bank's loan portfolio, before
net items, on such date.  As of June 30, 1997, 22.7% of the loans in the Bank's
loan portfolio had adjustable interest rates.  Loans maturing or repricing on or
after June 30, 1998, consist of fixed rate real estate loans of $46.3 million,
adjustable rate real estate loans of $11,000 and other fixed rate loans of
$714,000; the Bank has no other adjustable rate loans.  See Note C Loans
Receivable to the Financial Statements Contained in the 1997 Annual Report.

Investment Securities

     Interest and dividend income from investment securities generally provides
the second largest source of income to the Bank after interest on loans.  In
addition, the Bank receives interest income from  deposits in other financial
institutions.  The Company also has interest and dividend income from investing
the proceeds of the Conversion.  At June 30, 1997, the Company's and the Bank's
investment portfolio totaled approximately $35.2 million and consisted of U.S.
government and agency securities, mortgage-backed securities, municipal bonds,
interest-earning deposits in other financial institutions, and stock of the
Federal Home Loan Mortgage Corporation and the FHLB of Atlanta.

     Investments in mortgage-backed securities involve a risk that, because of
changes in the interest rate environment, actual prepayments will be greater
than estimated prepayments over the life of the security, which may require
adjustments to the amortization of any premium or accretion of any discount
relating to such instruments, thereby reducing the net yield on such securities.
There is also reinvestment risk associated with the cash flows from such
securities.  In addition, the market value of such securities may be adversely
affected by changes in interest rates. See Note B Investment Securities to the
Financial Statements Contained in the 1997 Annual Report.

     As a member of the FHLB of Atlanta, the Bank is required to maintain an
investment in stock of the FHLB of Atlanta equal to the greater of 1% of the
Bank's outstanding home loans or 5% of its outstanding advances from the FHLB of
Atlanta.  No ready market exists for such stock, which is carried at cost.  As
of June 30, 1997, the Bank's investment in stock of the FHLB of Atlanta was
$586,500.

     North Carolina regulations require the Bank to maintain a minimum amount of
liquid assets which may be invested in specified short-term securities.  See "--
Regulation of the Bank - Liquidity."  The Bank is also permitted to make certain
other securities investments.

Deposits and Borrowings

     Deposits.  Deposits are the primary source of the Bank's funds for lending
and other investment purposes.  The Bank attracts both short-term and long-term
deposits from the general public by offering a variety of accounts and rates.
The Bank offers passbook savings accounts, statement savings accounts,
negotiable order of withdrawal accounts, money market demand accounts, non-
interest-bearing accounts, and fixed interest rate certificates with varying
maturities.  At June 30, 1997, 72.8% of the Bank's deposits consisted of
certificate accounts, 7.8% consisted of passbook and statement savings accounts,
19.3% consisted of interest-bearing transaction accounts and 0.1% consisted of
noninterest-bearing transaction accounts.  Deposit flows are greatly influenced
by economic conditions, the general level of interest rates, competition, and
other factors, including the restructuring of the thrift industry.  The Bank's
savings deposits traditionally have been obtained primarily from its primary
market area.  The Bank utilizes traditional marketing methods to attract new
customers and savings deposits, including print media advertising and direct
mailings.

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The Bank does not advertise for deposits outside of its local market area or
utilize the services of deposit brokers.  See Note F Deposit Accounts to the
Financial Statements Contained in the 1997 Annual Report.

     In addition to deposits, the Bank derives funds from loan principal
repayments, interest payments, investment income and principal repayments,
interest from its own interest-earning deposits, interest income and repayments
from mortgage-backed securities and otherwise from its operations.  Loan
repayments are a relatively stable source of funds while deposit inflows and
outflows may be significantly influenced by general interest rates and money
market conditions.

     Borrowings.  Borrowings may be used on a short-term basis to compensate for
reductions in the availability of funds from other sources.  They may also be
used on a longer term basis for general business purposes.  Although it has not
done so in several years, the Bank may obtain advances from the FHLB of Atlanta
to supplement its liquidity needs.  The FHLB system functions in a reserve
credit capacity for savings institutions.  As a member, the Bank is required to
own capital stock in the FHLB of Atlanta and is authorized to apply for advances
from the FHLB of Atlanta on the security of that stock and a floating lien on
certain of its real estate secured loans and other assets.  Each credit program
has its own interest rate and range of maturities.  Depending on the program,
limitations on the amount of advances are based either on a fixed percentage of
an institution's net worth or on the FHLB of Atlanta's assessment of the
institution's creditworthiness.  At June 30, 1997, the Bank had no outstanding
borrowings.

Results of Operations

     The Bank's results of operations are dependent primarily on net interest
income, which is the difference between the income earned on its interest-
earning assets, such as loans and investments, and the cost of its interest-
bearing liabilities, consisting of deposits.  The Bank's operations are affected
to a much lesser degree by non-interest income, such as transaction and other
service fee income, and other sources of income.  The Bank's net income is also
affected by, among other things, provisions for loan losses and operating
expenses.  The Bank's  principal operating expenses, aside from interest
expense, consist of compensation and employee benefits, office occupancy costs,
data processing expenses and federal deposit insurance premiums.  The Bank's
results of operations are also significantly affected by general economic and
competitive conditions, particularly changes in market interest rates,
government legislation and policies concerning monetary and fiscal affairs,
housing and financial institutions and the attendant actions of regulatory
authorities.

