<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                 FORM 10-KSB/A
                                 -------------

                       ANNUAL REPORT UNDER SECTION 13 OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                    FOR FISCAL YEAR ENDED DECEMBER 31, 2000

                       Commission File Number: 000-30517
                                               ---------


                      AMERICAN COMMUNITY BANCSHARES, INC.
            (Exact Name of Registrant as specified in its charter)

                                NORTH CAROLINA
                           (State of Incorporation)

                                  56-2179531
                                  ----------
                     (I.R.S. Employer Identification No.)

                         2593 West Roosevelt Boulevard
                         Monroe, North Carolina  28110
                         -----------------------------
                         (Address of Principal Office)

                                (704) 225-8444
                                --------------
             (Registrant's telephone number, including area code)

          Securities registered pursuant to Section 12(g) of the Act:

                         COMMON STOCK, $1.00 PAR VALUE

Check whether the Registrant (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
     -

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

The Registrant's revenues for the year ended December 31, 2000 were $10,160,517.

The aggregate market value of the voting stock held by non-affiliates of the
Registrant at December 31, 2000 was approximately $11,936,496.

The number of shares of the Registrant's Common Stock outstanding on December
31, 2000 was 1,492,062.

                     Documents Incorporated by Reference:

     1.     Portions of Annual Report to Shareholders for the Fiscal Year Ended
            December 31, 2000 (Part II).

     2.     Proxy Statement for the 2001 Annual Meeting of Shareholders (Part
            III).

Transitional Small Business Disclosure Format    Yes ____  No   X
                                                              -----
<PAGE>

                       FORM 10-KSB CROSS REFERENCE INDEX
                       ---------------------------------

As indicated below, portions of (i) the Registrant's Annual Report to
Shareholders for the fiscal year ended December 31, 2000, and (ii) the
Registrant's Proxy Statement for the Annual Meeting of Shareholders to be held
April 17, 2001, filed with the Securities and Exchange Commission via EDGAR are
incorporated by reference into Parts II and III of this Report.

Key
---

AR        Annual Report to Shareholders for the fiscal year ended December 31,
          2000.

Proxy     Proxy Statement for the Annual Meeting of Shareholders to be held
          April 17, 2001.

10-KSB    10-KSB for the year ended December 31, 2000.

<TABLE>
<CAPTION>
Part I                                                                 Page                 Document
                                                                       ----                 --------
<S>              <C>                                                   <C>                  <C>

Item 1.          Business                                                 3                 10-KSB
Item 2.          Properties                                              10                 10-KSB
Item 3.          Legal Proceedings                                       11                 10-KSB
Item 4.          Submission of Matters to a Vote of Security Holders     11                 10-KSB

Part II

Item 5.          Market for Registrant's Common Equity and Related
                 Stockholder Matters                                     11                 AR
Item 6.          Management's Discussion and Analysis of Financial
                 Condition and Results of Operations                     11                 AR
Item 7.          Financial Statements and Supplementary Data             13                 AR
Item 8.          Changes in and Disagreements with Accountants
                 on Accounting and Financial Disclosure                  13                 10-KSB

Part III

Item 9.          Directors, Executive Officers, Promoters, and Control
                 Persons; Compliance with Section 16(a) of Exchange Act  14                 Proxy
Item 10.         Executive Compensation                                  14                 Proxy
Item 11.         Security Ownership of Certain Beneficial Owners and
                 Management                                              14                 Proxy
Item 12.         Certain Relationships and Related Transactions          14                 Proxy

Part IV

Item 13.         Exhibits and Reports on Form 8-K
                 (a)    Index to Exhibits                                14                 10-KSB
                 (b)    Reports on Form 8-K filed during the
                        three months ended December 31, 2000             15                 10-KSB
</TABLE>

                                       2
<PAGE>

                                    PART I

Item 1. Description of Business

American Community Bancshares, Inc. (the "Registrant") was incorporated under
the laws of the State of North Carolina on February 16, 2000, at the direction
of the Board of Directors of American Community Bank (the "Bank"), for the
purpose of serving as the bank holding company of the Bank and became the
holding company for the Bank on April 28, 2000.  To become the Bank's holding
company, Registrant received approval of the Federal Reserve Board as well as
the Bank's shareholders.  Upon receiving such approvals, each share of the
common stock of the Bank was exchanged on a one-for-one basis for shares of the
common stock of the Registrant.

The Bank is a North Carolina chartered commercial bank which was chartered on
November 13, 1998 and opened for business on November 16, 1998.  The Bank has
its main banking offices at 2593 West Roosevelt Boulevard, Monroe, North
Carolina.  In addition to the main office, the Bank has six full service branch
offices including: the Indian Trail Office, Indian Trail, North Carolina; the
Wal-Mart Superstore Office, Monroe, North Carolina; the Marshville Office,
Marshville, North Carolina; the Mountain Island Office, Charlotte, North
Carolina; the Sunset Office, Monroe, North Carolina; and the Matthews-Mint Hill
Office, Mint Hill, North Carolina.

At December 31, 2000, the Registrant and its only subsidiary, the Bank, had 65
full-time employees.

Business of the Registrant and the Bank

The Registrant's only function is the ownership of all of the issued and
outstanding stock of the Bank.  The Registrant does not engage in any separate
lines of business.  During 2000, the Registrant had no cash flow activity. The
Bank engages in a general banking business in Monroe, North Carolina, Western
Union County and portions of Mecklenburg County.  The Bank operates for the
primary purpose of serving the banking needs of individuals, and small to
medium-sized businesses in its market area.  While numerous banks in our market
have chosen to focus on the affluent and high net worth individuals, we have
chosen to focus on middle income households and the entrepreneurial segment of
our market.  The Bank offers a range of banking services including checking and
savings accounts, commercial, consumer and personal loans, mortgage and
factoring services and other associated financial services.  The Bank has also
targeted the growing Hispanic market as a marketing niche we intend to pursue.

