<PAGE>

                         GREATER ROME BANCSHARES, INC.

                              1996 ANNUAL REPORT
<PAGE>

              REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



To the Board of Directors and Stockholders
Greater Rome Bancshares, Inc.
Rome, Georgia


We have audited the accompanying consolidated balance sheets of Greater Rome
Bancshares, Inc. and subsidiary as of December 31, 1996 and 1995, and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for each of the three years in the period ended December 31,
1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Greater Rome
Bancshares, Inc. and subsidiary as of December 31, 1996 and 1995, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1996, in conformity with generally accepted
accounting principles.


                                                  PORTER KEADLE MOORE, LLP


                                                  /s/ Porter Keadle Moore, LLP


                                                  Successor to the practice of
                                                  Evans, Porter, Bryan & Co.

Atlanta, Georgia
February 14, 1997
<PAGE>

                         GREATER ROME BANCSHARES, INC.

                          CONSOLIDATED BALANCE SHEETS

                          DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
                                    ASSETS
                                    ------
                                                             1996         1995
                                                             ----         ----
<S>                                                   <C>            <C>
Cash and due from banks                               $   764,891       13,506
Federal funds sold                                      4,058,912    3,410,000
                                                       ----------    ---------

     Cash and cash equivalent                           4,823,803    5,423,506

Securities available for sale                           1,489,375         -
Securities held to maturity                             4,748,925    1,000,000
Loans, net                                             13,095,601         -
Premises and equipment, net                             2,099,035      375,694
Accrued interest receivable and other assets              251,902       63,151
                                                       ----------    ---------

                                                      $26,508,641    6,862,351
                                                       ----------    ---------

                      LIABILITIES AND STOCKHOLDERS EQUITY
                      -----------------------------------

Deposits:
  Demand                                              $ 3,006,709         -
  Interest - bearing demand                             1,692,466         -
  Savings                                               3,479,435         -
  Time                                                 11,665,926         -
                                                       ----------    ---------

     Total deposits                                    19,844,536         -

Accrued interest payable and other liabilities            286,148       89,580
                                                       ----------    ---------

          Total liabilities                            20,130,684       89,580
                                                       ----------    ---------

Commitments

Stockholders' equity
  Preferred stock, par value $1.00 per share;
    100,000 shares authorized; no shares
    issued or outstanding                                    -            -
  Common stock, par value $.01 per share;
    10,000,000 shares authorized; 700,000
    shares issued and outstanding                           7,000        7,000
  Additional paid-in capital                            6,930,117    6,930,117
  Accumulated deficit                                    (560,820)    (164,346)
  Unrealized gain on securities available for sale          1,660         -
                                                       ----------    ---------

          Total stockholders' equity                    6,377,957    6,772,771
                                                       ----------    ---------

                                                      $26,508,641    6,862,351
                                                       ==========    =========
</TABLE>

See accompanying notes to consolidated financial statements.

                                      -3-
<PAGE>

                         GREATER ROME BANCSHARES, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                FOR THE YEARS ENDED DECEMBER 31, 1996, AND 1994

<TABLE>
<CAPTION>
                                                                                       1996       1995       1994
                                                                                       ----       ----       ----
<S>                                                                             <C>           <C>         <C>
Interest income:
     Interest and fees on loans                                                 $   605,126       -          -
     Interest on federal funds sold and deposits with other banks                   175,449    184,160       -
     Interest and dividends on investments:
          U.S. Government agencies                                                  260,907       -          -
          U.S. Treasuries                                                            19,919       -          -
                                                                                  ---------   --------    -------

               Total interest income                                              1,061,401    184,160       -
                                                                                  ---------   --------    -------

Interest expense on deposits:
     Demand                                                                          26,066       -          -
     Savings                                                                         75,701       -          -
     Time                                                                           211,831       -          -
     Other                                                                               26     34,883      9,144
                                                                                  ---------   --------    -------

               Total interest expense                                               313,624     34,883      9,144
                                                                                  ---------   --------    -------

               Net interest income (expense)                                        747,777    149,277     (9,144)

Provision for loan losses                                                           134,000       -          -
                                                                                  ---------   --------    -------

               Net interest income (expense) after provision for loan losses        613,777    149,277     (9,144)
                                                                                  ---------   --------    -------

Other income                                                                         48,741       -          -
                                                                                  ---------   --------    -------
Other expenses:
     Salaries and employee benefits                                                 544,925    119,865     31,535
     Occupancy                                                                      167,716     16,448       -
     Other operating                                                                346,351    120,755     15,876
                                                                                  ---------   --------    -------

               Total other expenses                                               1,058,992    257,068     47,411
                                                                                  ---------   --------    -------
               Net loss                                                         $  (396,474)  (107,791)   (56,555)
                                                                                  =========   ========    =======
Net loss per share                                                              $      (.57)      (.15)      (.08)
                                                                                  =========   ========    =======

Weighted average number of shares outstanding                                       700,000    700,000    700,000
                                                                                  =========   ========    =======
</TABLE>

See accompanying notes to consolidated financial statements.

