<PAGE>
 
                    U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-QSB
                                        
   (X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                             EXCHANGE ACT OF 1934

                   For the quarter ended September 30, 1997

   ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                             EXCHANGE ACT OF 1934

      For the transition period from                  to                .
                                     ----------------    ---------------

                          Commission File No. 33-52930


                              GF BANCSHARES, INC.
                 (Name of small business issuer in its charter)

          Georgia                                                58-2016968
-------------------------------                              ------------------
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)


                 327 West Taylor Street, Griffin, Georgia 30223
                 ----------------------------------------------
                    (Address of principal executive offices)


                                 (770) 228-2786
                           -------------------------
                           Issuer's telephone number
                             (including area code)


         Securities registered under Section 12(b) of the Exchange Act:

                                                 Name on each exchange on
               Title of each class                   which registered
                      None                                  None
                      ----                                  ----

         Securities registered under Section 12(g) of the Exchange Act:
                         Common Stock, $1.00 Par Value
                         -----------------------------
                                 Title of class

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

As of September 30, 1997, there were 989,122 shares of Common Stock issued and
outstanding.  The registrant's voting stock is not regularly and actively traded
in any established market, and there are no regularly quoted bid and asked
prices for the registrant's voting stock.

                                       1
<PAGE>
 
                                     INDEX

                                                                          PAGE
 
PART 1.  FINANCIAL INFORMATION  
 
         Item 1. Financial Statements (unaudited)
 
                 Consolidated Balance Sheets as of                       
                 September 30, 1997 and June 30, 1997                       3
                                                                         
                 Consolidated Statements of Income for the Three         
                 Months Ended September 30, 1997 and 1996                   4
                                                                         
                 Consolidated Statements of Cash Flows for the           
                 Three Months Ended September 30, 1997 and 1996           5-6
                                                                         
                 Notes to Consolidated Financial Statements              7-10
                                                                         
         Item 2. Management's Discussion and Analysis of Interim
                 Financial Condition or Plan of Operation for the        
                 Three Months Ended September 30, 1997, compared         
                 to the Three Months Ended September 30, 1996           11-14


PART II. OTHER INFORMATION

         Schedules Omitted:
         All schedules, other than those indicated above and below,
         are omitted because of the absence of the conditions under
         which they are required or because the information is 
         included in the financial statements or related notes.            15

         Signature Page                                                    19

                                       2
<PAGE>
Item 1.  Financial Statements

                              GF BANCSHARES, INC.
                                AND SUBSIDIARY
                          CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                          September 30,        June 30,
                                                                              1997              1997
                                                                          -------------      -----------
<S>                                                                       <C>                <C>
ASSETS

Cash and due from banks                                                   $   290,216        $   561,388
Interest-bearing deposits in other banks                                    5,339,866          5,169,734
Investment securities available for sale                                    2,927,033          2,951,887
Federal Home Loan Bank stock                                                  944,200            944,200
Mortgage loans held for sale                                                3,494,918          3,862,253
Loans, net                                                                 82,636,823         81,345,192
Premises and equipment, net                                                 1,083,142          1,112,169
Real estate owned, net                                                        504,069            504,069
Accrued interest receivable                                                 1,237,744          1,242,609
Other assets                                                                  460,495            745,730
                                                                          -----------        -----------
       TOTAL ASSETS                                                       $98,918,506        $98,439,231
                                                                          ===========        ===========
LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
  Deposits:
    Noninterest-bearing demand                                            $ 2,609,606        $ 1,474,585
    Interest-bearing demand and money market                               17,861,273         18,257,241
    Savings                                                                 3,719,382          3,643,434
    Time                                                                   57,667,527         56,003,955
                                                                          -----------        -----------
       Total Deposits                                                      81,857,788         79,379,215