Management considers American Community Bancshares' asset quality to be of
primary importance. The allowance for loan losses, which is utilized to absorb
actual losses in the loan portfolio, is maintained at a level sufficient to
provide for estimated potential charge-offs of non-collectible loans. The loan
portfolio is analyzed periodically in an effort to identify potential problems
before they actually occur.  The allowance for loan losses is evaluated on a
regular basis by management using a methodology that segments the loan portfolio
by loan types.  This methodology is based upon management's periodic review of
the collectibility of the loans in light of the current status of the portfolio,
historical experience, the nature and volume of the loan portfolio, adverse
situations that may affect the borrower's ability to repay, estimated value of
any underlying collateral, and prevailing economic conditions.  Because American
Community Bank has been in existence for a relatively short time, and therefore
has a limited history, management has also considered in applying its analytical
methodology the loss experience and allowance levels of other peer community
banks and the historical experiences encountered by American Community Bank's
management and senior lending officers.  In addition, regulatory examiners may
require American Community Bank to recognize changes to the allowance for loan
losses based on their judgments about information available to them at the time
of their examination.  The provision for loan losses represents a charge against
income in an amount necessary to maintain the allowance at an appropriate level.
The monthly provision for loan losses may fluctuate based on the results of this
analysis.  Further analysis of the allowance for loan losses is provided in
Table Two of Item 6.

At December 31, 2000, non-accrual loans totaled $158,075.  During 2000, interest
income of $14,970 was recorded on these loans while additional interest income
of $1,481 that would have been recorded was not, given that these loans stopped
accruing interest.

                                       3
<PAGE>

Competition

The Registrant's market area consists of Monroe, North Carolina, Western Union
County, which is part of the Charlotte Standard Metropolitan area and portions
of Mecklenburg County.  Union County has a population of over 100,000, with an
average household income of over $50,000.  Monroe is the largest city in Union
County and serves as the county seat.  The area is served by national and
regional airlines through facilities at Douglas International Airport,
Charlotte, North Carolina.

Union County's unemployment rate is below the state and national averages.
Union County has a labor force of over 56,000.  Approximately 29% of the work
force is employed in manufacturing, 15% in services and 14% in retail.  The
major private employers in Union County include Tyson Foods (poultry
processing); Wampler Foods (turkey processing); Teledyne-Allvac/Vasco (nickel-
base alloys); and Union Regional Medical Center (health services).


Supervision and Regulation

Regulation of Registrant

Federal Regulation. Registrant is subject to examination, regulation and
-------------------
periodic reporting under the Bank Holding Company Act of 1956, as amended, (the
"BHC Act"), as administered by the Federal Reserve Board. The Federal Reserve
Board has adopted capital adequacy guidelines for bank holding companies on a
consolidated basis.

Registrant is required to obtain the prior approval of the Federal Reserve Board
to acquire all, or substantially all, of the assets of any bank or bank holding
company. Prior Federal Reserve Board approval is required for Registrant to
acquire direct or indirect ownership or control of any voting securities of any
bank or bank holding company if, after giving effect to such acquisition, it
would, directly or indirectly, own or control more than five percent of any
class of voting shares of such bank or bank holding company.

The merger or consolidation of Registrant with another bank holding company, or
the acquisition by Registrant of the stock or assets of another bank, or the
assumption of liability by Registrant to pay any deposits in another bank, will
require the prior written approval of the primary federal bank regulatory agency
of the acquiring or surviving bank under the federal Bank Merger Act.  The
decision is based upon a consideration of statutory factors similar to those
outlined above with respect to the BHC Act.  In addition, in certain such cases
an application to, and the prior approval of, the Federal Reserve Board under
the BHC Act and/or the North Carolina Banking Commission may be required.

Registrant is required to give the Federal Reserve Board prior written notice of
any purchase or redemption of its outstanding equity securities if the gross
consideration for the purchase or redemption, when combined with the net
consideration paid for all such purchases or redemptions during the preceding 12
months, is equal to 10% or more of Registrant' consolidated net worth. The
Federal Reserve Board may disapprove such a purchase or redemption if it
determines that the proposal would constitute an unsafe and unsound practice, or
would violate any law, regulation, Federal Reserve Board order or directive, or
any condition imposed by, or written agreement with, the Federal Reserve Board.
Such notice and approval is not required for a bank holding company that would
be treated as "well capitalized" under applicable regulations of the Federal
Reserve Board, that has received a composite "1" or "2" rating at its most
recent bank holding company inspection by the Federal Reserve Board, and that is
not the subject of any unresolved supervisory issues.

The status of Registrant as a registered bank holding company under the BHC Act
does not exempt it from certain federal and state laws and regulations
applicable to corporations generally, including, without limitation, certain
provisions of the federal securities laws.

In addition, a bank holding company is prohibited generally from engaging in, or
acquiring five percent or more of any class of voting securities of any company
engaged in, non-banking activities. One of the principal exceptions to this
prohibition is for activities found by the Federal Reserve Board to be so
closely related to banking or managing or controlling banks as to be a proper
incident thereto. Some of the principal activities that the Federal Reserve
Board has determined by regulation to be so closely related to banking as to be
a proper incident thereto are:

                                       4
<PAGE>

     -  making or servicing loans;
     -  performing certain data processing services;
     -  providing discount brokerage services;
     -  acting as fiduciary, investment or financial advisor;
     -  leasing personal or real property;
     -  making investments in corporations or projects designed primarily to
        promote community welfare; and
     -  acquiring a savings and loan association.

