EXHIBIT 99.1




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##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Consolidated Financial Statements
 For the Years Ended December 31, 2010 and 2009




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##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Table of Contents
 Financial Statements
 For the Years Ended December 31, 2010 and 2009
 PageReport of Independent Registered Public Accounting Firm
    
    
    1Consolidated Statements of Financial Condition
    
    
    2Consolidated Statements of Income
    
    
    3Consolidated Statements of Comprehensive Income
    
    
    4Consolidated Statements of Shareholders Equity
    
    
    5Consolidated Statements of Cash Flows
    
    
    6Notes to Consolidated Financial Statements
    
    
    7-48




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##### 



Report of Independent Registered Public Accounting Firm




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##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Consolidated Statements of Financial Condition
 December 31, 2010 and 2009  (dollars in thousands, except per share amounts)
 2010
    
    
    2009AssetsCash and due from banks
    
    $
    31,696
    
    
    $
    13,055Federal funds sold
    
    
    
    
    
    
    3,175Securities available-for-sale
    
    
    76,904
    
    
    
    44,461Loans, net of allowance for loan losses of $7,866 and $5,072, respectively
    
    
    308,943
    
    
    
    331,777Loans held for sale
    
    
    46,570
    
    
    
    58,135Bank premises and equipment
    
    
    9,271
    
    
    
    9,654Accrued interest receivable
    
    
    1,697
    
    
    
    1,851Foreclosed real estate, net of allowance
    
    
    2,751
    
    
    
    4,466Deferred tax asset, net
    
    
    2,475
    
    
    
    1,018Federal Home Loan Bank stock
    
    
    2,527
    
    
    
    2,828Bank-owned life insurance
    
    
    9,210
    
    
    
    8,812Other assets
    
    
    3,267
    
    
    
    4,781Total assets
    
    $
    495,311
    
    
    $
    484,013Liabilities and Shareholders EquityLiabilitiesDepositsNon-interest bearing
    
    $
    41,602
    
    
    $
    41,787Interest-bearing:NOW accounts
    
    
    38,668
    
    
    
    36,395Savings
    
    
    53,880
    
    
    
    51,424Money market accounts
    
    
    36,013
    
    
    
    19,232Time deposits of $100,000 or more
    
    
    171,843
    
    
    
    179,123Other time deposits
    
    
    72,743
    
    
    
    77,279Total deposits
    
    
    414,749
    
    
    
    405,240Federal Home Loan Bank borrowings
    
    
    
    
    
    
    3,600Repurchase agreements
    
    
    3,467
    
    
    
    3,697Long-term debt
    
    
    25,000
    
    
    
    25,000Other borrowings
    
    
    3,625
    
    
    
    Other liabilities
    
    
    3,494
    
    
    
    3,203Total liabilities
    
    
    450,335
    
    
    
    440,740Shareholders equityPreferred stock, par value $.001; 1,000,000 shares
authorized; none issued
    
    
    
    
    
    
    Common stock, par value $.001; 9,000,000 shares
authorized; 3,536,715 and 3,499,477 shares issued and
outstanding, respectively
    
    
    4
    
    
    
    4Additional paid-in capital
    
    
    15,847
    
    
    
    15,567Retained earnings
    
    
    28,889
    
    
    
    27,355Accumulated other comprehensive income
    
    
    236
    
    
    
    347Total shareholders equity
    
    
    44,976
    
    
    
    43,273Total liabilities and shareholders equity
    
    $
    495,311
    
    
    $
    484,013
   2




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##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Consolidated Statements of Income
 For the Years Ended December 31, 2010 and 2009  (dollars in thousands, except per share amounts)
 2010
    
    
    2009Interest incomeInterest and fees on loans
    
    $
    22,379
    
    
    $
    22,260Interest on taxable securities
    
    
    1,620
    
    
    
    1,925Interest on nontaxable securities
    
    
    369
    
    
    
    412Interest on Federal funds sold and cash in banks
    
    
    41
    
    
    
    7Total interest income
    
    
    24,409
    
    
    
    24,604Interest expenseInterest on time deposits of $100,000 or more
    
    
    3,578
    
    
    
    5,415Interest on other deposits
    
    
    2,759
    
    
    
    3,330Interest on funds purchased and other borrowings
    
    
    953
    
    
    
    977Total interest expense
    
    
    7,290
    
    
    
    9,722Net interest income
    
    
    17,119
    
    
    
    14,882Provision for loan losses
    
    
    8,355
    
    
    
    3,082Net interest income after
provision for loan losses
    
    
    8,764
    
    
    
    11,800Non-interest incomeService charges on deposits
    
    
    1,476
    
    
    
    1,496Gain on sale of mortgage loans
    
    
    10,780
    
    
    
    9,735Other income
    
    
    990
    
    
    
    2,926Total non-interest income
    
    
    13,246
    
    
    
    14,157Non-interest expenseSalaries and employee benefits
    
    
    12,511
    
    
    
    12,776Occupancy expenses
    
    
    1,650
    
    
    
    1,657Other expenses
    
    
    6,382
    
    
    
    6,469Total non-interest expense
    
    
    20,543
    
    
    
    20,902Income before income taxes
    
    
    1,467
    
    
    
    5,055Income tax expense (benefit)
    
    
    (66
    )
    
    
    1,303Net income
    
    $
    1,533
    
    
    $
    3,752Earnings per common shareBasic
    
    $
    0.44
    
    
    $
    1.08Diluted
    
    $
    0.44
    
    
    $
    1.07
   3




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##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Consolidated Statements of Comprehensive Income
 For the Years Ended December 31, 2010 and 2009  (dollars in thousands)
 2010
    
    
    2009Net income
    
    $
    1,533
    
    
    $
    3,752Other comprehensive income (loss):Unrealized holding gain (loss) arising during the
period
    
    
    (139
    )
    
    
    217Reclassification for gain (loss) included in
net income
    
    
    (35
    )
    
    
    Tax effect
    
    
    63
    
    
    
    (78
    )Total other comprehensive income (loss)
    
    
    (111
    )
    
    
    139Comprehensive income
    
    $
    1,422
    
    
    $
    3,891
   4




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##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Consolidated Statements of Shareholders Equity
 For the Years Ended December 31, 2010 and 2009  (dollars in thousands)
 AccumulatedCommon
    
    
    Common
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    TotalStock
    
    
    Stock
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    ShareholdersShares
    
    
    Par Value
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    EquityBalance at January 1, 2009
    
    
    3,456,816
    
    
    
    4
    
    
    
    15,268
    
    
    
    23,604
    
    
    