                                      -4-
<PAGE>

                         GREATER ROME BANCSHARES, INC.

          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

             FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                                                                   Unrealized
                                                                                    Gain on
                                                                                   Investment
                                                    Additional                     Securities
                                       Common         Paid-In      Accumulated     Available
                                       Stock          Capital        Deficit        for Sale      Total
                                      --------     ------------   -------------   ------------  ---------
<S>                                   <C>          <C>            <C>             <C>           <C>
Proceeds from the sale of
  organization shares                 $      1               49         -               -              50

Net loss                                  -                -         (56,555)           -         (56,555)
                                       -------       ----------     ---------         ------    ----------

Balance, December 31, 1994                   1               49      (56,555)           -         (56,505)

Redemption of organization
  shares                                    (1)             (49)        -               -             (50)

Issuance of 700,000 shares at $10
  $10 per share, net of offering
  costs of $62,883                       7,000        6,930,117         -               -       6,937,117

Net loss                                  -                -        (107,791)           -        (107,791)
                                       -------       ----------     ---------         ------    ----------

Balance, December 31, 1995               7,000        6,930,117     (164,346)           -       6,772,771

Change in unrealized gain
  on investment securities
  available for sale                      -                -            -              1,660        1,660

Net loss                                  -                -        (396,474)           -        (396,474)
                                       -------       ----------     ---------         ------    ----------

Balance December 31, 1996             $  7,000        6,930,117     (560,820)          1,660    6,377,957
                                       =======       ==========     =========         ======    ==========
</TABLE>

See accompanying notes to consolidated financial statements.

                                      -5-

<PAGE>

                         GREATER ROME BANCSHARES, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

              FOR THE YEAR ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                                                             1996            1995          1994
                                                                             ----            ----          ----
<S>                                                                   <C>                 <C>            <C>
Cash flows from operating activities:
  Net loss                                                         $       (396,474)      (107,791)      (56,555)
  Adjustment to reconcile net loss to net cash
   used by operating activities:
     Depreciation, amortization and accretion                                59,725          4,961             -
     Provision for loan losses                                              134,000              -             -
     Change in:
       Interest receivable                                                 (192,803)             -             -
       Other assets                                                          (8,034)        (9,579)            -
       Interest payable                                                      38,574         (4,498)            -
       Other liabilities                                                    157,994         65,579        28,498
                                                                      --------------    -----------     ---------
          Net cash used by operating activities                             207,018        (51,328)      (28,057)
                                                                      --------------    -----------     ---------

Cash flows from investing activities:
  Proceeds from maturities and calls of securities
    available for sale                                                      500,000              -             -
  Purchases of securities available for sale                             (1,986,289)             -             -
  Purchase of securities held to maturity                                (3,748,672)    (1,000,000)            -
  Net increase in loans                                                 (13,229,601)             -             -
  Purchases of premises and equipment                                    (1,772,659)      (169,790)      (58,264)
  Organization cost                                                               -         (2,451)      (52,982)
  Deferred offering expense                                                       -         49,156       (49,156)
                                                                      --------------    -----------     ---------

          Net cash used by investing activities                         (20,237,221)    (1,123,085)     (160,402)
                                                                      --------------    -----------     ---------
Cash flows from financing activities:
  Net change in demand and savings deposits                               8,178,610              -             -
  Net change in time deposits                                            11,665,926              -             -
  Payment of note payable organizer                                               -       (150,739)            -
  Net change in lines of credit                                                   -       (195,820)      195,820
  Proceeds from the sale of common stock,
    net of offering cost                                                          -      6,937,117             -
  Proceeds from the sale (redemption) of
    organization shares                                                           -            (50)           50
                                                                      --------------    -----------     ---------
          Net cash provided by financing activities                      19,844,536      6,590,508       195,870
                                                                      --------------    -----------     ---------