Market Area

     The Bank's primary market area consists of the communities in a 10-mile
radius around its office in Thomasville, North Carolina.  This area includes
portions of Davidson, Randolph and Guilford counties in North Carolina.
Employment in the Bank's primary market area is diversified among manufacturing,
agricultural, retail and wholesale trade, government, services and utilities.
The High Point-Thomasville area of North Carolina is considered to be the
furniture capital of the world, so the economy of the Bank's primary market area
is greatly affected by the furniture and home furnishings industry.  Thomasville
Furniture Industries, Inc. is the largest employer in Thomasville. Other major
employers include Community General Hospital and Parkdale Mills.  Employment in
the Davidson County, North Carolina area as of June, 1997 was strong, with an
unemployment rate below that of North Carolina and national averages.
Comparative data indicates that the income levels in Davidson County and in
Thomasville are below national and North Carolina averages.  From 1990 to 1995,
population in Davidson County increased by 7.7%, which was above national and
North Carolina averages, while the population of Thomasville increased by 5.3%
which was below the North Carolina average of 5.5%.  Thomasville has a sizable
elderly population, and as a predominantly middle class manufacturing community,
Thomasville's residents have less formal education than residents of Davidson
County and North Carolina as a whole.  As a result, comparative data indicates
that as of 1990 the median home value in Thomasville was only $48,200, well
below the Davidson County average of $60,800, the North Carolina average of
$65,800 and the national average of $79,090.

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Subsidiaries

     The Bank is the only subsidiary of the Company.  As a North Carolina
chartered savings bank, the Bank is able to invest up to 10% of its total assets
in subsidiary service corporations.  However, any investment in service
corporation which would cause the Bank to exceed an investment of 3% of assets
must receive prior approval of the FDIC.  The Bank has one subsidiary which is
not active and has never engaged in any business.

Competition

     The Bank faces strong competition both in attracting deposits and making
real estate and other loans.  Its most direct competition for deposits has
historically come from other savings institutions, credit unions and commercial
banks located in its primary market area, including large financial institutions
which have greater financial and marketing resources available to them.  As of
June 30, 1997, there were eight depository institutions with 13 offices in
Thomasville, North Carolina.  Based upon 1996 comparative data, the Bank had
16.7% of the deposits in Thomasville, and 5.8% of the deposits in Davidson
County.  The Bank has also faced additional significant competition for
investors' funds from short-term money market securities and other corporate and
government securities.  The ability of the Bank to attract and retain savings
deposits depends on its ability to generally provide a rate of return, liquidity
and risk comparable to that offered by competing investment opportunities.

     The Bank experiences strong competition for real estate loans from other
savings institutions, commercial banks, and mortgage banking companies.  It
competes for loans primarily through the interest rates and loan fees it
charges, the efficiency and quality of services it provides borrowers, and its
more flexible underwriting standards. Competition may increase as a result of
the continuing reduction of restrictions on the interstate operations of
financial institutions.

Supervision and Regulation

     Bank holding companies and state savings banks are extensively regulated
under both federal and state law. The following is a brief summary of certain
statutes and rules and regulations that affect or will affect the Company and
the Bank.  This summary is qualified in its entirety by reference to the
particular statute and regulatory provisions referred to below and is not
intended to be an exhaustive description of the statutes or regulations
applicable to the business of the Company and the Bank.  Supervision, regulation
and examination of the Company and the Bank by the regulatory agencies are
intended primarily for the protection of depositors rather than shareholders of
the Company.

Regulation of the Company

     General.  The Company was organized for the purpose of acquiring and
holding all of the capital stock of the Bank to be issued in the Conversion.  As
a savings bank holding company subject to the BHCA, the Company is subject to
certain regulations of the Federal Reserve.  Under the BHCA, the Company's
activities and those of its subsidiaries are limited to banking, managing or
controlling banks, furnishing services to or performing services for its
subsidiaries or engaging in any other activity which the Federal Reserve
determines to be so closely related to banking or managing or controlling banks
as to be a proper incident thereto.  The BHCA prohibits the Company from
acquiring direct or indirect control of more than 5% of the outstanding voting
stock or substantially all of the assets of any bank or savings bank or merging
or consolidating with another bank holding company or savings bank holding
company without prior approval of the Federal Reserve.

     Additionally, the BHCA prohibits the Company from engaging in, or acquiring
ownership or control of, more than 5% of the outstanding voting stock of any
company engaged in a nonbanking business unless such business is determined by
the Federal Reserve to be so closely related to banking as to be properly
incident thereto.

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     Similarly, Federal Reserve approval (or, in certain cases, non-disapproval)
must be obtained prior to any person acquiring control of the Company.  Control
is conclusively presumed to exist if, among other things, a person acquires more
than 25% of any class of voting stock of the holding company or controls in any
manner the election of a majority of the directors of the holding company.
Control is presumed to exist if a person acquires more than 10% of any class of
voting stock and the stock is registered under Section 12 of the Exchange Act or
the acquiror will be the largest shareholder after the acquisition.

     There are a number of obligations and restrictions imposed on bank holding
companies and their depository institution subsidiaries by law and regulatory
policy that are designed to minimize potential loss to the depositors of such
depository institutions and the FDIC insurance funds in the event the depository
institution becomes in danger of default or in default.  For example, to avoid
receivership of an insured depository institution subsidiary, a bank holding
company is required to guarantee the compliance of any insured depository
institution subsidiary that may become "undercapitalized" with the terms of any
capital restoration plan filed by such subsidiary with its appropriate federal
banking agency up to the lesser of (i) an amount equal to 5% of the
institution's total assets at the time the institution became undercapitalized
or (ii) the amount which is necessary (or would have been necessary) to bring
the institution into compliance with all acceptable capital standards as of the
time the institution fails to comply with such capital restoration plan.  Under
a policy of the Federal Reserve with respect to bank holding company operations,
a bank holding company is required to serve as a source of financial strength to
its subsidiary depository institutions and to commit resources to support such
institutions in circumstances where it might not do so absent such policy.  The
Federal Reserve under the BHCA also has the authority to require a bank holding
company to terminate any activity or to relinquish control of a nonbank
subsidiary (other than a nonbank subsidiary of a bank) upon the Federal
Reserve's determination that such activity or control constitutes a serious risk
to the financial soundness and stability of any bank subsidiary of the bank
holding company.