    208
    
    
    
    39,084Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,752
    
    
    
    
    
    
    
    3,752Change in unrealized gain (loss) on securities
available-for-sale, net of deferred taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    139
    
    
    
    139Proceeds from exercise of stock options
    
    
    21,103
    
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    
    
    
    
    52Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    80
    
    
    
    
    
    
    
    
    
    
    
    80Issuance of stock for compensation
    
    
    21,558
    
    
    
    
    
    
    
    167
    
    
    
    (1
    )
    
    
    
    
    
    
    166Balance at December 31, 2009
    
    
    3,499,477
    
    
    
    4
    
    
    
    15,567
    
    
    
    27,355
    
    
    
    347
    
    
    
    43,273Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,533
    
    
    
    
    
    
    
    1,533Change in unrealized gain (loss) on securities
available-for-sale, net of deferred taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (111
    )
    
    
    (111
    )Disqualifying disposition, net tax effect
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    9Proceeds from exercise of stock options
    
    
    11,954
    
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    15Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    83
    
    
    
    
    
    
    
    
    
    
    
    83Issuance of stock for compensation
    
    
    25,284
    
    
    
    
    
    
    
    173
    
    
    
    1
    
    
    
    
    
    
    
    174Balance at December 31, 2010
    
    
    3,536,715
    
    
    $
    4
    
    
    $
    15,847
    
    
    $
    28,889
    
    
    $
    236
    
    
    $
    44,976
   5




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GEORGIA-CAROLINA BANCSHARES, INC.
 Consolidated Statements of Cash Flows
 For the Years Ended December 31, 2010 and 2009  (dollars in thousands)
 2010
    
    
    2009Cash flows from operating activitiesNet income
    
    $
    1,533
    
    
    $
    3,752Adjustments to reconcile net income to net
cash provided by (used in) operating activities:Depreciation and amortization
    
    
    658
    
    
    
    677Provision for loan losses
    
    
    8,355
    
    
    
    3,082(Gains) losses on sales of foreclosed real estate
    
    
    72
    
    
    
    (1,764
    )(Gains) losses on sales of premises and equipment
    
    
    3
    
    
    
    Gain on sales of securities
    
    
    (19
    )
    
    
    Increase in cash value of bank-owned life insurance
    
    
    (398
    )
    
    
    (410
    )Stock-based compensation expense
    
    
    83
    
    
    
    80Stock compensation
    
    
    173
    
    
    
    166Deferred income tax
    
    
    (1,394
    )
    
    
    (245
    )Gain on loans held for sale
    
    
    (10,780
    )
    
    
    (9,735
    )Proceeds from sale of loans held for sale
    
    
    560,651
    
    
    
    619,768Originations of loans held for sale
    
    
    (538,306
    )
    
    
    (639,766
    )(Increase) decrease in accrued interest receivable
    
    
    154
    
    
    
    83Increase (decrease) in accrued interest payable
    
    
    (235
    )
    
    
    (721
    )(Increase) decrease in other assets
    
    
    1,410
    
    
    
    (2,702
    )Increase in other liabilities
    
    
    535
    
    
    
    316Net cash provided by (used in) operating activities
    
    
    22,495
    
    
    
    (27,419
    )Cash flows from investing activities(Increase) decrease in Federal funds sold
    
    
    3,175
    
    
    
    (3,175
    )Loan originations and collections, net
    
    
    13,053
    
    
    
    (9,187
    )Purchases of available-for-sale securities
    
    
    (62,634
    )
    
    
    (16,183
    )Proceeds from maturities, sales and calls of
available-for-sale securities
    
    
    30,036
    
    
    
    29,533Net (increase) decrease of FHLB stock
    
    
    301
    
    
    
    (627
    )Proceeds from sale of foreclosed real estate
    
    
    3,069
    
    
    
    10,852Net additions to premises and equipment
    
    
    (173
    )
    
    
    (145
    )Net cash provided by (used in) investing activities
    
    
    (13,173
    )
    
    
    11,068Cash flows from financing activitiesIncrease (decrease) in deposits
    
    
    9,509
    
    
    
    28,231Increase (decrease) in FHLB borrowings
    
    
    
    
    
    
    (2,400
    )Increase (decrease) in repurchase agreements
and other borrowings
    
    
    (205
    )
    
    
    (6,431
    )Proceeds from stock options exercised
    
    
    15
    
    
    
    52Net cash provided by financing activities
    
    
    9,319
    
    
    
    19,452Net increase in cash and due from banks
    
    
    18,641
    
    
    
    3,101Cash and due from banks at beginning of the year
    
    
    13,055
    
    
    
    9,954Cash and due from banks at end of the year
    
    $
    31,696
    
    
    $
    13,055
   6




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GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 1Summary of significant accounting policies
 Nature of business
   Significant accounting policies
 Basis of presentation
 Estimates
   7




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GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 1Summary of significant accounting policies
  Significant concentrations of credit risk
 Significant concentrations of deposit risk
 Cash and due from banks
 Investment securities
 Securities available-for-sale
   8




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GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 1Summary of significant accounting policies
    Federal Home Loan Bank Stock
 Loans and interest income
   9




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GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 1Summary of significant accounting policies
 Derivatives and Hedging.
      10




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GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 1Summary of significant accounting policies
 Allowance for loan losses
 Foreclosed real estate
 Bank premises and equipment
 Financial instruments
 Bank-owned life insurance (BOLI) Investments in Insurance Contracts.
 Income taxes Income Taxes,
  11




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GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 1Summary of significant accounting policies
 Earnings per share Earnings Per Share.
 Fair value of financial instruments
  Cash and due from banks, Federal funds sold, and interest-bearing deposits in banks
 Available-for-sale securities
 Loans and loans held for sale
 Deposit liabilities, other borrowings, and repurchase agreements
  12




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GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 1Summary of significant accounting policies
  Comprehensive income
 Stock-based compensation Compensation-Stock Compensation,
 Recently issued accounting standards
 Business Combinations.
  13




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GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 1Summary of significant accounting policies
 Intangibles  Goodwill and Other.
  Disclosures about the
Credit Quality of Financing Receivables and the Allowance for Credit Losses, Receivables.
 Improving Disclosure
about Fair Value Measurements, Fair Value Measurements and
Disclosures.
  14




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GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 1Summary of significant accounting policies
 Measuring Liabilities
at Fair Value, Fair Value Measurements and Disclosures.
  Note 2Cash and due from banks
  Note 3Investment securities
  2010Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value(in thousands)Securities available-for-sale:U.S. Government and agency
    