Net change in cash and cash equivalents                                    (599,703)     5,416,095         7,411

Cash and cash equivalents at the beginning of year                        5,423,506          7,411             -
                                                                      --------------    -----------     ---------
Cash and cash equivalents at the end of the year                   $      4,823,803      5,423,506         7,411
                                                                      ==============    -----------     ---------

Supplementary disclosures of cash flow information:

  Cash paid during the year for:
   Interest                                                        $        275,050         39,529         4,498

Non cash investing and financing activities:
   Purchase of land, and related
     note payable to organizer                                     $              -              -       150,739

  Change in unrealized gain on securities available for sale       $          1,600              -             -
</TABLE>

See accompanying notes to consolidated financial statements.

                                      -6-
<PAGE>

                         GREATER ROME BANCSHARES, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     Organization
     ------------
     Greater Rome Bancshares, Inc. (the "Company") is a bank holding company
     whose business is conducted by its wholly-owned bank subsidiary, Greater
     Rome Bank (the "Bank"). The Company is subject to regulation under the Bank
     Holding Company Act of 1956.

     The Bank is a commercial bank that serves Rome, Georgia, a community
     located approximately 50 miles north of metropolitan Atlanta, and
     surrounding Floyd County. The Bank is chartered and regulated by the State
     of Georgia Department of Banking and Finance and is insured and subject to
     regulation by the Federal Deposit Insurance Corporation.

     Operations of the Company for the period from inception (June 17, 1994) to
     February 26, 1996 related primarily to expenditures by the organizers for
     incorporating and organizing the Bank including raising capital and
     securing banking facilities. The Company was reported on as a developmental
     stage entity as of December 31, 1995.

     Basis of Presentation and Reclassification
     ------------------------------------------
     The 1996 consolidated financial statements include the accounts of the
     Company and the Bank. All intercompany accounts and transactions have been
     eliminated in consolidation. The 1995 and 1994 financial statements include
     the accounts of the Company only, as the Bank did not open for business
     until February 26, 1996. Certain 1995 and 1994 amounts have been
     reclassified to conform to the 1996 presentation.

     The accounting principles followed by Greater Rome Bancshares, Inc. and its
     subsidiary, and the methods of applying these principles, conform with
     generally accepted accounting principles ("GAAP") and with general
     practices within the banking industry. In preparing financial statements in
     conformity with GAAP, management is required to make estimates and
     assumptions that affect the reported amounts in the financial statements.
     Actual results could differ significantly from those estimates. Material
     estimates common to the banking industry that are particularly susceptible
     to significant change in the near term include, but are not limited to, the
     determination of the allowance for loan losses and the valuation of real
     estate acquired in connection with or in lieu of foreclosure on loans.

     Cash and Cash Equivalents
     -------------------------
     For presentation purposes in the consolidated statements of cash flows,
     cash and cash equivalents include cash on hand, amounts due from banks,
     interest-bearing deposits with banks and federal funds sold.

     Investment Securities
     ---------------------
     The Company classifies its securities in one of three categories: trading,
     available for sale, or held to maturity. Trading securities are bought and
     held principally for sale in the near term. Held to maturity securities are
     those securities for which the Company has the ability and intent to hold
     the security until maturity. All other securities not included in trading
     or held to maturity are classified as available for sale. The Company's
     current investment policy prohibits trading activity.

     Held to maturity securities are recorded at cost, adjusted for the
     amortization or accretion of premiums or discounts. Transfers of securities
     between categories are recorded at fair value at the date of transfer.
     Unrealized holding gains or losses associated with transfers of securities
     from held to maturity to available for sale are recorded as a separate
     component of stockholders' equity.

     Available for sale securities consist of investment securities not
     classified as trading securities or held to maturity securities and are
     recorded at fair value. Unrealized holding gains and losses, net of the
     related tax effect, on securities available for sale are excluded from
     earnings and are reported as a separate component of stockholders' equity
     until realized.

     A decline in the market value of any available for sale or held to maturity
     investment below cost that is deemed other than temporary is charged to
     earnings and establishes a new cost basis for the security.

     Premiums and discounts are amortized or accreted over the life of the
     related security as an adjustment to the yield. Realized gains and losses
     for securities classified as available for sale and held to maturity are
     included in earnings and are derived using the specific identification
     method for determining the cost of securities sold.