     In addition, insured depository institutions under common control are
required to reimburse the FDIC for any loss suffered by either the SAIF or the
Bank Insurance Fund (the "BIF") as a result of the default of a commonly
controlled insured depository institution or for any assistance provided by the
FDIC to a commonly controlled insured depository institution in danger of
default.  The FDIC may decline to enforce the cross-guarantee provisions if it
determines that a waiver is in the best interest of the SAIF or the BIF or both.
The FDIC's claim for damages is superior to claims of stockholders of the
insured depository institution or its holding company but is subordinate to
claims of depositors, secured creditors and holders of subordinated debt (other
than affiliates) of the commonly controlled insured depository institutions.

     Federal regulations require that the Company must notify the Federal
Reserve Bank of Richmond prior to repurchasing Common Stock in excess of ten
percent of its net worth during a rolling twelve month period.  As a result of
the Company's ownership of the Bank, the Company is registered under the savings
bank holding company laws of North Carolina.  Accordingly, the Company is also
subject to regulation and supervision by the Administrator.

     Capital Adequacy Guidelines for Holding Companies.  The Federal Reserve has
adopted capital adequacy guidelines for bank holding companies and banks that
are members of the Federal Reserve system and have consolidated assets of $150
million or more.  For bank holding companies with less than $150 million in
consolidated assets, the guidelines are applied on a bank-only basis unless the
parent bank holding company (i) is engaged in nonbank activity involving
significant leverage or (ii) has a significant amount of outstanding debt that
is held by the general public.

     Bank holding companies are required to comply with the Federal Reserve's
risk-based capital guidelines. Under these regulations, the minimum ratio of
total capital to risk-weighted assets (including certain off-balance sheet
activities, such as standby letters of credit) is 8%.  At least half of the
total capital is required to be "Tier I capital," principally consisting of
common stockholders' equity, noncumulative perpetual preferred stock, and a
limited amount of cumulative perpetual preferred stock, less certain goodwill
items.  The remainder ("Tier II capital") may consist of a limited amount of
subordinated debt, certain hybrid capital instruments and other debt securities,
perpetual preferred stock, and a limited amount of the general loan loss
allowance.  In addition to the risk-based capital guidelines, the

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Federal Reserve has adopted a minimum Tier I capital (leverage) ratio, under
which a bank holding company must maintain a minimum level of Tier I capital to
average total consolidated assets of at least 3% in the case of a bank holding
company which has the highest regulatory examination rating and is not
contemplating significant growth or expansion.  All other bank holding companies
are expected to maintain a Tier I capital (leverage) ratio of at least 1% to 2%
above the stated minimum.

Federal Securities Law

     The Company has registered its Common Stock with the SEC pursuant to
Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange Act") and
will not deregister the Common Stock for a period of three years following the
completion of the Conversion.  As a result of such registration, the proxy and
tender offer rules, insider trading reporting requirements, annual and periodic
reporting and other requirements of the Exchange Act are applicable to the
Company.

Regulation of the Bank

     General.  Federal and state legislation and regulation have significantly
affected the operations of federally insured savings institutions and other
federally regulated financial institutions in the past several years and have
increased competition among savings institutions, commercial banks and other
providers of financial services.  In addition, federal legislation has imposed
new limitations on investment authority, and higher insurance and examination
assessments on savings institutions and has made other changes that may
adversely affect the future operations and competitiveness of savings
institutions with other financial institutions, including commercial banks and
their holding companies.  The operations of regulated depository institutions,
including the Bank, will continue to be subject to changes in applicable
statutes and regulations from time to time.

     The Bank is a North Carolina-chartered savings bank, is a member of the
FHLB system, and its deposits are insured by the FDIC through the SAIF.  It is
subject to examination and regulation by the FDIC and the Administrator and to
regulations governing such matters as capital standards, mergers, establishment
of branch offices, subsidiary investments and activities, and general investment
authority.  Generally, North Carolina state chartered savings banks whose
deposits are issued by the SAIF are subject to restrictions with respect to
activities and investments, transactions with affiliates and loans-to-one
borrower similar to those applicable to SAIF insured savings associations.  Such
examination and regulation is intended primarily for the protection of
depositors and the federal deposit insurance funds.

     The Bank is subject to various regulations promulgated by the Federal
Reserve including, without limitation, Regulation B (Equal Credit Opportunity),
Regulation D (Reserves), Regulation E (Electronic Fund Transfers), Regulation O
(Loans to Executive Officers, Directors and Principal Shareholders), Regulation
Z (Truth in Lending), Regulation CC (Availability of Funds) and Regulation DD
(Truth in Savings).  As creditors of loans secured by real property and as
owners of real property, financial institutions, including the Bank, may be
subject to potential liability under various statutes and regulations applicable
to property owners generally, including statutes and regulations relating to the
environmental condition of real property.

     The FDIC has extensive enforcement authority over North Carolina-chartered
savings banks, including the Bank.  This enforcement authority includes, among
other things, the ability to assess civil money penalties, to issue cease and
desist or removal orders and to initiate injunctive actions.  In general, these
enforcement actions may be initiated in response to violations of laws and
regulations and unsafe or unsound practices.

     The grounds for appointment of a conservator or receiver for a North
Carolina savings bank on the basis of an institution's financial condition
include: (i) insolvency, in that the assets of the savings bank are less than
its liabilities to depositors and others; (ii) substantial dissipation of assets
or earnings through violations of law or unsafe or unsound practices; (iii)
existence of an unsafe or unsound condition to transact business; (iv)
likelihood that the savings bank will be unable to meet the demands of its
depositors or to pay its obligations in the normal course of business; and (v)

                                       6
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insufficient capital or the incurring or likely incurring of losses that will
deplete substantially all of the institution's capital with no reasonable
prospect of replenishment of capital without federal assistance.