    $
    28,265
    
    
    $
    61
    
    
    $
    (97
    )
    
    $
    28,229Mortgage-backed
    
    
    39,167
    
    
    
    715
    
    
    
    (282
    )
    
    
    39,600State and municipal
    
    
    9,103
    
    
    
    127
    
    
    
    (155
    )
    
    
    9,075Total
    
    $
    76,535
    
    
    $
    903
    
    
    $
    (534
    )
    
    $
    76,904
  15




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GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 3Investment securities
 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value(in thousands)Securities available-for-sale:U.S. Government and agency
    
    $
    10,501
    
    
    $
    151
    
    
    $
    
    
    
    $
    10,652Mortgage-backed
    
    
    23,446
    
    
    
    680
    
    
    
    (222
    )
    
    
    23,904Corporate obligations
    
    
    195
    
    
    
    
    
    
    
    (73
    )
    
    
    122State and municipal
    
    
    9,776
    
    
    
    134
    
    
    
    (127
    )
    
    
    9,783Total
    
    $
    43,918
    
    
    $
    965
    
    
    $
    (422
    )
    
    $
    44,461
  SecuritiesAvailable-for-SaleAmortized
    
    
    FairCost
    
    
    Value(in thousands)Less than one year
    
    $
    
    
    
    $
    One to five years
    
    
    3,459
    
    
    
    3,482Five to ten years
    
    
    14,871
    
    
    
    14,766Over ten years
    
    
    19,038
    
    
    
    19,056Mortgage-backed securities
    
    
    39,167
    
    
    
    39,600Total
    
    $
    76,535
    
    
    $
    76,904
    16




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##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 3Investment securities
  2010Less than Twelve Months
    
    
    Over Twelve MonthsGross
    
    
    
    
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    NumberUnrealized
    
    
    Fair
    
    
    Number of
    
    
    Unrealized
    
    
    Fair
    
    
    ofLosses
    
    
    Value
    
    
    Securities
    
    
    Losses
    
    
    Value
    
    
    Securities(in thousands)Securities
available-for-sale:U.S. agency
    
    $
    (97
    )
    
    $
    10,947
    
    
    
    7
    
    
    $
    
    
    
    $
    
    
    
    
    State and municipal
    
    
    (35
    )
    
    
    796
    
    
    
    2
    
    
    
    (120
    )
    
    
    672
    
    
    
    1Corporate obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Mortgage-backed
    
    
    (265
    )
    
    
    13,013
    
    
    
    10
    
    
    
    (17
    )
    
    
    935
    
    
    
    4Total
    
    $
    (397
    )
    
    $
    24,756
    
    
    
    19
    
    
    $
    (137
    )
    
    $
    1,607
    
    
    
    5
 2009Less than Twelve Months
    
    
    Over Twelve MonthsGross
    
    
    
    
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    NumberUnrealized
    
    
    Fair
    
    
    Number of
    
    
    Unrealized
    
    
    Fair
    
    
    ofLosses
    
    
    Value
    
    
    Securities
    
    
    Losses
    
    
    Value
    
    
    Securities(in thousands)Securities
available-for-sale:U.S. agency
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    
    State and municipal
    
    
    (1
    )
    
    
    197
    
    
    
    1
    
    
    
    (126
    )
    
    
    1,426
    
    
    
    3Corporate obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (73
    )
    
    
    122
    
    
    
    1Mortgage-backed
    
    
    (170
    )
    
    
    7,019
    
    
    
    6
    
    
    
    (52
    )
    
    
    763
    
    
    
    2Total
    
    $
    (171
    )
    
    $
    7,216
    
    
    
    7
    
    
    $
    (251
    )
    
    $
    2,311
    
    
    
    6
   17




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##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 3Investment securities
   Note 4Loans
  2010
    
    
    2009(in thousands)Commercial and industrial
    
    $
    20,298
    
    
    $
    22,906Real estate  construction
    
    
    86,418
    
    
    
    107,429Real estate  residential
    
    
    61,194
    
    
    
    66,050Real estate  commercial
    
    
    142,351
    
    
    
    133,140Consumer
    
    
    6,606
    
    
    
    7,468Total loans receivable
    
    
    316,867
    
    
    
    336,993Deferred loan fees
    
    
    (58
    )
    
    
    (144
    )Total loans
    
    
    316,809
    
    
    
    336,849Allowance for loan losses
    
    
    (7,866
    )
    
    
    (5,072
    )Loans, net of allowance for loan losses
    
    $
    308,943
    
    
    $
    331,777
     18




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##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 4Loans
      19




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##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 4Loans
  Credit Risk Profile by Risk Grade Category:
 As of December 31, 2010  (in thousands)
 Commercialand
    
    
    Real Estate -
    
    
    Real Estate -
    
    
    Real Estate -Industrial
    
    
    Construction
    
    
    Residential
    
    
    Commercial
    
    
    Consumer
    
    
    TotalGrade 1
    
    $
    251
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    794
    
    
    $
    1,045Grade 2
    
    
    133
    
    
    
    
    
    
    
    235
    
    
    
    1,059
    
    
    
    100
    
    
    
    1,527Grade 3
    
    
    15,939
    
    
    
    14,879
    
    
    
    48,901
    
    
    
    86,109
    
    
    
    5,370
    
    
    
    171,198Grade 4
    
    
    3,338
    
    
    
    62,594
    
    
    
    7,801
    
    
    
    44,126
    
    
    
    99
    
    
    
    117,958Grade 5
    
    
    
    
    
    
    4,375
    
    
    
    568
    
    
    
    2,862
    
    
    
    
    
    
    
    7,805Grade 6
    
    
    637
    
    
    
    4,348
    
    
    
    3,666
    
    
    
    8,195
    
    
    
    125
    
    
    
    16,971In process
    
    
    
    
    
    
    222
    
    
    
    23
    
    
    
    
    
    
    
    118
    
    
    
    363Total loans
receivable
    
    $
    20,298
    
    
    $
    86,418
    
    
    $
    61,194
    
    
    $
    142,351
    
    
    $
    6,606
    
    
    $
    316,867
 As of December 31, 2009  (in thousands)
 Commercialand
    
    
    Real Estate -
    
    
    Real Estate -
    
    
    Real Estate -Industrial
    
    
    Construction
    
    
    Residential
    
    
    Commercial
    
    
    Consumer
    
    
    TotalGrade 1
    
    $
    217
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    183
    
    
    $
    400Grade 2
    
    
    
    
    
    
    
    
    
    
    486
    
    
    
    150
    
    
    
    109
    
    
    