                                        -7-
<PAGE>

                         GREATER ROME BANCSHARES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
     Loans, Loan Fees and Interest Income
     ------------------------------------
     Loans that management has the intent and ability to hold for the
     foreseeable future or until maturity are reported at the principal amount
     outstanding, net of the allowance for loan losses and any deferred fees or
     costs on originated loans. Interest on all loans is calculated principally
     by using the simple interest method on the daily balance of the principal
     amount outstanding.

     The Bank accounts for impaired loans in accordance with Statement of
     Financial Accounting Standards ("SFAS") No. 114, "Accounting by Creditors
     for Impairment of a Loan" as amended by SFAS No. 118, "Accounting by
     Creditors for Impairment of a Loan - Income Recognition and Disclosure." A
     loan is impaired when, based on current information and events, it is
     probable that all amounts due according to the contractual terms of the
     loan agreement will not be collected. Impaired loans are measured based on
     the present value of expected future cash flows discounted at the loan's
     effective interest rate, or at the loan's observable market price, or at
     the fair value of the collateral of the loan if the loan is collateral
     dependent. Interest income from impaired loans is recognized using a cash
     basis method of accounting during the time within that period in which the
     loans were impaired.

     Allowance for Loan Losses
     -------------------------
     The Bank's provision for loan losses is based upon management's continuing
     review and evaluation of the loan portfolio and is intended to create an
     allowance adequate to absorb losses on loans outstanding as of the end of
     each reporting period. For individually significant loans, management's
     review consists of evaluations of the financial strength of the borrowers
     and the related collateral. The review of groups of loans, which are
     individually insignificant, is based upon delinquency status of the group,
     lending policies, and collection experience.

     Management believes that the allowance for loan losses is adequate. While
     management uses available information to recognize losses on loans, future
     additions to the allowance may be necessary based on changes in economic
     conditions. In addition, various regulatory agencies, as an integral part
     of their examination process, periodically review the allowance for loan
     losses. Such agencies may require the Bank to recognize additions to the
     allowance based on their judgments of information available to them at the
     time of their examination.


     Premises and Equipment
     ----------------------
     Premises and equipment are stated at cost less accumulated depreciation.
     Major additions and improvements are charged to the asset accounts while
     maintenance and repairs that do not improve or extend the useful lives of
     the assets are expensed currently. When assets are retired or otherwise
     disposed of, the cost and related accumulated depreciation are removed from
     the accounts, and any gain or loss is reflected in earnings for the period.

     Depreciation expense is computed using the straight-line method over the
     following estimated useful lives:

          Buildings                               40 years
          Land improvements                       20 years
          Furniture, fixtures and equipment      3-7 years

     Income Taxes
     ------------
     Deferred tax assets and liabilities are recorded for the future tax
     consequences attributable to difference between the financial statement
     carrying amounts of existing assets and liabilities and their respective
     tax bases. Future tax benefits, such as net operating loss carryforwards,
     are recognized to the extent that realization of such benefits is more
     likely than not. Deferred tax assets and liabilities are measured using
     enacted tax rates expected to apply to taxable income in the years in which
     the assets and liabilities are expected to be recovered or settled. The
     effect on deferred tax assets and liabilities of a change in tax rates is
     recognized in income tax expense in the period that includes the enactment
     date.

     In the event the future tax consequences of differences between the
     financial reporting bases and the tax bases of the Company's assets and
     liabilities results in deferred tax assets, an evaluation of the
     probability of being able to realize the future benefits indicated by such
     asset is required. A valuation allowance is provided for the portion of the
     deferred tax asset when it is more likely than not that some portion or all
     of the deferred tax asset will not be realized. In assessing the
     realizability of the deferred tax assets, management considers the
     scheduled reversals of deferred tax liabilities, projected future taxable
     income, and tax planning strategies.

                                      -8-
<PAGE>

                         GREATER ROME BANCSHARES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
     Net Loss Per Share
     ------------------
     Net loss per share is based on the weighted average number of shares
     actually outstanding during each year. Stock options are considered to be
     common stock equivalents. These options are not included in the computation
     of net loss per share as the effect of inclusion is anti-dilutive.