In evaluating a written notice of such an acquisition, the Federal Reserve Board
will consider various factors, including among others the financial and
managerial resources of the notifying bank holding company and the relative
public benefits and adverse effects which may be expected to result from the
performance of the activity by an affiliate of such company. The Federal Reserve
Board may apply different standards to activities proposed to be commenced de
novo and activities commenced by acquisition, in whole or in part, of a going
concern. The required notice period may be extended by the Federal Reserve Board
under certain circumstances, including a notice for acquisition of a company
engaged in activities not previously approved by regulation of the Federal
Reserve Board. If such a proposed acquisition is not disapproved or subjected to
conditions by the Federal Reserve Board within the applicable notice period, it
is deemed approved by the Federal Reserve Board.

Capital Requirements. The Federal Reserve Board uses capital adequacy guidelines
---------------------
in its examination and regulation of bank holding companies. If capital falls
below minimum guidelines, a bank holding company may, among other things, be
denied approval to acquire or establish additional banks or non-bank businesses.

The Federal Reserve Board's capital guidelines establish the following minimum
regulatory capital requirements for bank holding companies:

     -      a leverage capital requirement expressed as a percentage of total
            assets;

     -      a risk-based requirement expressed as a percentage of total risk-
            weighted assets; and

     -      a Tier 1 leverage requirement expressed as a percentage of total
            assets.

The leverage capital requirement consists of a minimum ratio of total capital to
total assets of 6%, with an expressed expectation that banking organizations
generally should operate above such minimum level. The risk-based requirement
consists of a minimum ratio of total capital to total risk-weighted assets of
8%, of which at least one-half must be Tier 1 capital (which consists
principally of shareholders' equity). The Tier 1 leverage requirement consists
of a minimum ratio of Tier 1 capital to total assets of 3% for the most highly-
rated companies, with minimum requirements of 4% to 5% for all others.

The risk-based and leverage standards presently used by the Federal Reserve
Board are minimum requirements, and higher capital levels will be required if
warranted by the particular circumstances or risk profiles of individual banking
organizations. Further, any banking organization experiencing or anticipating
significant growth would be expected to maintain capital ratios, including
tangible capital positions (i.e., Tier 1 capital less all intangible assets),
well above the minimum levels.

The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
requires the federal bank regulatory agencies biennially to review risk-based
capital standards to ensure that they adequately address interest rate risk,
concentration of credit risk and risks from non-traditional activities and,
since adoption of the Riegle Community Development and Regulatory Improvement
Act of 1994 (the "Riegle Act"), to do so taking into account the size and
activities of depository institutions and the avoidance of undue reporting
burdens. In 1995, the agencies adopted regulations requiring as part of the
assessment of an institution's capital adequacy the consideration of (a)
identified concentrations of credit risks, (b) the exposure of the institution
to a decline in the value of its capital due to changes in interest rates and
(c) the application of revised conversion factors and netting rules on the
institution's potential future exposure from derivative transactions.

                                       5
<PAGE>

In addition, the agencies in September 1996 adopted amendments to their
respective risk-based capital standards to require banks and bank holding
companies having significant exposure to market risk arising from, among other
things, trading of debt instruments, (1) to measure that risk using an internal
value-at-risk model conforming to the parameters established in the agencies'
standards and (2) to maintain a commensurate amount of additional capital to
reflect such risk. The new rules were adopted effective January 1, 1997, with
compliance mandatory from and after January 1, 1998.

Under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989
("FIRREA"), depository institutions are liable to the FDIC for losses suffered
or anticipated by the FDIC in connection with the default of a commonly
controlled depository institution or any assistance provided by the FDIC to such
an institution in danger of default. This law is applicable to the extent that
Registrant maintains as a separate subsidiary a depository institution in
addition to the Bank.

Subsidiary banks of a bank holding company are subject to certain quantitative
and qualitative restrictions imposed by the Federal Reserve Act on any extension
of credit to, or purchase of assets from, or letter of credit on behalf of, the
bank holding company or its subsidiaries, and on the investment in or acceptance
of stocks or securities of such holding company or its subsidiaries as
collateral for loans. In addition, provisions of the Federal Reserve Act and
Federal Reserve Board regulations limit the amounts of, and establish required
procedures and credit standards with respect to, loans and other extensions of
credit to officers, directors and principal shareholders of the Bank,
Registrant, any subsidiary of Registrant and related interests of such persons.
Moreover, subsidiaries of bank holding companies are prohibited from engaging in
certain tie-in arrangements (with the holding company or any of its
subsidiaries) in connection with any extension of credit, lease or sale of
property or furnishing of services.

Any loans by a bank holding company to a subsidiary bank are subordinate in
right of payment to deposits and to certain other indebtedness of the subsidiary
bank. In the event of a bank holding company's bankruptcy, any commitment by the
bank holding company to a federal bank regulatory agency to maintain the capital
of a subsidiary bank would be assumed by the bankruptcy trustee and entitled to
a priority of payment. This priority would also apply to guarantees of capital
plans under FDICIA.

Branching

Under the Riegle Act, the Federal Reserve Board may approve bank holding company
acquisitions of banks in other states, subject to certain aging and deposit
concentration limits. As of June 1, 1997, banks in one state may merge with
banks in another state, unless the other state has chosen not to implement this
section of the Riegle Act. These mergers are also subject to similar aging and
deposit concentration limits.