    745Grade 3
    
    
    17,037
    
    
    
    10,686
    
    
    
    59,359
    
    
    
    116,711
    
    
    
    6,698
    
    
    
    210,491Grade 4
    
    
    4,449
    
    
    
    88,099
    
    
    
    2,854
    
    
    
    7,783
    
    
    
    76
    
    
    
    103,261Grade 5
    
    
    664
    
    
    
    1,342
    
    
    
    823
    
    
    
    1,683
    
    
    
    23
    
    
    
    4,535Grade 6
    
    
    583
    
    
    
    7,594
    
    
    
    2,300
    
    
    
    6,813
    
    
    
    165
    
    
    
    17,455In process
    
    
    (44
    )
    
    
    (292
    )
    
    
    228
    
    
    
    
    
    
    
    214
    
    
    
    106Total loans receivable
    
    $
    22,906
    
    
    $
    107,429
    
    
    $
    66,050
    
    
    $
    133,140
    
    
    $
    7,468
    
    
    $
    336,993
  20




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 4Loans
 Allowance for Loan Losses and Recorded Investment in Loans Receivable
For the Year Ended December 31, 2010
 Commercialand
    
    
    Real Estate -
    
    
    Real Estate -
    
    
    Real Estate -Industrial
    
    
    Construction
    
    
    Residential
    
    
    Commercial
    
    
    Consumer
    
    
    Unallocated
    
    
    TotalAllowance for loan losses:Beginning balance
    
    $
    259
    
    
    $
    2,364
    
    
    $
    827
    
    
    $
    1,319
    
    
    $
    176
    
    
    $
    127
    
    
    $
    5,072Charge-offs
    
    
    (139
    )
    
    
    (3,663
    )
    
    
    (980
    )
    
    
    (850
    )
    
    
    (147
    )
    
    
    
    
    
    
    (5,779
    )Recoveries
    
    
    63
    
    
    
    16
    
    
    
    13
    
    
    
    22
    
    
    
    104
    
    
    
    
    
    
    
    218Provisions
    
    
    44
    
    
    
    5,191
    
    
    
    1,210
    
    
    
    1,126
    
    
    
    118
    
    
    
    666
    
    
    
    8,355Ending Balance
    
    $
    227
    
    
    $
    3,908
    
    
    $
    1,070
    
    
    $
    1,617
    
    
    $
    251
    
    
    $
    793
    
    
    $
    7,866Ending Balances:Individually evaluated for impairment
    
    $
    30
    
    
    $
    160
    
    
    $
    271
    
    
    $
    149
    
    
    $
    73
    
    
    $
    
    
    
    $
    683Collectively evaluated for impairment
    
    $
    197
    
    
    $
    3,748
    
    
    $
    799
    
    
    $
    1,468
    
    
    $
    178
    
    
    $
    793
    
    
    $
    7,183Loans receivable:Ending balance  total
    
    $
    20,298
    
    
    $
    86,418
    
    
    $
    61,194
    
    
    $
    142,351
    
    
    $
    6,606
    
    
    $
    
    
    
    $
    316,867Ending balances:Individually evaluated for impairment
    
    $
    627
    
    
    $
    4,347
    
    
    $
    3,185
    
    
    $
    8,146
    
    
    $
    122
    
    
    $
    
    
    
    $
    16,427Collectively evaluated for impairment
    
    $
    19,671
    
    
    $
    82,071
    
    
    $
    58,009
    
    
    $
    134,205
    
    
    $
    6,484
    
    
    $
    
    
    
    $
    300,440
   21




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 4Loans
 Impaired Loans
For the Year Ended December 31, 2010
 Average
    
    
    InterestRecorded
    
    
    Unpaid Principal
    
    
    Related
    
    
    Recorded
    
    
    IncomeInvestment
    
    
    Balance
    
    
    Allowance
    
    
    Investment
    
    
    RecognizedWith no related allowance
recorded:Commercial and industrial
    
    $
    597
    
    
    $
    608
    
    
    $
    
    
    
    $
    481
    
    
    $
    30Real Estate   Construction
    
    
    3,705
    
    
    
    7,330
    
    
    
    
    
    
    
    7,341
    
    
    
    97Real Estate   Residential
    
    
    2,466
    
    
    
    2,628
    
    
    
    
    
    
    
    2,677
    
    
    
    81Real Estate   Commercial
    
    
    7,680
    
    
    
    8,530
    
    
    
    
    
    
    
    8,534
    
    
    
    498Consumer
    
    
    49
    
    
    
    68
    
    
    
    
    
    
    
    77
    
    
    
    2Total
    
    $
    14,497
    
    
    $
    19,164
    
    
    $
    
    
    
    $
    19,110
    
    
    $
    708With an allowance recorded:Commercial and industrial
    
    $
    30
    
    
    $
    30
    
    
    $
    30
    
    
    $
    36
    
    
    
    2Real Estate   Construction
    
    
    642
    
    
    
    703
    
    
    
    160
    
    
    
    703
    
    
    
    27Real Estate   Residential
    
    
    719
    
    
    
    719
    
    
    
    271
    
    
    
    642
    
    
    
    37Real Estate   Commercial
    
    
    466
    
    
    
    466
    
    
    
    149
    
    
    
    473
    
    
    
    32Consumer
    
    
    73
    
    
    
    73
    
    
    
    73
    
    
    
    77
    
    
    
    6Total
    
    $
    1,930
    
    
    $
    1,991
    
    
    $
    683
    
    
    $
    1,931
    
    
    $
    104Total:Commercial and industrial
    
    $
    627
    
    
    $
    638
    
    
    $
    30
    
    
    $
    517
    
    
    
    32Real Estate   Construction
    
    
    4,347
    
    
    
    8,033
    
    
    
    160
    
    
    
    8,044
    
    
    
    124Real Estate   Residential
    
    
    3,185
    
    
    
    3,347
    
    
    
    271
    
    
    
    3,319
    
    
    
    118Real Estate   Commercial
    
    
    8,146
    
    
    
    8,996
    
    
    
    149
    
    
    
    9,007
    
    
    
    530Consumer
    
    
    122
    
    
    
    141
    
    
    
    73
    
    
    
    154
    
    
    
    8Total
    
    $
    16,427
    
    
    $
    21,155
    
    
    $
    683
    
    
    $
    21,041
    
    
    $
    812
  22




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 4Loans
  Age Analysis of Past Due Loans Receivable
As of December, 31, 2010
 Recorded30-59
    