     Transactions with Affiliates.  Under current federal law, transactions
between the Bank and any affiliate are governed by Sections 23A and 23B of the
Federal Reserve Act.  An affiliate of the Bank is any company or entity that
controls, is controlled by or is under common control with the savings bank.
Generally, subsidiaries of a bank, other than a bank subsidiary, and certain
other types of companies are not considered to be affiliates.  Generally,
Sections 23A and 23B (i) limit the extent to which the Bank or its subsidiaries
may engage in "covered transactions" with any one affiliate to an amount equal
to 10% of such the Bank's capital stock and surplus, and contain an aggregate
limit on all such transactions with all affiliates to an amount equal to 20% of
such capital stock and surplus and (ii) require that all such transactions be on
terms substantially the same, or at least as favorable, to the Bank or the
subsidiary as those provided to a nonaffiliate.  The term "covered transaction"
includes the making of loans or other extensions of credit to an affiliate, the
purchase of assets from an affiliate, the purchase of, or an investment in, the
securities of an affiliate, the acceptance of securities of an affiliate as
collateral for a loan or extension of credit to any person, or issuance of a
guarantee, acceptance or letter of credit on behalf of an affiliate.

     Further, current federal law has extended to savings banks the restrictions
contained in Section 22(h) of the Federal Reserve Act and its implementing
regulations with respect to loans to directors, executive officers and principal
stockholders.  Under Section 22(h), loans to directors, executive officers and
stockholders who own more than 10% of a savings bank, and certain affiliated
entities of any of the foregoing, may not exceed, together with all other
outstanding loans to such person and affiliated entities, the savings bank's
loans-to-one borrower limit as established by federal law and all loans to such
persons may not exceed the institution's unimpaired capital and unimpaired
surplus.  Section 22(h) also prohibits loans above amounts prescribed by the
appropriate federal banking agency to directors, executive officers and
stockholders who own more than 10% of a savings bank, and their respective
affiliates, unless such loan is approved in advance by a majority of the
disinterested directors of the board of directors of the savings bank and the
Company. Any "interested" director may not participate in the voting.  The
Federal Reserve has prescribed the loan amount (which includes all other
outstanding loans to such person), as to which such prior board of director
approval is required, as being the greater of $25,000 or 5% of unimpaired
capital and unimpaired surplus (up to $500,000).  Further, pursuant to Section
22(h) the Federal Reserve requires that loans to directors, executive officers,
and principal stockholders be made on terms substantially the same as offered in
comparable transactions to other persons and not involve more than the normal
risk of repayment or present other unfavorable features.  Section 22(h) also
generally prohibits a depository institution from paying the overdrafts of any
of its executive officers or directors.

     Deposit Insurance.  The Bank is required to pay assessments based on a
percentage of its insured deposits to the FDIC for insurance of its deposits by
the SAIF.  Under the FDIC's risk-based deposit insurance assessment system, the
assessment rate for an insured depository institution depends on the assessment
risk classification assigned to the institution by the FDIC, which is determined
by the institution's capital level and supervisory evaluations.  Based on the
data reported to regulators for the date closest to the last day of the seventh
month preceding the semi-annual assessment period, institutions are assigned to
one of three capital groups -- well capitalized, adequately capitalized or
undercapitalized -- using the same percentage criteria as in the prompt
corrective action regulations.  See "-- Regulation of the Bank - Prompt
Corrective Regulatory Action."  Within each capital group, institutions are
assigned to one of three subgroups on the basis of supervisory evaluations by
the institution's primary supervisory authority and such other information as
the FDIC determines to be relevant to the institution's financial condition and
the risk posed to the deposit insurance fund.  Subgroup A consists of
financially sound institutions with only a few minor weaknesses.  Subgroup B
consists of institutions that demonstrate weaknesses which, if not corrected,
could result in significant deterioration of the institution and increased risk
of loss to the deposit insurance fund.  Subgroup C consists of institutions that
pose a substantial probability of loss to the deposit insurance fund unless
effective corrective action is taken.  The assessment rate for SAIF members had
ranged from 0.23% of deposits for well capitalized institutions in Subgroup A to
0.31% of deposits for undercapitalized institutions in Subgroup C while
assessments for over 90% of the BIF members had been the statutory minimum of
$2,000.  Recently enacted legislation provided for a one-time assessment of 65.7
basis points of insured deposits as of March 31, 1995, that fully capitalized
the SAIF and had the effect of reducing future SAIF

                                       7
<PAGE>
 
assessments.  Accordingly, although the special assessment resulted in a one-
time charge to the Bank of approximately $409,000 pre-tax, the recapitalization
of the SAIF had the effect of reducing the Bank's future deposit insurance
premiums to the SAIF.  Under the recently enacted legislation, both BIF and SAIF
members will be assessed an amount for the Financing Corporation Bond payments.
BIF members will be assessed approximately 1.3 basis points while the SAIF rate
will be approximately 6.4 basis points until January 1, 2000.  At that time, BIF
and SAIF members will begin pro rata sharing of the payment at an expected rate
of 2.43 basis points.

     Community Reinvestment Act. The Bank, like other financial institutions, is
subject to the Community Reinvestment Act, as amended ("CRA"). A purpose of this
Act is to encourage financial institutions to help meet the credit needs of its
entire community, including the needs of low- and moderate-income neighborhoods.
During the Bank's last compliance examination the Bank received a "satisfactory"
rating with respect to CRA compliance.  The Bank's rating with respect to CRA
compliance would be a factor to be considered by the Federal Reserve and FDIC in
considering applications submitted by the Bank to acquire branches or to acquire
or combine with other financial institutions and take other actions and could
result in the denial of such applications.