North Carolina "opted-in" to the provisions of the Riegle Act. Since July 1,
1995, an out-of-state bank that did not already maintain a branch in North
Carolina was permitted to establish and maintain a de novo branch in North
Carolina, or acquire a branch in North Carolina, if the laws of the home state
of the out-of-state bank permit North Carolina banks to engage in the same
activities in that state under substantially the same terms as permitted by
North Carolina. Also, North Carolina banks may merge with out-of-state banks,
and an out-of-state bank resulting from such an interstate merger transaction
may maintain and operate the branches in North Carolina of a merged North
Carolina bank, if the laws of the home state of the out-of-state bank involved
in the interstate merger transaction permit interstate merger.

Regulation of the Bank

The Bank is extensively regulated under both federal and state law. Generally,
these laws and regulations are intended to protect depositors and borrowers, not
shareholders. To the extent that the following information describes statutory
and regulatory provisions, it is qualified in its entirety by reference to the
particular statutory and regulatory provisions. Any change in applicable law or
regulation may have a material effect on the business of the Registrant and the
Bank.

State Law. The Bank is subject to extensive supervision and regulation by the
----------
North Carolina Commissioner of Banks (the "Commissioner"). The Commissioner
oversees state laws that set specific requirements for bank capital and regulate
deposits in, and loans and investments by, banks, including the amounts, types,
and in some cases, rates.

                                       6
<PAGE>

The Commissioner supervises and performs periodic examinations of North
Carolina-chartered banks to assure compliance with state banking statutes and
regulations, and the Bank is required to make regular reports to the
Commissioner describing in detail the resources, assets, liabilities and
financial condition of the Bank. Among other things, the Commissioner regulates
mergers and consolidations of state-chartered banks, the payment of dividends,
loans to officers and directors, record keeping, types and amounts of loans and
investments, and the establishment of branches.

Deposit Insurance. As a member institution of the FDIC, the Bank's deposits are
------------------
insured up to a maximum of $100,000 per depositor through the Bank Insurance
Fund, administered by the FDIC, and each member institution is required to pay
semi-annual deposit insurance premium assessments to the FDIC. The BIF
assessment rates have a range of 0 cents to 27 cents for every $100 in
assessable deposits. Banks with no premium are subject to an annual statutory
minimum assessment.

Capital Requirements. The federal banking regulators have adopted certain risk-
---------------------
based capital guidelines to assist in the assessment of the capital adequacy of
a banking organization's operations for both transactions reported on the
balance sheet as assets and transactions, such as letters of credit, and
recourse arrangements, which are recorded as off balance sheet items. Under
these guidelines, nominal dollar amounts of assets and credit equivalent amounts
of off balance sheet items are multiplied by one of several risk adjustment
percentages which range from 0% for assets with low credit risk, such as certain
U.S. Treasury securities, to 100% for assets with relatively high credit risk,
such as business loans.

A banking organization's risk-based capital ratios are obtained by dividing its
qualifying capital by its total risk adjusted assets. The regulators measure
risk-adjusted assets, which include off balance sheet items, against both total
qualifying capital (the sum of Tier 1 capital and limited amounts of Tier 2
capital) and Tier 1 capital. "Tier 1," or core capital, includes common equity,
qualifying noncumulative perpetual preferred stock and minority interests in
equity accounts of consolidated subsidiaries, less goodwill and other
intangibles, subject to certain exceptions. "Tier 2," or supplementary capital,
includes among other things, limited-life preferred stock, hybrid capital
instruments, mandatory convertible securities, qualifying subordinated debt, and
the allowance for loan and lease losses, subject to certain limitations and less
required deductions. The inclusion of elements of Tier 2 capital is subject to
certain other requirements and limitations of the federal banking agencies.
Banks and bank holding companies subject to the risk-based capital guidelines
are required to maintain a ratio of Tier 1 capital to risk-weighted assets of at
least 4% and a ratio of total capital to risk-weighted assets of at least 8%.
The appropriate regulatory authority may set higher capital requirements when
particular circumstances warrant. As of December 31, 2000, the Bank was
classified as "well-capitalized" with Tier 1 and Total Risk - Based Capital of
9.66% and 10.83% respectively.

The federal banking agencies have adopted regulations specifying that they will
include, in their evaluations of a bank's capital adequacy, an assessment of the
bank's interest rate risk ("IRR") exposure. The standards for measuring the
adequacy and effectiveness of a banking organization's IRR management include a
measurement of board of director and senior management oversight, and a
determination of whether a banking organization's procedures for comprehensive
risk management are appropriate for the circumstances of the specific banking
organization.

Failure to meet applicable capital guidelines could subject a banking
organization to a variety of enforcement actions, including limitations on its
ability to pay dividends, the issuance by the applicable regulatory authority of
a capital directive to increase capital and, in the case of depository
institutions, the termination of deposit insurance by the FDIC, as well as the
measures described under FDICIA described below, as applicable to
undercapitalized institutions. In addition, future changes in regulations or
practices could further reduce the amount of capital recognized for purposes of
capital adequacy. Such a change could affect the ability of the Bank to grow and
could restrict the amount of profits, if any, available for the payment of
dividends to the shareholders.

FDICIA. In December 1991, Congress enacted FDICIA, which substantially revised
-------
the bank regulatory and funding provisions of the Federal Deposit Insurance Act
and made significant revisions to several other federal banking statutes. FDICIA
provides for, among other things:

      *   publicly available annual financial condition and management reports
          for certain financial institutions, including audits by independent
          accountants,

                                       7
<PAGE>

      *   the establishment of uniform accounting standards by federal banking
          agencies,

      *   the establishment of a "prompt corrective action" system of regulatory
          supervision and intervention, based on capitalization levels, with
          greater scrutiny and restrictions placed on depository institutions
          with lower levels of capital,

      *   additional grounds for the appointment of a conservator or receiver,
          and

      *   restrictions or prohibitions on accepting brokered deposits, except
          for institutions which significantly exceed minimum capital
          requirements.