    
    60-89
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    InvestmentDays
    
    
    Days
    
    
    Greater
    
    
    Total
    
    
    Current
    
    
    Total
    
    
    > 90 DaysPast
    
    
    Past
    
    
    Than 90
    
    
    Past
    
    
    and not
    
    
    Loans
    
    
    andDue
    
    
    Due
    
    
    Days
    
    
    Due
    
    
    Past Due
    
    
    Receivable
    
    
    AccruingCommercial and Industrial
    
    $
    152
    
    
    $
    30
    
    
    $
    9
    
    
    $
    191
    
    
    $
    20,107
    
    
    $
    20,298
    
    
    $
    Real Estate Construction
    
    
    675
    
    
    
    943
    
    
    
    3,618
    
    
    
    5,236
    
    
    
    81,182
    
    
    
    86,418
    
    
    
    Real Estate  Residential
    
    
    1,177
    
    
    
    740
    
    
    
    691
    
    
    
    2,608
    
    
    
    58,586
    
    
    
    61,194
    
    
    
    Real Estate  Commercial
    
    
    55
    
    
    
    217
    
    
    
    90
    
    
    
    362
    
    
    
    141,989
    
    
    
    142,351
    
    
    
    Consumer
    
    
    16
    
    
    
    38
    
    
    
    50
    
    
    
    104
    
    
    
    6,502
    
    
    
    6,606
    
    
    
    Total
    
    $
    2,075
    
    
    $
    1,968
    
    
    $
    4,458
    
    
    $
    8,501
    
    
    $
    308,366
    
    
    $
    316,867
    
    
    $
    
 Loans Receivable on Nonaccrual Status
As of December 31, 2010 and 2009
 2010
    
    
    2009Commercial and industrial
    
    $
    34
    
    
    $
    37Real estate  construction
    
    
    3,753
    
    
    
    3,228Real estate  residential
    
    
    1,979
    
    
    
    2,464Real estate  commercial
    
    
    408
    
    
    
    368Consumer
    
    
    83
    
    
    
    93Total
    
    $
    6,257
    
    
    $
    6,190
  23




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 4Loans
 Troubled Debt Restructurings
As of December 31, 2010
 Pre-Modification
    
    
    Post-ModificationOutstanding
    
    
    OutstandingNumber of
    
    
    Recorded
    
    
    RecordedContracts
    
    
    Investment
    
    
    InvestmentCommercial and industrial
    
    
    1
    
    
    $
    546
    
    
    $
    546Real estate  construction
    
    
    3
    
    
    
    1,569
    
    
    
    1,569Real Estate  residential
    
    
    2
    
    
    
    1,190
    
    
    
    1,190Real estate  Commercial
    
    
    9
    
    
    
    5,945
    
    
    
    5,945Total
    
    
    15
    
    
    $
    9,250
    
    
    $
    9,250
  2010
    
    
    2009(in thousands)Balance at beginning of the year
    
    $
    13,820
    
    
    $
    14,086Advances
    
    
    3,967
    
    
    
    8,136Repayments
    
    
    (5,313
    )
    
    
    (8,402
    )Balance at end of the year
    
    $
    12,474
    
    
    $
    13,820
 Note 5Foreclosed real estate
  2010
    
    
    2009(in thousands)Carrying amount of property
    
    $
    2,751
    
    
    $
    4,466Less: valuation allowance
    
    
    
    
    
    
    Balance at end of the year
    
    $
    2,751
    
    
    $
    4,466
   24




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 6Bank premises and equipment
  2010
    
    
    2009(in thousands)Land and improvements
    
    $
    3,804
    
    
    $
    3,844Building and improvements
    
    
    6,384
    
    
    
    6,331Equipment, furniture and fixtures
    
    
    4,558
    
    
    
    4,68214,746
    
    
    
    14,857Less: accumulated depreciation
    
    
    (5,475
    )
    
    
    (5,203
    )Premises and equipment, net
    
    $
    9,271
    
    
    $
    9,654
  Note 7Deposits
  2010
    
    
    2009(in thousands)One year or less
    
    $
    149,716
    
    
    $
    178,185Over one year through three years
    
    
    82,629
    
    
    
    76,829Over three years
    
    
    12,241
    
    
    
    1,388Balance at end of the year
    
    $
    244,586
    
    
    $
    256,402
   25




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 8Federal Home Loan Bank advances
  Note 9Line of credit
  Note 10Employee benefit plans
    26




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 10Employee benefit plans
  Note 11Shareholders equity and regulatory requirements
      27




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 11Shareholders equity and regulatory requirements
  Required to BeWell-CapitalizedRequired for
    
    
    Under PromptCapital Adequacy
    
    
    Corrective ActionActual
    
    
    Purposes
    
    
    ProvisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioAs of December 31, 2010:Total capital (to risk
weighted assets)Bank
    
    $
    49,175
    
    
    
    12.91
    %
    
    $
    30,472
    
    
    
    8.0
    %
    
    $
    38,090
    
    
    
    10.0
    %Consolidated
    
    $
    49,539
    
    
    
    13.01
    %
    
    $
    30,472
    
    
    
    8.0
    %
    
    $
    38,090
    
    
    
    10.0
    %Tier 1 capital (to risk
weighted assets)Bank
    
    $
    44,376
    
    
    
    11.65
    %
    
    $
    15,236
    
    
    
    4.0
    %
    
    $
    22,854
    
    
    
    6.0
    %Consolidated
    
    $
    44,739
    
    
    
    11.75
    %
    
    $
    15,236
    
    
    
    4.0
    %
    
    $
    22,854
    
    
    
    6.0
    %Tier 1 leverage (to
average assets)Bank
    
    $
    44,376
    
    
    
    9.17
    %
    
    $
    19,365
    
    
    
    4.0
    %
    
    $
    24,207
    
    
    
    5.0
    %Consolidated
    
    $
    44,739
    
    
    
    9.24
    %
    
    $
    19,368
    
    
    
    4.0
    %
    
    $
    24,210
    
    
    
    5.0
    %
  28




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 11Shareholders equity and regulatory requirements
 Required to BeWell-CapitalizedRequired for
    
    
    Under PromptCapital Adequacy
    
    
    Corrective ActionActual
    
    
    Purposes
    
    
    ProvisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioAs of December 31, 2009:Total capital (to risk
weighted assets)Bank
    
    $
    47,782
    
    
    
    11.69
    %
    
    $
    32,698
    
    
    
    8.0
    %
    
    $
    40,872
    
    
    
    10.0
    %Consolidated
    
    $
    47,997
    
    
    
    11.74
    %
    
    $
    32,698
    
    
    