Federal Home Loan Bank advances                                             2,553,332          4,553,332
Unremitted escrow funds from borrowers                                        290,159            225,668
Unremitted funds on loans serviced for others                                 539,266            555,541
Accrued interest payable                                                      328,235            296,705
Other liabilities                                                             379,914            627,255
                                                                          -----------        -----------
       TOTAL LIABILITIES                                                   85,948,694         85,637,716
                                                                          -----------        -----------
STOCKHOLDERS' EQUITY
Preferred stock, 2,000,000 shares authorized,
  none issued and outstanding                                                       0                  0
Common stock, par value $1.00; 8,000,000 shares
  authorized, 989,122 and 948,316 shares issued
  and outstanding                                                             989,122            948,316
Surplus                                                                     7,453,541          7,152,571
Retained earnings                                                           4,511,554          4,685,434
Unrealized gains on investment securities available for sale                   15,595             15,194
                                                                          -----------        -----------
       TOTAL STOCKHOLDERS' EQUITY                                          12,969,812         12,801,515
                                                                          -----------        -----------
       TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $98,918,506        $98,439,231
                                                                          ===========        ===========

</TABLE>

The accompanying notes are an integral part of these consolidated 
financial statements.

                                       3

<PAGE>
                              GF BANCSHARES, INC.
                                AND SUBSIDIARY
                       CONSOLIDATED STATEMENTS OF INCOME
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                         For the three months
                                                                          ended September 30,
                                                                         1997             1996
                                                                      ----------        ----------
<S>                                                                   <C>               <C> 
INTEREST INCOME
  Loans, including fees                                               $2,070,809        $1,952,811
  Investment securities                                                   65,131            66,476
  Interest-bearing deposits in other bank                                 63,730            61,594
                                                                      ----------        ----------
     TOTAL INTEREST INCOME                                             2,199,670         2,080,881
                                                                      ----------        ----------
INTEREST EXPENSE
  Interest-bearing demand and money market deposits                      139,667           141,927
  Savings deposits                                                        28,149            28,967
  Time deposits                                                          853,774           794,543
  Federal Home Loan Bank advances                                         56,015            46,102
                                                                      ----------        ----------

     TOTAL INTEREST EXPENSE                                            1,077,605         1,011,539
                                                                      ----------        ----------
     NET INTEREST INCOME                                               1,122,065         1,069,342

PROVISION FOR LOAN LOSSES                                                 15,000            15,000
                                                                      ----------        ----------
     NET INTEREST INCOME AFTER PROVISION FOR                           
       LOAN LOSSES                                                     1,107,065         1,054,342
                                                                      ----------        ----------
OTHER INCOME
  Service charges and fees                                               103,671           118,600
  Gain on loan production office operations                               66,436            42,432
  Other income                                                            24,258            11,092
                                                                      ----------        ----------
     TOTAL OTHER INCOME                                                  194,365           172,124
                                                                      ----------        ----------
OTHER EXPENSE
  Salaries and employee benefits                                         367,238           370,124
  Net occupancy expense                                                   90,854            78,228
  Other expense (note E)                                                 250,201           800,948
                                                                      ----------        ----------
     TOTAL OTHER EXPENSE                                                 708,293         1,249,300
                                                                      ----------        ----------

  INCOME (LOSS) BEFORE INCOME TAXES                                      593,137           (22,834)

INCOME TAX EXPENSE (BENEFIT)                                             223,000           (22,000)
                                                                      ----------        ----------
     NET INCOME (LOSS)                                                $  370,137        $     (834)
                                                                      ==========        ==========

EARNINGS PER SHARE                                                    $     0.38        $    (0.00)
                                                                      ==========        ==========
WEIGHTED AVERAGE NUMBER OF
   SHARES OUTSTANDING                                                 $  965,214        $  906,383
                                                                      ==========        ==========
</TABLE>

The accompanying notes are an integral part of these consolidated 
financial statements.