     The federal banking regulatory agencies have issued a rewrite of the CRA
regulations, which became effective on January 1, 1996, to implement a new
evaluation system that rates institutions based on their actual performance in
meeting community credit needs.  Under the regulations, a savings bank will be
evaluated and rated under three categories: a lending test, an investment test
and a service test.  For each of these three tests, the savings bank will be
given a rating of either "outstanding," "high satisfactory," "low satisfactory,"
"needs to improve" or "substantial non-compliance."  A set of criteria for each
rating has been developed and is included in the regulation.  If an institution
disagrees with a particular rating, the institution has the burden of rebutting
the presumption by clearly establishing that the quantitative measures do not
accurately present its actual performance, or that demographics, competitive
conditions or economic or legal limitations peculiar to the service area should
be considered.  The ratings received under the three tests will be used to
determine the overall composite CRA rating.  The composite ratings will be the
same as those that are currently given: "outstanding," "satisfactory," "needs to
improve" or "substantial non-compliance."

     Capital Requirements Applicable To The Bank.  The FDIC requires the Bank to
have a minimum leverage ratio of Tier I capital (principally consisting of
common stockholders' equity, noncumulative perpetual preferred stock and
minority interests in consolidated subsidiaries, less certain intangible items,
goodwill items, identified losses and investments in securities subsidiaries) to
total assets of at least 3%; provided, however that all institutions, other than
those (i) receiving the highest rating during the examination process and (ii)
not anticipating or experiencing any significant growth, are required to
maintain a ratio of 1% or 2% above the stated minimum, with an absolute minimum
leverage ratio of not less than 4%.  The FDIC also requires the Bank to have a
ratio of total capital to risk-weighted assets, including certain off-balance
sheet activities, such as standby letters of credit, of at least 8%. At least
half of the total capital is required to be Tier I capital.  The remainder
("Tier II capital") may consist of a limited amount of subordinated debt,
certain hybrid capital instruments, other debt securities, certain types of
preferred stock and a limited amount of loan loss allowance.

     An institution which fails to meet minimum capital requirements may be
subject to a capital directive which is enforceable in the same manner and to
the same extent as a final cease and desist order, and must submit a capital
plan within 60 days to the FDIC.  If the leverage ratio falls to 2% or less, the
bank may be deemed to be operating in an unsafe or unsound condition, allowing
the FDIC to take various enforcement actions, including possible termination of
insurance or placement of the institution in receivership. At June 30, 1997, the
Bank had a leverage ratio of 20.3%.

     The Administrator requires that net worth equal at least 5% of total
assets.  Intangible assets must be deducted from net worth and assets when
computing compliance with this requirement.

     At June 30, 1997, the Bank complied with each of the capital requirements
of the FDIC and the Administrator.

                                       8
<PAGE>
 
     Each federal banking agency is required to establish risk-based capital
standards that take adequate account of interest rate risk, concentration of
credit risk, and the risk of nontraditional activities, as well as reflect the
actual performance and expected risk of loss on multifamily mortgages.

     On August 2, 1995, the federal banking agencies issued a joint notice of
adoption of final risk based capital rules to take account of interest rate
risk.  The final regulation required an assessment of the need for additional
capital on a case-by-case basis, considering both the level of measured exposure
and qualitative risk factors.  The final rule also stated an intent to, in the
future, establish an explicit minimum capital charge for interest rate risk
based on the level of a bank's measured interest rate risk exposure.

     Effective June 26, 1996, the federal banking agencies issued a joint policy
statement announcing the agencies' election not to adopt a standardized measure
and explicit capital charge for interest rate risk at that time.  Rather, the
policy statement (i) identifies the main elements of sound interest rate risk
management, (ii) describes prudent principles and practices for each of those
elements, and (iii) describes the critical factors affecting the agencies'
evaluation of a bank's interest rate risk when making a determination of capital
adequacy.  The joint policy statement is not expected to have a material impact
on Bank's management of interest rate risk.

     Loans-To-One-Borrower.  The Bank is subject to the Administrator's loans-
to-one-borrower limits.  Under these limits, no loans and extensions of credit
to any borrower outstanding at one time and not fully secured by readily
marketable collateral shall exceed 15% of the net worth of the savings bank.
Loans and extensions of credit fully secured by readily marketable collateral
may comprise an additional 10% of net worth.  These limits also authorize
savings banks to make loans-to-one-borrower, for any purpose, in an amount not
to exceed $500,000.  A savings bank also is authorized to make loans-to-one-
borrower to develop domestic residential housing units, not to exceed the lesser
of $30 million or 30% of the savings bank's net worth, provided that the
purchase price of each single-family dwelling in the development does not exceed
$500,000 and the aggregate amount of loans made under this authority does not
exceed 150% of net worth.  These limits also authorize a savings bank to make
loans-to-one-borrower to finance the sale of real property acquired in
satisfaction of debts in an amount up to 50% of net worth.

     As of  June 30, 1997, the largest aggregate amount of loans which the Bank
had to any one borrower was $1.5 million.  The Bank had no loans outstanding
which management believes violate the applicable loans-to-one-borrower limits.
The Bank does not believe that the loans-to-one-borrower limits will have a
significant impact on its business, operations and earnings.

     Federal Home Loan Bank System.  The FHLB system provides a central credit
facility for member institutions.  As a member of the FHLB of Atlanta, the Bank
is required to own capital stock in the FHLB of Atlanta in an amount at least
equal to the greater of 1% of the aggregate principal amount of its unpaid
residential mortgage loans, home purchase contracts and similar obligations at
the end of each calendar year, or 5% of its outstanding advances (borrowings)
from the FHLB of Atlanta.  On June 30, 1997, the Bank was in compliance with
this requirement with an investment in FHLB of Atlanta stock of $586,500.

     Each FHLB is required to contribute at least 10% of its reserves and
undivided profits to fund the principal and a portion of the interest on certain
bonds and certain other obligations which are used to fund the resolution of
troubled savings association cases, and to transfer a percentage of its annual
net earnings to the Affordable Housing Program. These contributions continue to
reduce the FHLB of Atlanta's earnings and the Bank's dividends on its FHLB of
Atlanta stock.