    8.0
    %
    
    $
    40,872
    
    
    
    10.0
    %Tier 1 capital (to risk
weighted assets)Bank
    
    $
    42,710
    
    
    
    10.45
    %
    
    $
    16,349
    
    
    
    4.0
    %
    
    $
    24,523
    
    
    
    6.0
    %Consolidated
    
    $
    42,926
    
    
    
    10.50
    %
    
    $
    16,349
    
    
    
    4.0
    %
    
    $
    24,523
    
    
    
    6.0
    %Tier 1 leverage (to
average assets)Bank
    
    $
    42,710
    
    
    
    8.91
    %
    
    $
    19,164
    
    
    
    4.0
    %
    
    $
    23,955
    
    
    
    5.0
    %Consolidated
    
    $
    42,926
    
    
    
    8.96
    %
    
    $
    19,164
    
    
    
    4.0
    %
    
    $
    23,956
    
    
    
    5.0
    %
    29




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 11Shareholders equity and regulatory requirements
  Compensation-Stock Compensation,
  2010
    
    
    2009Expected volatility
    
    
    74.8%  74.8
    %
    
    
    66.8%  95.7
    %Weighted-average volatility
    
    
    74.82
    %
    
    
    78.20
    %Expected dividends
    
    
    0
    %
    
    
    0
    %Expected term (in years)
    
    
    7.0  7.0
    
    
    
    7.0  7.0Risk-free rate
    
    
    3.66
    %
    
    
    3.00
    %Weighted-average grant date fair value
    
    $
    4.98
    
    
    $
    5.70Total intrinsic value of options exercised
    
    $
    79,936
    
    
    $
    94,583
   30




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 11Shareholders equity and regulatory requirements
    WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicOptions
    
    Shares
    
    
    Price
    
    
    Term
    
    
    ValueOutstanding at
January 1, 2010
    
    
    273,888
    
    
    $
    9.69Granted
    
    
    36,318
    
    
    
    7.00Exercised
    
    
    (18,292
    )
    
    
    (3.33
    )Forfeited or expired
    
    
    (8,625
    )
    
    
    (3.43
    )Outstanding at
December 31, 2010
    
    
    283,289
    
    
    $
    9.94
    
    
    
    4.50
    
    
    $
    239,951Exercisable at
December 31, 2010
    
    
    205,205
    
    
    $
    10.33
    
    
    
    3.15
    
    
    $
    211,407
  31




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 11Shareholders equity and regulatory requirements
 WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicOptions
    
    Shares
    
    
    Price
    
    
    Term
    
    
    ValueOutstanding at
January 1, 2009
    
    
    286,875
    
    
    $
    9.18Granted
    
    
    25,613
    
    
    
    8.06Exercised
    
    
    (27,700
    )
    
    
    (3.79
    )Forfeited or expired
    
    
    (10,900
    )
    
    
    (7.43
    )Outstanding at
December 31, 2009
    
    
    273,888
    
    
    $
    9.69
    
    
    
    4.43
    
    
    $
    267,086Exercisable at
December 31, 2009
    
    
    217,894
    
    
    $
    9.44
    
    
    
    3.48
    
    
    $
    265,265
  2010
    
    
    2009Gross options exercised
    
    
    18,292
    
    
    
    27,700Options withheld as payment
    
    
    6,338
    
    
    
    6,597Net options exercised
    
    
    11,954
    
    
    
    21,103
  2010
    
    
    2009Net options exercised
    
    
    11,954
    
    
    
    21,103Issuance of stock for compensation
    
    
    25,284
    
    
    
    21,558Net issuance of common stock
    
    
    37,238
    
    
    
    42,661
  32




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 11Shareholders equity and regulatory requirements
   WeightedAverageGrant-DateNonvested Shares
    
    Shares
    
    
    Fair ValueNonvested at January 1, 2010
    
    
    55,994
    
    
    $
    5.82Granted
    
    
    36,318
    
    
    
    4.98Vested
    
    
    (14,228
    )
    
    
    5.95Forfeited
    
    
    
    
    
    
    Nonvested at December 31, 2010
    
    
    78,084
    
    
    $
    5.41
 WeightedAverageGrant-DateNonvested Shares
    
    Shares
    
    
    Fair ValueNonvested at January 1, 2009
    
    
    49,581
    
    
    $
    6.36Granted
    
    
    25,613
    
    
    
    5.70Vested
    
    
    (15,200
    )
    
    
    7.14Forfeited
    
    
    (4,000
    )
    
    
    7.43Nonvested at December 31, 2009
    
    
    55,994
    
    
    $
    5.82
  33




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 11Shareholders equity and regulatory requirements
   2010
    
    
    2009Beginning shares authorized and unissued
    
    
    79,823
    
    
    
    93,326Shares issued
    
    
    (25,284
    )
    
    
    (13,503
    )Ending shares authorized and unissued
    
    
    54,539
    
    
    
    79,823
  2010Income
    
    
    Shares
    
    
    Per(Numerator)
    
    
    (Denominator)
    
    
    Share(dollars in thousands, except per share)Basic EPSIncome available to common stockholders
    
    $
    1,533
    
    
    
    3,519,408
    
    
    $
    0.44Effect of stock options outstanding
    
    
    
    
    
    
    
    
    
    
    Diluted EPSIncome available to common stockholders,
plus conversions
    
    $
    1,533
    
    
    
    3,519,408
    
    
    $
    0.44
  34




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 11Shareholders equity and regulatory requirements
 2009Income
    
    
    Shares
    
    
    Per(Numerator)
    
    
    (Denominator)
    
    
    Share(dollars in thousands, except per share)Basic EPSIncome available to common stockholders
    
    $
    3,752
    
    
    
    3,484,309
    
    
    $
    1.08Effect of stock options outstanding
    
    
    
    
    
    
    8,562
    
    
    
    (0.01
    )Diluted EPSIncome available to common stockholders,
plus conversions
    
    $
    3,752
    
    
    
    3,492,871
    
    
    $
    1.07
  Note 12Income taxes
  2010
    
    
    2009Current tax provision
    
    $
    1,328
    
    
    $
    1,548Deferred tax expense (benefit)
    
    
    (1,394
    )
    
    
    (245
    )Total income tax expense (benefit)
    
    $
    (66
    )
    
    $
    1,303
  35




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 12Income Taxes
  2010
    
    
    2009Federal statutory rates
    
    
    34.0
    %
    
    
    34.0
    %State taxes, net of federal benefit
    
    
    3.7
    
    
    
    3.6Tax-exempt income
    
    
    (8.6
    )
    