                                       4
<PAGE>
                              GF BANCSHARES, INC.
                                AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                   For the three months
                                                                    ended September 30,
                                                              --------------------------------
                                                                  1997                 1996
                                                              -----------          -----------
<S>                                                           <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net Income (Loss)                                           $  370,137          $      (834)

   Adjustments to reconcile net income to net cash
     provided (used) by operating activities:
         Depreciation                                              43,619               69,104
         Provision for loan losses                                 15,000               15,000
         Decrease in mortgage loans held for sale                 367,335              171,121
         Decrease in other assets                                 285,235              316,305
         Decrease in interest receivable                            4,865                8,827
         Increase in interest payable                              31,530               14,370
         Increase (decrease) in unremitted funds on
           loans serviced for others                              (16,275)              39,190
         (Increase) decrease in other liabilities                (247,341)             462,806
                                                              -----------          -----------
            NET CASH PROVIDED BY OPERATING
                ACTIVITIES                                        854,105            1,095,889
                                                              -----------          -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Principal repayments of investment securities
     available for sale                                            25,255                    -
   Proceeds from maturities of investment securities
     available for sale                                                 -               15,720
   Net increase in loans                                       (1,306,631)          (4,421,851)
   Purchases of premises and equipment                            (14,592)              (5,935)
                                                              -----------          -----------
            NET CASH USED BY INVESTING ACTIVITIES             $(1,295,968)         $(4,412,066)
                                                              ===========          ===========
</TABLE>
                                  (Continued)


The accompanying notes are an integral part of these consolidated 
financial statements.

                                       5

<PAGE>
                              GF BANCSHARES, INC.
                                AND SUBSIDIARY
              CONSOLIDATED STATEMENTS OF CASH FLOWS, (Continued)
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                        For the three months
                                                                                         ended September 30,
                                                                                   --------------------------------
                                                                                       1997                 1996
                                                                                   -----------          -----------
<S>                                                                                <C>                  <C>
CASH FLOWS FROM FINANCING ACTIVITIES

   Net increase (decrease) in demand, money market and savings accounts            $   815,001          $  (159,631)
   Net increase (decrease) in time deposits                                          1,663,572             (525,989)
   Repayment of FHLB Advances                                                       (2,000,000)                   0
   Net increase (decrease) in unremitted funds for taxes and insurance                  64,491             (135,038)
   Proceeds from exercise of stock options                                             341,776               21,031
   Cash dividends paid                                                                (544,017)            (523,467)
                                                                                   -----------          -----------
     NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES                                  340,823           (1,323,094)
                                                                                   -----------          -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                  (101,040)          (4,639,271)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                     5,731,122            5,815,945
                                                                                   -----------          -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                         $ 5,630,082          $ 1,176,674
                                                                                   ===========          ===========

SUPPLEMENTAL DISCLOSURES OF CASH PAID:
   Interest                                                                        $ 1,046,075          $   965,437
                                                                                   ===========          ===========
   Income taxes                                                                    $     2,500          $   255,000
                                                                                   ===========          ===========
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING
   AND FINANCING ACTIVITIES:
   Acquisition of real estate in settlement of loans                               $         -          $    55,323
                                                                                   ===========          ===========
</TABLE>

The accompanying notes are an integral part of these consolidated 
financial statements.

                                       6

<PAGE>
 
                              GF BANCSHARES, INC.
                                AND SUBSIDIARY

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                                        
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B of the Securities and Exchange Commission.  Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.  In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.  Operating
results for the three month period ended September 30, 1997, are not necessarily
indicative of the results that may be expected for the fiscal year ended June
30, 1998.  For further information, refer to the consolidated financial
statements and footnotes thereto included in GF Bancshares, Inc.'s (the
"Company") Annual Report on Form 10-KSB for the fiscal year ended June 30, 1997.

EARNINGS PER SHARE

Earnings per share and common equivalent shares are calculated by dividing net
income by the weighted average number of common and common equivalent shares
outstanding after consideration of the dilutive effect of stock options as of
the date of issuance of financial statements.


NOTE B - MERGER

On May 29, 1997, the Company and Regions Financial Corporation executed a
definitive agreement (Agreement) to merge the two companies. The merger will be
accounted for as a purchase under generally accepted accounting principles. The
merger is subject to regulatory and shareholder approval and is expected to be
consummated in the fourth quarter of 1997.

These financial statements have been prepared on the basis of the Company
retaining its present corporate structure and ownership and the Bank retaining
its thrift charter.  No adjustments have been made to reflect the tax
consequences of the Company being acquired, including recapture of tax loan loss
reserves; penalties for cancellation of existing contracts with vendors;
commissions for fees payable to the investment banker or other parties (other
than fee for fairness opinion); the effects of any changes in accounting
policies, principles or practices of the acquiror which differ from that of the
Company; or

                                       7
<PAGE>
 
any other expenses of the acquisition which were not actual liabilities as of
September 30, 1997 or June 30, 1997.