(2)  INVESTMENT SECURITIES
     Investment securities held to maturity are summarized as follows:

<TABLE>
<CAPTION>
                                                                 Gross          Gross          Estimated
                                                  Amortized    Unrealized     Unrealized         Fair
     AT DECEMBER 31, 1996:                          Cost         Gains          Losses          Value
                                                  ---------    ----------     ----------       ---------
<S>                                               <C>          <C>            <C>              <C>
          U.S. Government agencies               $ 4,748.925        6.011         32.781       4,722.155
                                                   ---------        -----         ------       ---------
</TABLE>

<TABLE>
<CAPTION>
                                                                 Gross          Gross          Estimated
                                                  Amortized    Unrealized     Unrealized         Fair
     AT DECEMBER 31, 1995:                          Cost         Gains          Losses          Value
                                                  ---------    ----------     ----------       ---------
          <S>                                     <C>          <C>            <C>              <C>
          U.S. Government agencies               $ 1,000.000         -              -          1,000.000
                                                   ---------        -----         ------       ---------
</TABLE>

     Investment securities available for sale are summarized as follows:

<TABLE>
<CAPTION>
                                                                 Gross          Gross          Estimated
                                                  Amortized    Unrealized     Unrealized         Fair
     AT DECEMBER 31, 1996:                          Cost         Gains          Losses          Value
                                                  ---------    ----------     ----------       ---------
          <S>                                     <C>          <C>            <C>              <C>
          U.S. Treasuries                        $ 1,238,125        4,296         3,280        1,239,141
          U.S. Government agencies                   249,590          644           -            250,234
                                                   ---------        -----         ------       ---------

                                                 $ 1,487,715        4,940         3,280        1,489,375
                                                   ---------        -----         ------       ---------
 </TABLE>

     The amortized cost and estimated fair value of investment securities at
     December 31, 1996, by contractual maturity, are shown below. Expected
     maturities of certain securities will differ from contractual maturities
     because borrowers may have the right to call or prepay certain obligations
     with or without call or prepayment penalties.

<TABLE>
<CAPTION>
                                                   Securities Available            Securities Held
                                                       for Sale                     to Maturity
                                                ------------------------        ---------------------

                                                Amortized      Estimated        Amortized   Estimated
                                                  Cost        Fair Value          Cost     Fair Value
                                                 ------       ----------         ------    ----------
     <S>                                     <C>              <C>             <C>          <C>
     U.S. Treasuries
        1 to 5 years                         $ 1,238.125       1,239.141             -            -
                                               ---------       ---------      ---------     ---------

     U.S. Government agencies
        1 to 5 years                         $   249,590         250,234      4,748,925     4,722,155
                                               ---------       ---------      ---------     ---------

     Total securities:
        1 to 5 years                         $ 1,487.715       1,489.375      4,748.925     4,722.155
                                               ---------       ---------      ---------     ---------
</TABLE>

     There were no sales of investment securities during 1996 and 1995.

                                      -9-
<PAGE>

                         GREATER ROME BANCSHARES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(3) LOANS
    Major classifications of loans at December 31, 1996 are presented below.

<TABLE>
<CAPTION>
     <S>                                        <C>
     Commercial                                 $   4,156,632
     Real estate - mortgage                         5,112,913
     Real estate - construction                       355,635
     Installment and other consumer                 3,656,887
                                                  -----------

            Total loans                            13,281,067

            Less: Allowance for loan losses           133,342
                  Unearned fees                        52,124
                                                  -----------

            Total net loans                     $  13,095,601
                                                  ===========
</TABLE>

     The Bank grants loans and extensions of credit to individuals and a variety
     of firms and corporations located primarily in Floyd County, Georgia.
     Although the Bank has a diversified loan portfolio, a substantial portion
     of the loan portfolio is collateralized by improved and unimproved real
     estate and is dependent upon the real estate market.

     An analysis of the activity in the allowance for loan losses for the year
     ended December 31, 1996 is presented below:

<TABLE>
<CAPTION>
      <S>                                       <C>
      Balance at beginning of year              $       -
      Provision charged to operations               134,000
      Loans charged off                                (658)
                                                    -------

      Balance at end of year                    $   133,342
                                                    =======
</TABLE>

(4)  PREMISES AND EQUIPMENT
     Premises and equipment at December 31, 1996 and 1995 are summarized as
     follows:

<TABLE>
<CAPTION>

                                                    1996              1995
                                                    ----              ----
      <S>                                  <C>                     <C>
      Land                                 $       313,438           313,438
      Land improvements                            115,287             3,471
      Buildings and improvements                 1,254,155               -
      Furniture, fixtures and equipment            448,153            10,221
      Construction in progress                        -               51,663
                                               -----------         ---------

                                                 2,131,033           378,793

      Less: Accumulated depreciation                31,998             3,099
                                               -----------         ---------

                                           $     2,099,035           375,694
                                               ===========         =========
</TABLE>

     Depreciation expense was $49,318 and $3,099 for the years ended December
     31, 1996 and 1995, respectively. No depreciation expense was charged to
     operations in 1994.