FDICIA also provides for increased funding of the FDIC insurance funds and the
implementation of risk-based premiums.

A central feature of FDICIA is the requirement that the federal banking agencies
take "prompt corrective action" with respect to depository institutions that do
not meet minimum capital requirements. Pursuant to FDICIA, the federal bank
regulatory authorities have adopted regulations setting forth a five-tiered
system for measuring the capital adequacy of the depository institutions that
they supervise. Under these regulations, a depository institution is classified
in one of the following capital categories: "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized" and
"critically undercapitalized." An institution may be deemed by the regulators to
be in a capitalization category that is lower than is indicated by its actual
capital position if, among other things, it receives an unsatisfactory
examination rating with respect to asset quality, management, earnings or
liquidity.

FDICIA provides the federal banking agencies with significantly expanded powers
to take enforcement action against institutions which fail to comply with
capital or other standards. Such action may include the termination of deposit
insurance by the FDIC or the appointment of a receiver or conservator for the
institution. FDICIA also limits the circumstances under which the FDIC is
permitted to provide financial assistance to an insured institution before
appointment of a conservator or receiver.

Miscellaneous. The dividends that may be paid by the Bank are subject to legal
--------------
limitations. In accordance with North Carolina banking law, dividends may not be
paid unless the Bank's capital surplus is at least 50% of its paid-in capital.

The earnings of the Bank will be affected significantly by the policies of the
Federal Reserve Board, which is responsible for regulating the United States
money supply in order to mitigate recessionary and inflationary pressures. Among
the techniques used to implement these objectives are open market transactions
in United States government securities, changes in the rate paid by banks on
bank borrowings, and changes in reserve requirements against bank deposits.
These techniques are used in varying combinations to influence overall growth
and distribution of bank loans, investments, and deposits, and their use may
also affect interest rates charged on loans or paid for deposits.

The monetary policies of the Federal Reserve Board have had a significant effect
on the operating results of commercial banks in the past and are expected to
continue to do so in the future. In view of changing conditions in the national
economy and money markets, as well as the effect of actions by monetary and
fiscal authorities, no prediction can be made as to possible future changes in
interest rates, deposit levels, loan demand or the business and earnings of the
Bank.

The Bank cannot predict what legislation might be enacted or what regulations
might be adopted, or if enacted or adopted, the effect thereof on the Bank's
operations.

Community Reinvestment Act. The Bank is subject to the provisions of the
---------------------------
Community Reinvestment Act of 1977, as amended (CRA).  Under the terms of the
CRA, the appropriate federal bank regulatory agency is required, in connection
with the examination of a bank, to assess such bank's record in meeting the
credit needs of the community served by that bank, including low and moderate-
income neighborhoods.  The regulatory agency's assessment of the Bank's record
is made available to the public.  Such an assessment is required of any bank
which has applied for any application for a domestic deposit-taking branch,
relocation of a main office, branch or ATM,

                                       8
<PAGE>

merger or consolidation with or acquisition of assets or assumption of
liabilities of a federally insured depository institution.

Under CRA regulations, banks with assets of less than $250,000,000 that are
independent or affiliated with a holding company with total banking assets of
less than $1 billion, are subject to streamlined small bank performance
standards and much less stringent data collection and reporting requirements
than larger banks.  The agencies emphasize that small banks are not exempt from
CRA requirements.  The streamlined performance method for small banks focuses on
the bank's loan-to-deposit ratio, adjusted for seasonal variations and as
appropriate, other lending-related activities, such as loan originations for
sale to secondary markets or community development lending or qualified
investments; the percentage of loans and, as appropriate, other lending-related
activities located in the Bank's assessment areas; the Bank's record of lending
to and, as appropriate, other lending-related activities for borrowers of
different income levels and businesses and farms of different sizes; the
geographic distribution of the Bank's loans given its assessment areas, capacity
to lend, local economic conditions, and lending opportunities; and the Bank's
record of taking action, if warranted, in response to written complaints about
its performance in meeting the credit needs of its assessment areas.

Regulatory agencies will assign a composite rating of "outstanding,"
"satisfactory," "needs to improve," or "substantial noncompliance" to the
institution using the foregoing ground rules.  A bank's performance need not fit
each aspect of a particular rating profile in order for the bank to receive that
rating; exceptionally strong performance with respect to some aspects may
compensate for weak performance in others, and the bank's overall performance
must be consistent with safe and sound banking practices and generally with the
appropriate rating profile.  To earn an outstanding rating, the bank first must
exceed some or all of the standards mentioned above.  The agencies may assign a
"needs to improve" or "substantial noncompliance" rating depending on the degree
to which the bank has failed to meet the standards mentioned above.

The regulation further states that the agencies will take into consideration
these CRA ratings when considering any application and that a bank's record of
performance may be the basis for denying or conditioning the approval of an
application.

Change of Control

State and federal law restricts the amount of voting stock of a bank holding
company or a bank that a person may acquire without the prior approval of
banking regulators.  The overall effect of such laws is to make it more
difficult to acquire a bank holding company or bank by tender offer or similar
means than it might be to acquire control of another type of corporation.

Pursuant to North Carolina law, no person may, directly or indirectly, purchase
or acquire voting stock of any bank holding company or bank which would result
in the change of control of that entity unless the Commissioner first shall have
approved such proposed acquisition.  A person will be deemed to have acquired
"control" of the bank holding company or the bank if he, she or it, directly or
indirectly, (i) owns, controls or has the power to vote 10% or more of the
voting stock of the bank holding company or bank, or (ii) possesses the power to
direct or cause the direction of its management and policy.