NOTE C - NEW AND PENDING ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 121 (SFAS 121), "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of."  The Company adopted
SFAS 121 in fiscal year 1997.  The provisions of SFAS 121 require the Company to
review long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable.  The adoption of SFAS 121 did not have a material impact on the
Company's earnings in fiscal year ended June 30, 1997 or in the quarter ended
September 30, 1997.

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 122 (SFAS 122), "Mortgage Servicing Rights", as an
amendment to SFAS 65.  The Company adopted SFAS 122 in fiscal year 1997.  The
provisions of SFAS 122 eliminate the accounting distinction between rights to
service mortgage loans that are acquired through loan origination (and
subsequently sold) and those acquired through purchase.  The adoption did not
have a material impact on the Company's earnings in fiscal year ended June 30,
1997 or in the quarter ended September 30, 1997.

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 123 (SFAS 123), "Accounting for Stock-Based
Compensation."  The Company  adopted SFAS 123 in fiscal year 1997.  SFAS 123
established a method of accounting for stock compensation plans based on fair
value.  Companies are permitted to continue to use the existing method of
accounting but are required to disclose pro forma net income and earnings per
share as if SFAS 123 had been used to measure compensation cost.  Based on the
provisions of the Company's stock option plans, the Company has determined that
there is no material effect from adoption of SFAS 123.

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 125 (SFAS 125), "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities."  This statement
provides accounting and reporting standards for transfers and servicing of
financial assets and extinguishments of liabilities.  This statement utilizes
the financial-components approach that focuses on control.  Under that approach,
after a transfer of financial assets, an entity recognizes the financial and
servicing assets it controls and the liabilities it has incurred, derecognizes
financial assets when control has been surrendered, and derecognizes liabilities
when extinguished.

SFAS 125 is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after December 31, 1996, and is to be
applied prospectively.  Earlier or retroactive application is not permitted.
However, in December 1996, The Financial

                                       8
<PAGE>
 
Accounting Standards Board issued Statement of Financial Accounting Standards
No. 127 (SFAS 127), "Deferral of the Effective Date of Certain Provisions of
FASB Statement No. 125."  This statement defers the effective date of certain
provisions for one year (December 31, 1997).  The deferred provisions relate to
repurchase agreements, dollar-roll transactions, securities lending, and similar
transactions.  The effective date for all other transfers and servicing of
financial assets is unchanged.  Management does not believe that the adoption of
SFAS 125 will have a material impact on the Company's financial statements.

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 128 (SFAS 128), "Earnings Per Share."  SFAS 128 is
effective for financial statements issued for periods ending after December 15,
1997.  This statement supersedes Accounting Principles Board Opinion No.15 (APB
15), "Earnings Per Share" and simplifies earnings per share computations by
replacing primary earnings per share with basic earnings per share, which shows
no effects from dilutive securities.  Entities with complex capital structures
will have to show diluted earnings per share, which is similar to the fully
diluted earnings per share computation under APB 15.  Had SFAS 128 been
effective on September 30, 1997, the Company would have had basic earnings per
share of $.38 and diluted earnings per share of $.38 for the three months ended
September 30, 1997.

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 129 (SFAS 129), "Disclosure of Information About
Capital Structure."  SFAS 129 is effective for financial statements issued for
periods ending after December 15, 1997.  This statement consolidates existing
disclosure requirements on capital structure.  The adoption of SFAS 129 is not
expected to have a significant impact on the financial condition or results of
operations of the Company.

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 130 (SFAS 130), "Reporting Comprehensive Income."  SFAS
130 is effective July 1, 1998.  Under SFAS 130, a company will begin showing
changes in assets and liabilities in a new comprehensive income statement of
alternative presentation as opposed to showing some of the items as transactions
in shareholders' equity accounts.  Upon adoption, all comparative annual and
interim financial statements will present a comprehensive income statement or
alternative disclosure, for all years presented.  The adoption of SFAS 130 is
not expected to have a significant impact on the financial condition or results
of operations of the Company.