    
    (2.8
    )Nondeductible interest
    
    
    0.7
    
    
    
    0.3State tax credits
    
    
    (17.1
    )
    
    
    (2.6
    )Bank-owned life insurance
    
    
    (9.2
    )
    
    
    (2.8
    )Other
    
    
    (8.0
    )
    
    
    (3.9
    )Total
    
    
    (4.5
    )%
    
    
    25.8
    %
   36




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 12Income Taxes
  2010
    
    
    2009(in thousands)Deferred tax assets
Allowance for loan losses
    
    $
    2,175
    
    
    $
    1,285Amortization of GA low-income housing tax credits
    
    
    190
    
    
    
    159Executive compensation plans
    
    
    258
    
    
    
    151Nonaccrual loan interest
    
    
    48
    
    
    
    33Valuation adjustment of other real estate owned
    
    
    406
    
    
    
    State tax credits
    
    
    356
    
    
    
    Valuation allowance on GA low-income housing tax credits
    
    
    (546
    )
    
    
    (159
    )Deferred income tax assets
    
    
    2,887
    
    
    
    1,469Deferred tax liabilitiesUnrealized gain on securities available-for-sale
    
    
    (133
    )
    
    
    (195
    )Qualified prepaids
    
    
    (96
    )
    
    
    (58
    )Depreciation on bank premises and equipment
    
    
    (183
    )
    
    
    (198
    )Deferred income tax liabilities
    
    
    (412
    )
    
    
    (451
    )Net deferred income tax assets
    
    $
    2,475
    
    
    $
    1,018
  Note 13Commitments and contingencies
    37




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 13Commitments and contingencies
  2010
    
    
    2009(in thousands)Commitments to extend credit
    
    $
    49,477
    
    
    $
    59,082Standby letters of credit
    
    
    5,154
    
    
    
    5,712Total
    
    $
    54,631
    
    
    $
    64,794
     38




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 13Commitments and contingencies
   Less
    
    
    
    
    
    
    
    
    
    
    Morethan
    
    
    1-3
    
    
    3-5
    
    
    than 5Total
    
    
    1 year
    
    
    years
    
    
    years
    
    
    years(in thousands)Data processing obligations
    
    
    3,261
    
    
    
    712
    
    
    
    1,423
    
    
    
    1,126
    
    
    
    Operating lease obligations
    
    
    703
    
    
    
    297
    
    
    
    378
    
    
    
    14
    
    
    
    14Service contract obligations
    
    
    400
    
    
    
    287
    
    
    
    113
    
    
    
    
    
    
    
    Total
    
    $
    4,364
    
    
    $
    1,296
    
    
    $
    1,914
    
    
    $
    1,140
    
    
    $
    14
  2010
    
    
    2009(dollars in thousands)Office premises rental expense
    
    $
    331
    
    
    $
    284Equipment rental expense
    
    $
    14
    
    
    $
    13
 Note 14Supplemental consolidated cash flow information
 2010
    
    
    2009(dollars in thousands)Income taxes paid
    
    $
    222
    
    
    $
    1,630Interest paid
    
    $
    7,525
    
    
    $
    10,443Interest received
    
    $
    24,563
    
    
    $
    24,687Real estate acquired by foreclosure (non-cash)
    
    $
    1,426
    
    
    $
    6,337Unrealized gain/(loss) on securities (non-cash)
    
    $
    (174
    )
    
    $
    217
  39




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 15Fair value of financial instruments
 Fair Value Measurements
and Disclosures.
    2010
    
    
    2009Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueLoans and loans held for
sale, net of allowance
    
    $
    363.4
    
    
    $
    400.5
    
    
    $
    395.0
    
    
    $
    435.5Time deposits
    
    $
    244.6
    
    
    $
    246.8
    
    
    $
    256.4
    
    
    $
    259.7
    40




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 15Fair value of financial instruments
 Level 1
 Level 2
 Level 3
  Investment Securities Available-for-Sale
  Loans Held for Sale
   41




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 15Fair value of financial instruments
 Loans
  Foreclosed Assets
   42




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 15Fair value of financial instruments
  Fair Value Measurements atDecember 31, 2010, Using,QuotedPrices inAssets/
    
    
    Active
    
    
    Significant
    
    
    SignificantLiabilities
    
    
    Markets for
    
    
    Other
    
    
    OtherMeasured at
    
    
    Identical
    
    
    Observable
    
    
    UnobservableFair Value
    
    
    Assets
    
    
    Inputs
    
    
    InputsDescription
    
    12/31/2010
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Available-for-sale securities
    
    $
    76,904
    
    
    $
    
    
    
    $
    76,904
    
    
    $
    
 Fair Value Measurements atDecember 31, 2009, Using,QuotedPrices inAssets/
    
    
    Active
    
    
    Significant
    
    
    SignificantLiabilities
    
    
    Markets for
    
    
    Other
    
    
    OtherMeasured at Fair
    
    
    Identical
    
    
    Observable
    
    
    UnobservableValue
    
    
    Assets
    
    
    Inputs
    
    
    InputsDescription
    
    12/31/2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Available-for-sale securities
    
    $
    47,289
    
    
    $
    
    
    
    $
    47,289
    
    
    $
    
 Note 16Bank-owned life insurance (BOLI)
 Investments in Insurance Contracts,
  43




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 17Other expenses
  2010
    
    
    2009(dollars in thousands)Data processing
    
    $
    987
    
    
    $
    1,044FDIC assessment
    
    
    688
    
    
    
    883ORE expense/valuation adjustments
    
    
    972
    
    
    
    781Legal and accounting
    
    
    553
    
    
    
    518Printing and supplies
    
    
    333
    
    
    
    321Advertising
    
    
    221
    
    
    
    237Business development
    
    
    158
    
    
    
    151Telecommunications
    
    
    217
    
    
    
    207Outside services
    
    
    234
    
    
    
    349Courier and postage
    
    
    171
    
    
    
    150Software license fees
    
    
    96
    
    
    
    142City and county taxes
    
    
    170
    
    
    
    129Directors fees
    
    
    207
    
    
    
    219Travel and employee meals & entertainment
    
    
    175
    
    
    
    165Other
    
    
    1,200
    
    
    
    1,173Total
    
    $
    6,382
    
    
    $
    6,469
 Note 18Accumulated Comprehensive Income
  2010
    
    
    2009(in thousands)Unrealized holding gains/(losses) on
available-for-sale securities
    
    $
    369
    
    
    $
    543Tax effect
    
    
    (133
    )
    