Federal law imposes additional restrictions on acquisitions of stock in bank
holding companies and FDIC-insured banks.  Under the federal Change in Bank
Control Act and the regulations thereunder, a person or group acting in concert
must give advance notice to the Federal Reserve or the FDIC before directly or
indirectly acquiring the power to direct the management or policies of, or to
vote 25% or more of any class of voting securities of, any bank holding company
or federally-insured bank.  Upon receipt of such notice, the federal regulator
either may approve or disapprove the acquisition.  The Change in Bank Control
Act generally creates a rebuttable presumption of a change in control if a
person or group acquires ownership or control of or the power to vote 10% or
more of any class of a bank holding company or bank's voting securities; the
bank holding company has a class of securities that are subject to registration
under the Securities Exchange Act of 1934; and, following such transaction, no
other person owns a greater percentage of that class of securities.

                                       9
<PAGE>

Government Monetary Policy and Economic Controls

As a bank holding company whose primary asset is the ownership of the capital
stock of a commercial bank, the Registrant is directly affected by the
government monetary policy and the economy in general.  The actions and policies
of the Federal Reserve which acts as the nation's central bank can directly
affect money supply and, in general, affect bank's lending activities by
increasing or decreasing their costs and availability of funds.  An important
function of the Federal Reserve is to regulate the national supply of bank
credit in order to combat recession and curb inflation pressures.  Among the
instruments of monetary policy used by the Federal Reserve to implement these
objectives are open market operations in U.S. Government securities, changes in
the discount rate and surcharge, if any, on member bank borrowings, and changes
in reserve requirements against bank deposits.  These methods are used in
varying combinations to influence overall growth of bank loans, investments and
deposits, and interest rates charged on loans or paid for deposits.  The Bank is
not a member of the Federal Reserve System but is subject to reserve
requirements imposed by the Federal Reserve on non-member banks.  The monetary
policies of the Federal Reserve have had a significant effect on the operating
results of commercial banks in the past and are expected to continue to do so in
the future.

Recent Legislative Developments

Effective March 11, 2000, the Gramm-Leach-Bliley Act of 1999, which was signed
into law on November 12, 1999, will allow a bank holding company to qualify as a
"financial holding company" and, as a result, be permitted to engage in a
broader range of activities that are "financial in nature" and in activities
that are determined to be incidental or complementary to activities that are
financial in nature. The Gramm-Leach-Bliley Act amends the BHC Act to include a
list of activities that are financial in nature, and the list includes
activities such as underwriting, dealing in and making a market in securities,
insurance underwriting and agency activities and merchant banking. The Federal
Reserve Board is authorized to determine other activities that are financial in
nature or incidental or complementary to such activities. The Gramm-Leach-Bliley
Act also authorizes banks to engage through financial subsidiaries in certain of
the activities permitted for financial holding companies.

On September 30, 1996, the Economic Growth and Regulatory Paperwork Reduction
Act of 1996 (the "Growth Act"), was enacted which contained a comprehensive
approach to recapitalize the FDIC's Savings Association Insurance Fund (the
"SAIF") and to assure payment of the Financing Corporation (the "FICO")
obligations. All of the Bank's deposits are insured by the FDIC's BIF. Under the
Growth Act, banks with deposits that are insured under the BIF are required to
pay a portion of the interest due on bonds that were issued by FICO to help
shore up the ailing Federal Savings and Loan Insurance Corporation in 1987. The
Growth Act stipulates that the BIF assessment rate to contribute toward the FICO
obligations must be equal to one-fifth the SAIF assessment rate through year-end
2000, or until the insurance funds are merged, whichever occurs first. The
amount of FICO debt service to be paid by all BIF-insured institutions is
approximately $0.0126 per $100 of BIF-insured deposits for each year from 1997
through 2000 when the obligation of BIF-insured institutions increases to
approximately $0.0240 per $100 of BIF-insured deposits per year through the year
2019, subject in all cases to adjustments by the FDIC on a quarterly basis. The
Growth Act also contained provisions protecting banks from liability for
environmental clean-up costs; prohibiting credit unions sponsored by Farm Credit
System banks; easing application requirements for most bank holding companies
when they acquire a thrift or a permissible non-bank operation; easing Fair
Credit Reporting Act restrictions between bank holding company affiliates; and
reducing the regulatory burden under the Real Estate Settlement Procedures Act,
the Truth-in-Savings Act, the Truth-in-Lending Act and the Home Savings Mortgage
Disclosure Act.

Registrant cannot predict what legislation might be enacted or what regulations
might be adopted, or if enacted or adopted, the effect thereof on Registrant's
operations.

Item 2. Properties

The following table sets forth the location of the Registrant's and Bank's main
office and branch offices as well as certain information relating to these
offices to date.

                                       10
<PAGE>

<TABLE>
<CAPTION>
                                                    Year     Approximate           Owned
          Office Location                          Opened   Square Footage       or Leased
          ---------------                          ------   --------------       ---------
          <S>                                      <C>      <C>                  <C>
          Main Office                               1999       11,250             Leased
          2593 West Roosevelt Boulevard
          Monroe, NC  2810

          Indian Trail Branch                       1999        3,850             Leased
          13860 East Independence Boulevard
          Indian Trail, NC  28079

          Sunset Branch                             1999          450             Leased
          120 East Sunset Drive
          Monroe,  NC  28110

          Wal-Mart Superstore Branch                2000          600             Leased
          2406 West Roosevelt Boulevard
          Monroe, NC  28110

          Marshville Branch                         2000        3,000             Leased
          7001 East Marshville Boulevard
          Marshville, NC  28103

          Matthews-Mint Hill Branch                 2000        1,300             Leased
          7200 Matthews-Mint Hill Road
          Mint Hill, NC  28227

          Mountain Island Branch                    2000        1,400             Leased
          Mount Holly-Huntersville Road
          Charlotte, NC
</TABLE>

Item 3. Legal Proceedings

Neither the Registrant nor the Bank, nor any of their properties, are subject to
any legal proceedings.