                                     -10-

<PAGE>

                         GREATER ROME BANCSHARES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


(5)  TIME DEPOSITS
     Time deposits exceeding $100,000 totaled $3,138,334 at December 31, 1996.
     Additionally, the scheduled maturities of time deposits as of December 31,
     1996 are as follows:

<TABLE>
          <S>                                          <C>
          1997                                         $   11,403,878
          1998                                                221,915
          1999                                                 24,654
          2000                                                 15,479
                                                           ----------
                                                       $   11,665,926
                                                           ----------
</TABLE>

(6)  INCOME TAXES
     At December 31, 1996, the Company had a Federal net operating loss
     carryforward and state net operating loss carryforward for tax purposes of
     approximately $297,000 and $493,000, respectively which will begin to
     expire in 2009 if not previously utilized. No income tax expense or benefit
     was recorded for the period ended December 31, 1996, 1995 or 1994 due to
     this loss carryforward.

     The following summarizes the sources and expected tax consequences of
     future deductions which comprise the net deferred taxes.

<TABLE>
<CAPTION>
                                                                                      1996       1995
                                                                                      ----       ----
          <S>                                                                      <C>         <C>
          Deferred tax assets:
           Deferred pre-opening expenses                                           $  71,574   43,212
           Allowance for loan losses                                                  40,795     -
           Premises and equipment                                                       -         982
           Operating loss carryforwards                                              112,669   16,593
           Other                                                                       8,483     -
                                                                                     -------   ------

             Total gross deferred tax assets                                         233,521   60,787

             Less valuation allowance                                               (217,295) (60,787)
                                                                                     -------   ------

             Net deferred tax assets                                                  16,226     -

          Deferred tax liability consisting of premises and equipment                (16,226)    -
                                                                                     -------   ------

             Net deferred taxes                                                    $    -        -
                                                                                     -------   ------
</TABLE>

     The future tax consequences of the differences between the financial
     reporting and tax bases of the Company's assets and liabilities resulted in
     a net deferred tax asset. A valuation allowance was established for the net
     deferred tax asset, as the realization of these deferred tax assets is
     dependent on future taxable income.

(7)  STOCKHOLDERS' EQUITY
     Dividends paid by the Bank are the primary source of funds available to the
     Company. Banking regulations limit the amount of dividends that may be paid
     without prior approval of the regulatory authorities. These restrictions
     are based on the level of regulatory capital and retained net earnings in
     prior years. At December 31, 1996, the Bank could not pay the Company a
     dividend without obtaining prior regulatory approval.

     Shares of preferred stock may be issued from time to time in one or more
     series as may be established by resolution of the board of directors of the
     Company. Each resolution shall include the number of shares issued,
     preferences, dividend provisions, special rights and limitations as
     determined by the board.

                                     -11-



<PAGE>

                         GREATER ROME BANCSHARES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(8)  STOCK INCENTIVE PLAN
     The Company has a Stock Incentive Plan whereby 105,000 shares of common
     stock have been reserved for issuance pursuant to the plan, which may
     include options, stock appreciation rights, stock awards, dividend
     equivalent rights, performance unit awards, or phantom shares. During 1996,
     incentive stock options were granted to employee at exercise prices not
     less than fair market value at the date of grant. The options vest evenly
     over four and five year periods and are exercisable no later than ten years
     from the date of grant.

     A summary status of the Company's incentive stock plan as December 31,
     1996, and changes during the year, is presented below:

<TABLE>
<CAPTION>
                                                                   Weighted
                                                                   Average
                                                                   Exercise
                                                           Shares   Price
                                                           ------   -----
<S>                                                        <C>     <C>
     Outstanding, beginning of Year                          -         -
     Granted during the year                               63,000  $ 10.00
                                                           ------    -----

     Outstanding, end of year                              63,000  $ 10.00
                                                           ======    =====

     Options exercisable at year end                       10,400  $ 10.00
                                                           ======    =====

     Weighted average fair value of options
       granted during the year                                     $  4.12
                                                                     =====
</TABLE>