    
    (196
    )Net of tax amount
    
    $
    236
    
    
    $
    347
  44




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 19  Quarterly Financial Data (Unaudited)
  
 2010
    
    
    20094Q
    
    
    3Q
    
    
    2Q
    
    
    1Q
    
    
    4Q
    
    
    3Q
    
    
    2Q
    
    
    1QInterest income
    
    $
    5,983
    
    
    $
    6,118
    
    
    $
    6,257
    
    
    $
    6,051
    
    
    $
    6,385
    
    
    $
    6,285
    
    
    $
    6,154
    
    
    $
    5,780Interest expense
    
    
    1,775
    
    
    
    1,801
    
    
    
    1,833
    
    
    
    1,881
    
    
    
    2,092
    
    
    
    2,399
    
    
    
    2,584
    
    
    
    2,647Net interest income
    
    
    4,208
    
    
    
    4,317
    
    
    
    4,424
    
    
    
    4,170
    
    
    
    4,293
    
    
    
    3,886
    
    
    
    3,570
    
    
    
    3,133Provision for loan losses
    
    
    922
    
    
    
    1,641
    
    
    
    4,706
    
    
    
    1,086
    
    
    
    1,172
    
    
    
    670
    
    
    
    613
    
    
    
    627Net interest income after
provision for loan losses
    
    
    3,286
    
    
    
    2,676
    
    
    
    (282
    )
    
    
    3,084
    
    
    
    3,121
    
    
    
    3,216
    
    
    
    2,957
    
    
    
    2,506Non-interest income
    
    
    3,456
    
    
    
    3,707
    
    
    
    3,035
    
    
    
    3,029
    
    
    
    3,570
    
    
    
    4,172
    
    
    
    3,727
    
    
    
    2,632Securities gain (loss)
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    5
    
    
    
    51
    
    
    
    
    
    
    
    Non-interest expenses
    
    
    4,755
    
    
    
    5,027
    
    
    
    5,676
    
    
    
    5,085
    
    
    
    5,450
    
    
    
    5,365
    
    
    
    5,436
    
    
    
    4,651Income before income tax expense (benefit)
    
    
    1,987
    
    
    
    1,356
    
    
    
    (2,904
    )
    
    
    1,028
    
    
    
    1,246
    
    
    
    2,074
    
    
    
    1,248
    
    
    
    487Income tax expense (benefit)
    
    
    489
    
    
    
    253
    
    
    
    (998
    )
    
    
    190
    
    
    
    282
    
    
    
    580
    
    
    
    349
    
    
    
    92Net income
    
    $
    1,498
    
    
    $
    1,103
    
    
    $
    (1,906
    )
    
    $
    838
    
    
    $
    964
    
    
    $
    1,494
    
    
    $
    899
    
    
    $
    395Basic earnings (loss) per common share
    
    $
    0.42
    
    
    $
    0.31
    
    
    $
    (0.54
    )
    
    $
    0.24
    
    
    $
    0.28
    
    
    $
    0.43
    
    
    $
    0.26
    
    
    $
    0.11Diluted earnings (loss) per common share
    
    $
    0.42
    
    
    $
    0.31
    
    
    $
    (0.54
    )
    
    $
    0.24
    
    
    $
    0.27
    
    
    $
    0.43
    
    
    $
    0.26
    
    
    $
    0.11
  45




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 20Condensed financial information on Georgia-Carolina Bancshares, Inc. (parent company
only)
 Condensed Balance Sheet
December 31, 2010 and 2009  (dollars in thousands)
 2010
    
    
    2009AssetsCash
    
    $
    316
    
    
    $
    185Investment in subsidiary
    
    
    44,612
    
    
    
    43,057Other assets
    
    
    60
    
    
    
    34Deferred tax benefit
    
    
    77
    
    
    
    86Total assets
    
    $
    45,065
    
    
    $
    43,362LiabilitiesOther liabilities
    
    $
    89
    
    
    $
    89Total liabilities
    
    
    89
    
    
    
    89Shareholders equity
    
    
    44,976
    
    
    
    43,273Total liabilities and shareholders equity
    
    $
    45,065
    
    
    $
    43,362
  46




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 20Condensed financial information on Georgia-Carolina Bancshares, Inc. (parent company only)
 Condensed Statement of Income
Years Ended December 31, 2010 and 2009  (dollars in thousands)
 2010
    
    
    2009Income, dividends from subsidiary
    
    $
    
    
    
    $
    ExpensesDirector compensation
    
    
    47
    
    
    
    55Legal fees
    
    
    57
    
    
    
    66Audit exam and accounting fees
    
    
    42
    
    
    
    38Annual report and proxy
    
    
    27
    
    
    
    60Shareholder services
    
    
    13
    
    
    
    16Other
    
    
    14
    
    
    
    18Total expenses
    
    
    200
    
    
    
    253Loss before income tax benefits and equity in
undistributed earnings of subsidiary
    
    
    (200
    )
    
    
    (253
    )Income tax benefits
    
    
    68
    
    
    
    86Loss before equity in undistributed earnings of
subsidiary
    
    
    (132
    )
    
    
    (167
    )Equity in undistributed earnings of subsidiary
    
    
    1,665
    
    
    
    3,919Net income
    
    $
    1,533
    
    
    $
    3,752
  47




---



##### 



GEORGIA-CAROLINA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 December 31, 2010 and 2009
 Note 20Condensed financial information on Georgia-Carolina Bancshares, Inc. (parent company only)
 Condensed Statement of Cash Flows
Years Ended December 31, 2010 and 2009  (dollars in thousands)
 2010
    
    
    2009Cash flows from operating activitiesNet income
    
    $
    1,533
    
    
    $
    3,752Adjustments to reconcile net income to net cash
provided by operating activities:Stock-based compensation expense
    
    
    83
    
    
    
    80Stock compensation
    
    
    173
    
    
    
    167Equity in undistributed earnings of subsidiary
    
    
    (1,665
    )
    
    
    (3,919
    )Net change in other assets and liabilities
    
    
    (8
    )
    
    
    (63
    )Net cash provided by operating activities
    
    
    116
    
    
    
    17Cash flows from financing activitiesPayments on borrowed funds
    
    
    
    
    
    
    (500
    )Proceeds from issuance of common stock, and
exercise of stock options
    
    
    15
    
    
    
    52Net cash provided by (used in) financing activities
    
    
    15
    
    
    
    (448
    )Net change in cash
    
    
    131
    
    
    
    (431
    )Cash at beginning of the year
    
    
    185
    
    
    
    616Cash at end of the year
    
    $
    316
    
    
    $
    185
  48