Item 4. Submission of Matters to a Vote of Security Holders

No matter was submitted to a vote of the Registrant's security holders during
the fourth quarter of 2000.

                                    PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

Incorporated by reference to Page 33 of the Registrant's Annual Report to
Shareholders attached hereto as Exhibit 13.

Item 6. Management's Discussion and Analysis or Plan of Operation.

The information contained in the section captioned "Management's Discussions and
Analysis of Financial Condition and Results of Operations" in the Annual Report
is incorporated herein by reference.

Certain of the information required to be provided pursuant to the disclosure
requirements under Guide 3 of the Guides for the preparation and Filing of
Reports and Registration Statements under the Securities Exchange Act of 1934 is
included in the Annual Report, which is incorporated herein by reference.  The
remainder of this information is provided in the following tables.

                                       11
<PAGE>

Table One
---------
                              NET INTEREST INCOME

Net interest income represents the difference between income derived from
interest-earning assets and interest expense incurred on interest-bearing
liabilities. Net interest income is affected by both (i) the difference between
the rates of interest earned on interest-earning assets and the rates paid on
interest-bearing liabilities ("interest rate spread") and (ii) the relative
amounts of interest-earning assets and interest-bearing liabilities ("net
interest-earning balance"). The following table sets forth information relating
to average balances of the Bank's assets and liabilities for the years ended
December 31, 2000 and 1999. The table reflects the average yield on interest-
earning assets and the average cost of interest-bearing liabilities (derived by
dividing income or expense by the daily average balance of interest-earning
assets or interest-bearing liabilities, respectively) as well as the net yield
on interest-earning assets (which reflects the impact of the net interest-
earning balance).

<TABLE>
<CAPTION>
                                                 Year Ended December 31, 2000                  Year Ended December 31, 1999
                                             ---------------------------------------------------------------------------------------
                                             Average                         Average       Average                       Average
                                             Balance        Interest           Rate        Balance          Interest       Rate
                                             ---------------------------------------------------------------------------------------
                                                     (Dollars in thousands)
<S>                                          <C>            <C>              <C>           <C>              <C>          <C>
Interest-earning assets:
 Loans                                       $ 83,730         $8,314           9.93%       $33,396          $  3,062        9.17%
 Investments                                      360             22           6.11%           666                29        4.35%
 Interest-earning deposits                     15,311            911           5.95%         8,228               366        4.45%
                                             --------         ------           ----         ------          --------     -------

     Total interest-earning assets             99,401          9,247           9.30%        42,290             3,457        8.17%
                                                              ------           ----                         --------     -------

Other assets                                    7,154                                        2,908
                                             --------                                       ------

     Total assets                            $106,555                                      $45,198
                                             ========                                      =======

Interest-bearing liabilities:
 Deposits:
   Savings                                   $  1,593             35           2.20%       $   614                14        2.28%
   Money Market and NOW                        15,502            569           3.67%         6,518               224        3.44%
   Time                                        60,829          3,908           6.42%        21,281             1,160        5.45%
 Borrowings                                     6,730            482           7.16%           428                26        6.07%
                                             --------         ------           ----         ------          --------     -------

     Total interest-bearing liabilities        84,654          4,994           5.90%        28,841             1,424        4.94%
                                                              ------           ----                         --------     -------

Non-interest-bearing deposits                  10,104                                        4,156
Other liabilities                                 408                                          198
Stockholders' equity                           11,389                                       12,003
                                             --------                                       ------

     Total liabilities and stockholders'
       equity                                $106,555                                      $45,198
                                             ========                                      =======

Net interest income and interest rate
 spread                                                       $4,253           3.40%                        $  2,033        3.23%
                                                              ======           ====                         ========     =======

Net yield on average interest-earning
 assets                                                                        4.28%                                        4.81%
                                                                               ====                                      =======

Ratio of average interest-earning
 assets to average interest-bearing
 liabilities                                   117.42%                                      146.63%
                                             ========                                       ======
</TABLE>

                                       12
<PAGE>

Table Two
---------

The following table allocates the allowance for loan losses by loan category at
the dates indicated. The allocation of the allowance to each category is not
necessarily indicative of future losses and does not restrict the use of the
allowance to absorb losses in any category.

<TABLE>
<CAPTION>
                                                                      At December 31,
                                         --------------------------------------------------------------------------
                                                         2000                                   1999
                                         ------------------------------------     ---------------------------------

                                                      Percent of   Percent                    Percent of   Percent
                                                      allowance    of loans                   allowance    of loans
                                         Amount of     to total    to gross        Amount of   to total    to gross
                                         allowance    allowance     loans          allowance  allowance     loans
                                         ---------    ---------   ---------        ---------  ---------    --------
                                                                    (Dollars in thousands)
<S>                                      <C>          <C>         <C>              <C>        <C>          <C>
TYPE OF LOAN:
 Loans to individuals                     $  132        9.53%         7.63%          $122        15.00%      7.98%
 Home equity lines of credit                 104        7.51%         8.86%            41         5.00%      6.52%
 Commercial and industrial loans             574       41.44%        32.60%           406        50.00%     38.33%
 Real estate - mortgage loans                575       41.52%        50.91%           244        30.00%     47.17%
                                          ------      ------        ------           ----       ------     ------

 Total allowance for loan losses          $1,385      100.00%       100.00%          $813       100.00%    100.00%
                                          ======      ======        ======           ====       ======     ======

</TABLE>


Table Three
-----------


At December 31, 2000, the scheduled maturities of time deposits in denominations
of $100,000 or more were as follows:


               3 months or less                   $11,215,006
               Over 3 months through 6 months       7,671,277
               Over 6 months through 12 months     20,480,411
               Over 12 months                       2,625,380
                                                  -----------

               Total                              $41,992,074
                                                  ===========

Item 7.  Financial Statements.