     SFAS No. 123, "Accounting for Stock-Based Compensation," became effective
     January 1, 1996. This statement encourages, but does not require, entities
     to compute the fair value of options at the date of grant and to recognize
     such costs as compensation expense immediately if there is no vesting
     period or ratably over the vesting period of the options. The Company has
     chosen not to adopt the cost recognition principles of this statement. No
     compensation expense has been recognized in 1996 related to the stock
     option plan. Had compensation cost been determined based upon the fair
     value of the options at the grant dates consistent with the method of the
     new statement, the Company's net earnings per share would have been reduced
     to the proforma amounts indicated below:

<TABLE>
<S>                                <C>                           <C>
     Net loss                      As reported                   $  396,474
                                   Proforma                      $  439,322

     Loss per share                As reported                   $      .57
                                   Proforma                      $      .63
</TABLE>

     The fair value of each option is estimated on the date of grant using the
     Minimum Value pricing model with the following weighted average assumptions
     used for grants in 1996: no dividend yield, a risk free interest rate of 6%
     and an expected life of 10 years.

     On January 9, 1997 the Board of Directors of the Company granted options to
     purchase shares of common stock in the Company to the non-employee
     directors of the Company and the Bank subject to the approval by
     shareholders at the 1997 annual meeting. Each of the ten non-employee
     directors was awarded an option to purchase 3,500 shares at an exercise
     price not less than fair market value at the date of grant. The options
     vest evenly over a four year period and are exerciseable no later than
     years from the date of Grant.

(9)  DEFINED CONTRIBUTION PLAN
     The Company adopted a 401(K) profit sharing plan, effective January 1,
     1997, covering substantially all employees subject to certain minimum age
     and service requirements. Employer contributions to the plan are determined
     annually by the Board of Directors.

                                     -12-
<PAGE>

                         GREATER ROME BANCSHARES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(10) RELATED PARTY TRANSACTIONS

     At December 31, 1996, deposits from directors, executive officers and their
     related interests aggregated approximately $3,622,000. These deposits were
     taken in the normal course of business at market interest rates.

     The Bank conducts transactions with directors and executive officers,
     including companies in which they have beneficial interest, in the normal
     course of business. It is the policy of the Bank that loan and deposit
     transactions with directors and executive officers be made on substantially
     the same terms as those prevailing at the time for comparable loans and
     deposits to other persons.

     The following table summarizes related party loan activity during 1996:

<TABLE>
          <S>                                          <C>
          Beginning balance                            $    -
          New Loans                                      678.233
          Repayments                                    (370,192)
                                                         -------

          Ending balance                               $ 308,041
                                                         =======
</TABLE>

(11) REGULATORY MATTERS

     The Bank is subject to various regulatory capital requirements administered
     by the federal banking agencies. Failure to meet minimum requirements can
     initiate certain mandatory and possibly additional discretionary actions by
     regulators that, if undertaken, could have a direct material effect on the
     Bank's financial statements. Under certain adequacy guidelines and the
     regulatory framework for prompt corrective action, the Bank must meet
     specific capital guidelines that involve quantitative measures of the
     Bank's assets, liabilities, and certain off-balance-sheet items as
     calculated under regulatory accounting practices. The Bank's capital
     amounts and classification are also subject to qualitative judgments by the
     regulators about components, risk weightings, and other factors.

     Quantitative measures established by regulation to ensure capital adequacy
     require the Bank to maintain minimum amounts and ratios of total and Tier 1
     capital to risk-weighted assets and of Tier 1 capital to average assets.
     Management believes, as of December 31, 1996, that the Bank meets all
     capital adequacy requirements to which it is subject.

     As of December 31, 1996, the most recent notification from the Federal
     Deposit Insurance Corporation categorized the Bank as well capitalized
     under the regulatory framework for prompt corrective action. To be
     categorized as well capitalized, the Bank must maintain minimum total risk-
     based, Tier 1 risk-based, Tier 1 leverage ratios as set forth below. There
     are no conditions or events since that notification that management
     believes have changed the institution's category.