     Federal Reserve System.  Federal Reserve regulations require savings banks,
not otherwise exempt from the regulations, to maintain reserves against their
transaction accounts (primarily negotiable order of withdrawal accounts) and
certain nonpersonal time deposits.  The reserve requirements are subject to
adjustment by the Federal Reserve.  As of June 30, 1997, the Bank was in
compliance with the applicable reserve requirements of the Federal Reserve.

                                       9
<PAGE>
 
     Restrictions on Acquisitions.  Federal law generally provides that no
"person," acting directly or indirectly or through or in concert with one or
more other persons, may acquire "control," as that term is defined in FDIC
regulations, of a state savings bank without giving at least 60 days' written
notice to the FDIC and providing the FDIC an opportunity to disapprove the
proposed acquisition.  Pursuant to regulations governing acquisitions of
control, control of an insured institution is conclusively deemed to have been
acquired by, among other things, the acquisition of more than 25% of any class
of voting stock.  In addition, control is presumed to have been acquired,
subject to rebuttal, upon the acquisition of more than 10% of any class of
voting stock.  Such acquisitions of control may be disapproved if it is
determined, among other things, that (i) the acquisition would substantially
lessen competition; (ii) the financial condition of the acquiring person might
jeopardize the financial stability of the savings bank or prejudice the
interests of its depositors; or (iii) the competency, experience or integrity of
the acquiring person or the proposed management personnel indicates that it
would not be in the interest of the depositors or the public to permit the
acquisitions of control by such person.

     Liquidity.  The Bank is subject to the Administrator's requirement that the
ratio of liquid assets to total assets equal at least 10%.  The computation of
liquidity under North Carolina regulation allows the inclusion of mortgage-
backed securities and investments which, in the judgment of the Administrator,
have a readily marketable value, including investments with maturities in excess
of five years.  On June 30, 1997, the Bank's liquidity ratio, calculated in
accordance with North Carolina regulations, was approximately 29.6%.

     Additional Limitations on Activities.  Recent FDIC law and regulations
generally provide that the Bank may not engage as principal in any type of
activity, or in any activity in an amount, not permitted for national banks, or
directly acquire or retain any equity investment of a type or in an amount not
permitted for national banks.  The FDIC has authority to grant exceptions from
these prohibitions (other than with respect to non-service corporation equity
investments) if it determines no significant risk to the insurance fund is posed
by the amount of the investment or the activity to be engaged in and if the Bank
is and continues to be in compliance with fully phased-in capital standards.
National banks are generally not permitted to hold equity investments other than
shares of service corporations and certain federal agency securities.  Moreover,
the activities in which service corporations are permitted to engage are limited
to those of service corporations for national banks.

     Savings banks are also generally prohibited from directly or indirectly
acquiring or retaining any corporate debt security that is not of investment
grade (generally referred to as "junk bonds").  State savings banks are also
required to notify the FDIC at least 30 days prior to the establishment or
acquisition of any subsidiary, or at least 30 days prior to conducting any such
new activity.  Any such activities must be conducted in accordance with the
regulations and orders of the FDIC and the Administrator.

     Prompt Corrective Regulatory Action.  Federal law provides the federal
banking agencies with broad powers to take corrective action to resolve problems
of insured depository institutions.  The extent of these powers depends upon
whether the institutions in question are "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized," or
"critically undercapitalized."  Under the FDIC regulations applicable to the
Bank, an institution is considered "well capitalized" if it has (i) a total
risk-based capital ratio of 10% or greater, (ii) a Tier I risk-based capital
ratio of 6% or greater, (iii) a leverage ratio of 5% or greater and (iv) is not
subject to any order or written directive to meet and maintain a specific
capital level for any capital measure.  An "adequately capitalized" institution
is defined as one that has (i) a total risk-based capital ratio of 8% or
greater, (ii) a Tier I risk-based capital ratio of 4% or greater and (iii) a
leverage ratio of 4% or greater (or 3% or greater in the case of an institution
with the highest examination rating and which is not experiencing or
anticipating significant growth).  An institution is considered (A)
"undercapitalized" if it has (i) a total risk-based capital ratio of less than
8%, (ii) a Tier I risk-based capital ratio of less than 4% or (iii) a leverage
ratio of less than 4% (or 3% in the case of an institution with the highest
examination rating and which is not experiencing or anticipating significant
growth); (B) "significantly undercapitalized" if the institution has (i) a total
risk-based capital ratio of less than 6%, or (ii) a Tier I risk-based capital
ratio of less than 3% or (iii) a leverage ratio of less than 3% and (C)
"critically undercapitalized" if the institution has a ratio of tangible equity
to total assets equal to or less than 2%.

                                       10
<PAGE>
 
     Interstate Banking.  The Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "Interstate Banking Act"), effective September 29,
1995, permits adequately capitalized bank and savings bank holding companies to
acquire control of banks and savings banks in any state.  The states may
specifically permit interstate acquisitions prior to September 29, 1995, by
enacting legislation that provides for such transactions.  North Carolina
adopted nationwide reciprocal interstate acquisition legislation in 1994.

     Such interstate acquisitions are subject to certain restrictions.  States
may require the bank or savings bank being acquired to have been in existence
for a certain length of time but not in excess of five years. In addition, no
bank or saving bank may acquire more than 10% of the insured deposits in the
United States or more than 30% of the insured deposits in any one state, unless
the state has specifically legislated a higher deposit cap. States are free to
legislate stricter deposit caps.

     The Interstate Banking Act also provides for interstate branching,
effective June 1, 1997, allowing interstate branching in all states, provided
that a particular state has not specifically denied interstate branching by
legislation prior to such time.  Unlike interstate acquisitions, a state may
deny interstate branching if it specifically elects to do so by June 1, 1997.
States may choose to allow interstate branching prior to June 1, 1997 by opting-
in to a group of states that permits these transactions.  These states generally
allow interstate branching via a merger of an out-of-state bank with an in-state
bank, or on a de novo basis.  North Carolina has enacted legislation permitting
branching transactions.