Incorporated by reference to pages 12 to 31 of the Registrant's Annual Report to
Shareholders, attached hereto as Exhibit 13.

Item 8.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

None

                                       13
<PAGE>

                                   PART III

Item 9.   Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.

Incorporated by reference to pages 4 and 5 of the Registrant's Definitive Proxy
Statement filed as Exhibit 99.

Item 10.  Executive Compensation.

Incorporated by reference to pages 7 to 10 of  the Registrant's Definitive Proxy
Statement filed as Exhibit 99.

Item 11.  Security Ownership of Certain Beneficial Owners and Management.

Incorporated by reference to page 3 of the Registrant's Definitive Proxy
Statement filed as Exhibit 99.

Item 12.  Certain Relationships and Related Investors.

Incorporated by reference to page 10 of  the Registrant's Definitive Proxy
Statement filed as Exhibit 99.


                                    PART IV

Item 13.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

     (a)  (1)  Financial Statements.

               The following financial statements of the Registrant are
               incorporated herein by reference to the Registrant's 2000 Annual
               Report to Shareholders:

               (a)   Independent Auditor's Report dated February 9, 2001.

               (b)   Consolidated Statements of Financial Condition for the
                     years ended December 31, 2000 and 1999 and for the period
                     ended December 31, 1998.

               (c)   Consolidated Statements of Operations for the years ended
                     December 31, 2000 and 1999 and for the period ended
                     December 31, 1998.

               (d)   Consolidated Statements of Changes in Stockholders' Equity
                     for the years ended December 31, 2000 and 1999 and for the
                     period ended December 31, 1998.

               (e)   Consolidated Statements of Cash Flows for the years ended
                     December 31, 2000 and 1999 and for the period ended
                     December 31, 1998.

               (f)   Notes to Consolidated Financial Statements.

          (2)  Financial Statement Schedules.

               All financial statement schedules are omitted as substantially
               all the required information is contained in the Registrant's
               financial statements listed above which are incorporated herein
               by reference or is not applicable.

                                       14
<PAGE>

          (3)  Exhibits.

               The following exhibits are filed herewith or incorporated herein
               by reference.


                 EXHIBIT
                  NUMBER       DESCRIPTION OF EXHIBIT
                 -------       ----------------------

                   3 (a)       Registrant's Articles of Incorporation *

                   3 (b)       Registrant's Bylaws *

                     4         Specimen Stock Certificate*

                   10(a)       Employment Agreement of Randy P. Helton*

                   10(b)       1999 Incentive Stock Option Plan*

                   10(c)       1999 Nonstatutory Stock Option Plan*

                   10(d)       401(k) Plan*

                   10(e)       2001 Incentive Stock Option Plan (filed herewith)

                    13         2000 Annual Report to Shareholders

                    99         Registrant's Definitive Proxy Statement **

          *    Incorporated by reference from exhibits to Registrant's
               Registration Statement on Form S-4 (File No. 333-31148)

     (b)  Reports on Form 8-K.

          During the third quarter of fiscal year 2000, the Registrant filed a
          report on Form 8-K regarding the Registrant's offering of between
          500,000 and 1,000,000 shares of its common stock to the public for a
          price of $9.50 per share.

          During the fourth quarter of fiscal year 2000, the Registrant filed a
          report on Form 8-K regarding the extension of Registrant's offering of
          between 500,000 and 1,000,000 shares of its common stock until
          February 28, 2001.

                                       15
<PAGE>

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.



August 27, 2001                     /s/ Randy P. Helton
                                    -------------------
                                    Randy P. Helton
                                    President and Chief Executive Officer


                                       16
<PAGE>

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.



/s/ Randy P. Helton                                        August 27, 2001
-------------------
Randy P. Helton, President,
Chief Executive Officer and Director


/s/ Dan R. Ellis, Jr.                                      August 27, 2001
---------------------
Dan R. Ellis, Jr., Chief Financial Officer


/s/ Thomas J. Hall                                         August 27, 2001
------------------
Thomas J. Hall, Director


/s/ Larry S. Helms                                         August 27, 2001
------------------
Larry S. Helms, Director


/s/ Kenneth W. Long                                        August 27, 2001
-------------------
Kenneth W. Long, Director


/s/ L. Steven Philips                                      August 27, 2001
---------------------
L. Steven Phillips, Director


/s/ Alison J. Smith                                        August 27, 2001
-------------------
Alison J. Smith, Director


/s/ David D. Whitley                                       August 27, 2001
--------------------
David D. Whitley, Director


/s/ Gregory N. Wylie                                       August 27, 2001
--------------------
Gregory N. Wylie, Director

                                       17
<PAGE>

                                 EXHIBIT INDEX
                                 -------------


                  EXHIBIT
                  NUMBER             DESCRIPTION
                  ------             -----------

                   10(e)             2001 Incentive Stock Option Plan

                   13                2000 Annual Report to Shareholders

                                       18