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 131 (SFAS 131), "Disclosures about Segments of an
Enterprise and Related Information."  SFAS 131 is effective July 1, 1998, and
requires disclosure of certain financial information by segments of a company's
business.  The adoption of SFAS 131 is not expected to have a significant impact
on the financial condition or results of operations of the Company.

                                       9
<PAGE>
 
NOTE D - RECENT LEGISLATION

In August of 1996, a bill was signed into law containing relief for savings
institutions from recapture of bad debt reserves.  The law's provisions are
effective for tax years beginning after December 31, 1995, which impacted the
Company's fiscal year ended June 30, 1997.  The new law eliminates the future
use of the Internal Revenue Code Section 593 reserve method of accounting for
bad debts by savings institutions; forgives recapture of pre-1988 base year
reserves; and requires the recapture of post-1987 reserves ratably over a six-
year period beginning with the first post-1995 taxable year.  The onset of
recapture can be delayed for one or two years if an institution meets a
residential loan originations requirement in effect in 1997 and 1998.  To
qualify for a deferral each year, an institution will be required to lend as
much in dollar terms on residential real estate as in the average of the most
recent six years.  The residential loan calculation does not include refinancing
and home equity loans.  The Company has not yet determined whether it qualifies
for this deferral.  However, it has determined that there will not be a material
effect on earnings resulting from the recapture, due to the provision of
deferred taxes in the years subsequent to 1987 when the tax provisions for bad
debts exceeds actual net loan charge-offs.

Under the present Internal Revenue Code, certain events, such as the pending
merger, may cause the Company's Bank subsidiary to become ineligible to maintain
the reserve discussed above and the post-1987 tax reserve.  For the thrift
(Bank) merged into a bank or nonthrift entity in a nontaxable transaction, the
ineligibility year is the year of the merger.  The thrift (Bank) must restate
its post-1987 bad debt reserve to zero and include its bad debt reserves
(defined to include qualifying, nonqualifying, and supplemental reserves) in
income ratably over a six-year period beginning in the ineligibility year or a
shorter period if it ceases to engage in business during the six-year
amortization period.

In September of 1996, a bill was signed into law  which provides for the
ultimate merger of the Savings Association Insurance Fund ("SAIF") into the
larger and fully capitalized Bank Insurance Fund ("BIF").  This legislation
requires the Company and all other depository institutions having SAIF-insured
deposits to pay a one-time assessment to recapitalize the SAIF, which had become
undercapitalized due to claims against the fund.  The obligations to pay the
special assessment became fixed on September 30, 1996 and were paid on November
27, 1996.  On September 30, 1996, the Company recorded a charge to earnings in
the amount of $552,850 to provide for this obligation.  This charge is therefore
reflected in the Financial Statements, to which these notes are attached, and
had a negative effect on earnings for the three months ended September 30, 1996.
The deposit insurance expense recorded for the three months ended September 30,
1996 was $603,494, reflecting the one-time assessment, and the recurring premium
expense of $50,644.  However, the legislation also provides for a reduction in
the recurring insurance premiums on SAIF-insured deposits following the
recapitalization.  Based on its risk category, the Company anticipates a
significant reduction in its recurring deposit insurance expense in the future.

                                       10
<PAGE>
 
NOTE E - SUPPLEMENTAL FINANCIAL DATA

Components of other expense in excess of 1% of total income are as follows:
 
                                       For the three months
                                        ended September 30,
 
                                          1997     1996
                                         -------  -------
     FDIC insurance premiums             $12,457  603,494
 
     Data processing                     $65,810   56,035
 
     Merger related expenses             $26,786        -
 
     Professional fees                   $20,689   31,956
 
     Telephone                           $40,700   34,131
 
     Stationery, printing & supplies     $29,433   19,687
 

NOTE F - SERVICING SALE AGREEMENT

The Company entered into an agreement to sell the servicing rights of
approximately $87,000,000 in mortgage loans serviced for others.  The sale price
for the servicing shall be determined by multiplying 1.06% by the principal
balance of the loan portfolio.  The Company will incur legal and other
professional expenses in conjunction with this transaction.  The Company will
also indemnify the Purchaser against payoff for 60 days after the sale date. The
terms and provision of the sale of the servicing are subject to other various
conditions, including the performance of due diligence by the Purchaser.