     It is anticipated that the Interstate Banking Act will increase competition
within the markets in which the Bank now operates, although the extent to which
such competition will increase in such markets or the timing of such increase
cannot be predicted.

     Restrictions on Dividends and Other Capital Distributions.  A North
Carolina-chartered stock savings bank may not declare or pay a cash dividend on,
or repurchase any of, its capital stock if the effect of such transaction would
be to reduce the net worth of the institution to an amount which is less than
the minimum amount required by applicable federal and state regulations.  In
addition, a North Carolina-chartered stock savings bank, for a period of five
years after its conversion from mutual to stock form, must obtain the written
approval from the Administrator before declaring or paying a cash dividend on
its capital stock in an amount in excess of one-half of the greater of (i) the
institution's net income for the most recent fiscal year end, or (ii) the
average of the institution's net income after dividends for the most recent
fiscal year end and not more than two of the immediately preceding fiscal year
ends, if applicable.  Under FDIC regulations, stock repurchases may be made by
the savings bank only upon receipt of FDIC approval.

     Also, without the prior written approval of the Administrator, a North
Carolina-chartered stock savings bank, for a period of five years after its
conversion from mutual to stock form, may not repurchase any of its capital
stock. The Administrator will give approval to repurchase only upon a showing
that the proposed repurchase will not adversely affect the safety and soundness
of the institution.

     In addition, the Bank is not permitted to declare or pay a cash dividend on
or repurchase any of its capital stock if the effect thereof would be to cause
its net worth to be reduced below the amount required for the liquidation
account established in connection with the Bank's conversion from mutual to
stock ownership.

     Other North Carolina Regulations.  As a North Carolina-chartered savings
bank, the Bank derives its authority from, and is regulated by, the
Administrator.  The Administrator has the right to promulgate rules and
regulations necessary for the supervision and regulation of North Carolina
savings banks under his jurisdiction and for the protection of the public
investing in such institutions.  The regulatory authority of the Administrator
includes, but is not limited to, the establishment of reserve requirements; the
regulation of the payment of dividends; the regulation of stock repurchases, the
regulation of incorporators, stockholders, directors, officers and employees;
the establishment of permitted types of withdrawable accounts and types of
contracts for savings programs, loans and investments; and the regulation of the
conduct and management of savings banks, chartering and branching of
institutions, mergers,

                                       11
<PAGE>
 
conversions and conflicts of interest.  North Carolina law requires that the
Bank maintain federal deposit insurance as a condition of doing business.

     The Administrator conducts regular examinations of North Carolina-chartered
savings banks.  The purpose of such examinations is to assure that institutions
are being operated in compliance with applicable North Carolina law and
regulations and in a safe and sound manner.  These examinations are usually
conducted on a joint basis with the FDIC.  In addition, the Administrator is
required to conduct an examination of any institution when he has good reason to
believe that the standing and responsibility of the institution is of doubtful
character or when he otherwise deems it prudent.  The Administrator is empowered
to order the revocation of the license of an institution if he finds that it has
violated or is in violation of any North Carolina law or regulation and that
revocation is necessary in order to preserve the assets of the institution and
protect the interests of its depositors.  The Administrator has the power to
issue cease and desist orders if any person or institution is engaging in, or
has engaged in, any unsafe or unsound practice or unfair and discriminatory
practice in the conduct of its business or in violation of any other law, rule
or regulation.

     A North Carolina-chartered savings bank must maintain net worth, computed
in accordance with the Administrator's requirements, of 5% of total assets and
liquidity of 10% of total assets, as discussed above. Additionally, a North
Carolina-chartered savings bank is required to maintain general valuation
allowances and specific loss reserves in the same amounts as required by the
FDIC.

     Subject to limitation by the Administrator, North Carolina-chartered
savings banks may make any loan or investment or engage in any activity which is
permitted to federally chartered institutions.  However, a North Carolina-
chartered savings bank cannot invest more than 15% of its total assets in
business, commercial, corporate and agricultural loans.  In addition to such
lending authority, North Carolina-chartered savings banks are authorized to
invest funds, in excess of loan demand, in certain statutorily permitted
investments, including but not limited to (i) obligations of the United States,
or those guaranteed by it; (ii) obligations of the State of North Carolina;
(iii) bank demand or time deposits; (iv) stock or obligations of the federal
deposit insurance fund or a FHLB; (v) savings accounts of any savings
institution as approved by the board of directors; and (vi) stock or obligations
of any agency of the State of North Carolina or of the United States or of any
corporation doing business in North Carolina whose principal business is to make
education loans.

     North Carolina law provides a procedure by which savings institutions may
consolidate or merge, subject to approval of the Administrator.  The approval is
conditioned upon findings by the Administrator that, among other things, such
merger or consolidation will promote the best interests of the members or
stockholders of the merging institutions. North Carolina law also provides for
simultaneous mergers and conversions and for supervisory mergers conducted by
the Administrator.

     Future Requirements.  Statutes and regulations are regularly introduced
which contain wide-ranging proposals for altering the structures, regulations
and competitive relationships of financial institutions.  It cannot be predicted
whether or what form any proposed statute or regulation will be adopted or the
extent to which the business of the Company and the Bank may be affected by such
statute or regulation.

ITEM 2.   DESCRIPTION OF PROPERTY

     The following table sets forth the location of the Bank's headquarters
office in Thomasville, North Carolina, as well as certain other information
relating to this office as of June 30, 1997:

                                       12
<PAGE>
 
<TABLE>
<CAPTION>
                                                      Net Book           
                                                      Value of           
                                                    Property or   Owned or
                                                    Improvements   Leased
                                                    ------------  --------
<S>                                                 <C>           <C>    
22 Winston Street                                                        
Thomasville, North Carolina 27360                     $605,446      Owned   

</TABLE>


     The Bank's headquarters is the only real property owned by the Company
that is used in its operations. The Bank's management considers the property to
be in good condition and is of the opinion that it is adequately covered by
insurance.  The total net book value of the Bank's furniture, fixtures and
equipment at June 30, 1997 was $103,675.  Any property acquired as a result of
foreclosure or by deed in lieu of foreclosure is classified as real estate owned
until such time as it is sold or otherwise disposed of by the Bank in an effort
to recover its investment.  As of June 30, 1997 the Bank recorded $53,002 in
real estate acquired in settlement of loans.


ITEM 3.   LEGAL PROCEEDINGS

     In the opinion of management, neither the Company nor the Bank is involved
in any pending legal proceedings other than routine litigation that is
incidental to the business.


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

     No matter was submitted to a vote of the Company's stockholders during the
quarter ended June 30, 1997.



                                    PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     See the information under the section captioned "Common Stock Information"
on page 41 of the Company's 1997 Annual Report, which section is incorporated
herein by reference.  See "ITEM 1. DESCRIPTION OF BUSINESS -- Regulation of the
Bank -- Restrictions on Dividends and Other Capital Distributions" above for
regulatory restrictions which limit the ability of the Bank to pay dividends to
the Company.

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS

     See the information set forth under ITEM 1 above and the information set
forth under the section captioned "Management's Discussion and Analysis" on
pages 3 through 11 in the Company's 1997 Annual Report, which section is
incorporated herein by reference.

ITEM 7.   FINANCIAL STATEMENTS

     The consolidated financial statements of the Company set forth on pages 12
through 40 in the Company's 1997 Annual Report are incorporated herein by
reference.

                                       13
<PAGE>
 
ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

     N/A.

                                    PART III

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

     The information required by this Item regarding directors and executive
officers of the Company is set forth under the sections captioned "Proposal 1 -
Election of Directors" on page 6 of the Proxy Statement and "Executive Officers"
on page 8 of the Proxy Statement, which sections are incorporated herein by
reference.

     The information required by this Item regarding compliance with Section
16(a) of the Securities Exchange Act of 1934 is set forth under the section
captioned "Section 16(a) Beneficial Ownership Reporting Compliance" set forth on
page 5 of the Proxy Statement, which is incorporated herein by reference.

ITEM 10.  EXECUTIVE COMPENSATION

     The information required by this Item is set forth under the sections
captioned "Proposal 1 - Election of Directors - Directors Compensation" on page
8 and "- Management Compensation" on pages 8 through 11 of the Proxy Statement,
which sections are incorporated herein by reference.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by this Item is incorporated by reference from the
section captioned "Security Ownership of Certain Beneficial Owners" on pages 2
through 5 of the Proxy Statement.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     See also the section captioned "Certain Indebtedness and Transactions of
Management" on page 11 of the Proxy Statement, which section is incorporated
herein by reference.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

     (3)(i)  Certificate of Incorporation, incorporated herein by reference to
             Exhibit 3.1 to the Registration Statement on Form S-1, Registration
             No. 333-8625, dated July 23, 1996 and amended on October 8, 1996
             and November 7, 1996.

     (3)(ii) Bylaws, incorporated herein by reference to Exhibit 3.2 to the
             Registration Statement on Form S-1, Registration No. 333-8625,
             dated July 23, 1996 and amended on October 8, 1996 and November 7,
             1996.

                                       14
<PAGE>
 
     (4)     Specimen Stock Certificate incorporated herein by reference to
             Exhibit 4.1 to the Registration Statement on Form S-1, Registration
             No. 333-8625, dated July 23, 1996 and amended on October 8, 1996
             and November 7, 1996.

     10(a)   Employment Agreement with James G. Hudson, Jr.

     10(b)   Special Termination Agreements with John E. Todd and Drema A.
             Michael.

     10(c)   Supplemental Income Agreements with James G. Hudson, Jr.

     (11)    Statement Regarding Computation of Per Share Earnings

     (13)    Portions of 1997 Annual Report to Stockholders

     (21)    See ITEM 1. - "DESCRIPTION OF BUSINESS --Subsidiaries." for
             discussion of subsidiaries

     (27)    Financial Data Schedule

Reports on Form 8-K

     The Company filed no reports  on Form 8-K during the last quarter of the
fiscal year ended June 30, 1997. There have been no reportable transactions
during the two most recent fiscal years nor are there any reportable
transactions proposed as of the date of this Form 10-KSB.

                                       15
<PAGE>
 
                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                    CENTURY BANCORP, INC.


Date:  September 23, 1997           By:  /s/ James G. Hudson, Jr.
                                         ------------------------------------
                                         James G. Hudson, Jr.
                                         President, Treasurer, and 
                                         Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
 
Signature                                 Title                      Date
---------                                 -----                      ----       
<S>                          <C>                              <C>
 
/s/ James G. Hudson, Jr.     President, Chief Executive       September 23, 1997
---------------------------  Officer, Treasurer  and
James G. Hudson, Jr.         Director                
                             
 
/s/ John E. Todd             Senior Vice-President and        September 23, 1997
---------------------------  Director 
John E. Todd                 
 
/s/ Drema A. Michael         Assistant Treasurer              September 23, 1997
---------------------------
Drema A. Michael
 
/s/ Henry H. Darr            Director                         September 23, 1997
---------------------------
Henry H. Darr
 
/s/ John R. Hunnicutt        Director                         September 23, 1997
---------------------------
John R. Hunnicutt
 
/s/ F. Stuart Kennedy        Director                         September 23, 1997
---------------------------
F. Stuart Kennedy
 
/s/ Milton T. Riley, Jr.     Director                         September 23, 1997
---------------------------
Milton T. Riley, Jr.
</TABLE>

                                       16