                                       11
<PAGE>
 
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF INTERIM FINANCIAL
         CONDITION OR PLAN OF OPERATION FOR THE THREE MONTHS
         ENDED SEPTEMBER 30, 1997, COMPARED TO THE THREE MONTHS
         ENDED SEPTEMBER 30, 1996


INTERIM FINANCIAL CONDITION

GF Bancshares, Inc. (the "Company"), reported total assets of $98,919,000 as of
September 30, 1997, compared to $98,439,000 at June 30, 1997.  The most
significant change in the composition of the assets was an increase in net loans
from $81,345,000 to $82,637,000.  The increase was primarily in the area of
construction loans and commercial loans. Loans held for sale decreased from
$3,862,000 at June 30, 1997, to $3,495,000 at September 30, 1997.  The increase
in net loans was funded from the increase in deposits.  Deposits increased from
$79,379,000 at June 30, 1997, to $81,858,000 at September 30, 1997.

A result of the strong loan growth experienced in recent months compared to
slower deposit growth has been a relatively high loan (including loans held for
sale) to deposit ratio. Management has embarked on a course to reverse this
trend through controlled loan growth and emphasis on deposit growth, as
reflected by the decrease in the ratio from 107% at June 30, 1997 to 105% at
September 30, 1997.  The Company's liquid assets as a percentage of deposits
were 6.68% at September 30, 1997, down from 5.61% at June 30, 1997.  Management
analyzes projected loan fundings and payoffs, deposit trends, and other market
conditions as they relate to levels of cash, liquid investments, and the funding
line the Company has available from the Federal Home Loan Bank ("FHLB").  As of
September 30, 1997, the Company had drawn $2,553,000 against the FHLB line, of
an available $20,000,000.  Based on this analysis, Management believes that the
Company has adequate liquidity to meet its short-term operating requirements.
However, no assurances are given in this regard.

The Company measures its capital adequacy against three standards: 1) tangible
capital, expressed as a percentage of adjusted total assets, of at least 1.5%;
2) core capital, expressed as a percentage of adjusted total assets, of at least
3.0%, and:  3) risk-based capital, expressed as a percentage of risk-weighted
assets, of at least 8.0%.  As of September 30, 1997, the Company's capital
positions were as follows:

<TABLE>
<CAPTION>
                            Minimum
                            Capital            Regulatory            Excess
                          Requirement           Capital             Capital           Ratio
                          -----------          -----------         ----------         ------
<S>                       <C>                  <C>                 <C>                <C>
Tangible Capital          $1,480,000           $10,801,000         $9,321,000         10.94%
Core Capital              $2,961,000           $10,801,000         $7,840,000         10.94%
Risk-based Capital        $6,456,000           $11,364,000         $4,908,000         14.08%
</TABLE>

                                       12
<PAGE>
 
Non-performing assets declined to 3.12% of total loans and real estate acquired
through foreclosure ("OREO") at September 30, 1997, compared to 3.38% at June
30, 1997:

<TABLE>
<CAPTION>
                                     September 30, 1997   June 30, 1997
                                     ------------------   -------------
<S>                                  <C>                  <C>
Nonaccrual loans                            $ 1,227,000     $ 1,380,000
Loans 90 days past due                          299,000         310,000
Restructured loans                              589,000         598,000
OREO                                            504,000         504,000
                                            -----------     -----------
   Total non-performing assets (A)          $ 2,619,000     $ 2,792,000
                                            -----------     -----------
 
   Total loans (gross) and OREO (B)         $83,892,000     $82,589,000
   A/B                                            3.12%           3.38%
</TABLE>

The allowance for loan losses at September 30, 1997 was $751,000, compared to
$740,000 at June 30, 1997.  The allowance at September 30, 1997, represented 
 .90% of total loans, compared to .90% at June 30, 1997. The allowance at
September 30, 1997 represented 35.51% of non-performing loans (non-performing
assets less OREO), compared to 32.34% at June 30, 1997. The analysis of the
activity in the allowance for loan losses is as follows:

<TABLE>
<CAPTION>
                                     1996            1997
                                   --------        --------
<S>                                <C>             <C>
Balance at June 30,                $688,000        $740,000
                                   --------        --------

  Chargeoffs:
     Commercial                           -               -
     Real estate mortgage                 -               -
     Consumer                        (8,000)        (4 ,000)
                                   --------        --------
          Total                      (8,000)        (4 ,000)
                                   --------        --------

  Recoveries
     Commercial                           -               -
     Real estate mortgage                 -               -
     Consumer                             -               -
          Total                           -               -

  Net chargeoffs                     (8,000)         (4,000)
                                   --------        --------

  Provisions charged to income       15,000          15,000
                                   --------        --------

Balance at September 30,           $695,000        $751,000
                                   --------        --------
</TABLE>

                                       13
<PAGE>
 
The loan portfolio is periodically reviewed to evaluate the outstanding loans
and to measure both the performance of the portfolio and the adequacy of the
allowance for loan losses.  This analysis includes a review of delinquency
trends, actual losses, and internal credit ratings.  Management's judgment as to
the adequacy of the allowance is based upon a number of assumptions about future
events which it believes to be reasonable, but which may or may not be
reasonable.  However, because of the inherent uncertainty of assumptions made
during the evaluation process, there can be no assurance that loan losses in
further periods will not exceed the allowance for loan losses, or that
additional allocations to the allowance will not be required.


RESULTS OF OPERATIONS

The Company's net income was $370,000 for the three months ended September 30,
1997, compared to a net loss of $1,000 for the three months ended September 30,
1996. The improvement was due primarily to the one-time SAIF assessment recorded
in the prior period, as discussed below.

The Company's net interest income increased to $1,122,000 for the three months
ended September 30, 1997, compared to $1,069,000 in the same period in 1996.
Interest on loans increased from $1,953,000 in the prior year, to $2,071,000 in
the current year, while interest on investment securities and interest-bearing
deposits was unchanged.  The improvement reflects the increase in loan volume.
Interest expense increased from $1,012,000 in the prior year, to $1,078,000 in
the current period, reflecting the increase in deposits.

The Company provided $15,000 for loan losses in the current period, compared to
a provision of $15,000 in the prior year. There were  net chargeoffs of $4,000
in the current period compared to net chargeoffs of $8,000 in the prior period.

The Company's other income increased to $194,000 in the current quarter,
compared to $172,000 in the same quarter of the prior year.  The increase is
primarily attributable to improved results from loan production office
operations.

The Company's other expenses decreased to $708,000 in the current period from
$1,249,000 in the same period of the prior year. The decrease was primarily due
to the one-time SAIF assessment of $553,000 recorded in the quarter ended
September 30, 1996. Included in other expenses were merger related expenses of
$26,786 for the quarter ended September 30, 1997.

                                       14
<PAGE>
 
                                    PART II
                                        
                               OTHER INFORMATION

                                        
Item 1.  Legal Proceedings
         None

Item 2.  Changes in Securities
         None

Item 3.  Defaults upon Senior Securities
         None
 
Item 4.  Submission of Matters to a Vote of Security Holders
         None

Item 5.  Other Information
         None

Item 6.  Exhibits and reports on Form 8-K
         Exhibit 11  Statement Re: Computation of Per Share
         Earnings attached.
 
         Exhibit 27  Financial Data Schedule
 

                                       15
<PAGE>
 
                                  SIGNATURES
                                        

Pursuant to the requirements 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.


                                       GF BANCSHARES, INC
                                          (REGISTRANT)



                                       By: /s/ Arthur H. Hammond
                                           ------------------------------------
                                           Arthur H. Hammond, E.V.P./C.F.O.



                                       By: /s/ Ron J. Franklin
                                           ------------------------------------
                                           Ron J. Franklin, President/C.E.O.


Date:  October 31, 1997

                                       16