     The Bank's actual capital amounts and ratios are also presented below.
     Consolidated amounts do not materially differ from Bank - only capital
     amounts and ratios:

<TABLE>
<CAPTION>
                                                                                                        To Be Well
                                                                                                     Capitalized Under
                                                                            For Capital              Prompt Corrective
                                                       Actual           Adequacy  Purposes           Action Provisions
                                                -------------------     -------------------          -----------------
                                                Amount        Ratio      Amount       Ratio          Amount      Ratio
                                                ------        -----      ------       -----          ------      -----
        <S>                                  <C>              <C>      <C>            <C>       <C>             <C>
        AS OF DECEMBER 31, 1996:
         Total Capital
           (to Risk Weighted Assets)         $ 6,176,572      39.32%   $ 1,256,800     8.00%    $ 1,571,000     10.00%
          Tier 1 Capital
           (to Risk Weighted Assets)         $ 6,043,230      38.47%   $   628,400     4.00%    $   942,600      6.00%
          Tier 1 Capital
           (to Average Assets)               $ 6,043,230      41.46%   $   583,022     4.00%    $   782,777      5.00%
</TABLE>

     As a condition to the Bank's charter approval, the Georgia Department of
Banking and Finance has also required that the Bank maintain a ratio of equity
capital to adjusted assets of not less than 8% during the first three years of
the Bank's operation and that the Bank not declare dividends to the Company
until the Bank is cumulatively profitable.

                                     -13-

<PAGE>

                         GREATER ROME BANCSHARES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(12) COMMITMENTS

     The Bank is a party to financial instruments with off-balance-sheet risk in
     the normal course of business to meet the financing needs of its customers.
     These financial instruments include commitments to extend credit and
     standby letters of credit. Those instruments involve, to varying degrees,
     elements of credit and interest rate risk in excess of the amount
     recognized on the consolidated balance sheets. The contractual amounts of
     those instruments reflect the extent of involvement the Bank has in
     particular classes of financial instruments.

     The Bank's exposure to credit loss in the event of non-performance by the
     other party to the financial instrument for commitments to extend credit
     and standby letters of credit is represented by the contractual amount of
     those instruments. The Bank uses the same credit policies in making
     commitments and conditional obligations as it does for on-balance-sheet
     instruments.

     In most cases, the Bank requires collateral or other security to support
     financial instruments with credit risk.

     The following summarizes commitments as of December 31, 1996. There were no
     commitments at December 31, 1995.

<TABLE>
<CAPTION>
                                                            Approximate
                                                              Contract
                                                              Amount
                                                           ------------
          <S>                                            <C>
          Financial instruments whose contract
            amounts represent credit risk:
              Commitments to extend credit               $   1,111,000
              Standby letters of credit                  $      25,000
</TABLE>

     Commitments to extend credit are agreements to lend to a customer as long
     as there is no violation of any condition established in the contract.
     Commitments generally have fixed expiration dates or other termination
     clauses and may require payment of a fee. Since many of the commitments may
     expire without being drawn upon, the total commitment amounts do not
     necessarily represent future cash requirements. The Bank evaluates each
     customer's creditworthiness on a case by case basis. The amount of
     collateral obtained, if deemed necessary by the Bank, upon extension of
     credit is based on management's credit evaluation. Collateral held varies
     but may include unimproved and improved real estate, certificates of
     deposit or personal property.

     Standby letters of credit are conditional commitments issued by the Bank to
     guarantee the performance of a customer to a third party. The credit risk
     involved in issuing letters of credit is essentially the same as that
     involved in extending loan facilities to customers.

(13) SUPPLEMENTAL FINANCIAL DATA

     Components of other operating expenses in excess of 1% of total interest
     and other income for the years ended December 31, 1996, 1995 and 1994 are
     as follows:

<TABLE>
<CAPTION>
                                                      1996         1995          1994
                                                      ----         ----          ----
     <S>                                          <C>            <C>            <C>
     Professional Fees                            $ 55,098       68,207         6,202
     Advertising and marketing                    $ 64,861        9,346           848
     Processing Fees                              $ 71,417        1,021            -
     Supplies                                     $ 43,819       10,748           640
     Telecommunications                           $ 11,972        5,086           796
     Automobile expenses                          $ 17,280        1,799         3,805
</TABLE>

                                     -14-






<PAGE>

                         GREATER ROME BANCSHARES,INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


(14) GREATER ROME BANCSHARES, INC. (PARENT COMPANY ONLY) FINANCIAL INFORMATION

                                Balance Sheets

                          December 31, 1996 and 1995

<TABLE>
<CAPTION>
                                                              Assets
                                                              ------

                                                                                    1996               1995
                                                                                    ----               ----
     <S>                                                                   <C>                    <C>
     Cash and cash equivalents                                             $     286,582            333,506
     Investment in Bank                                                        6,063,451          6,464,382
     Other assets                                                                 27,924             35,372
                                                                               ---------          ---------

                                                                           $   6,377,957          6,833,260
                                                                               =========          =========

                                               Liabilities and Stockholders' Equity
                                               ------------------------------------

     Other liabilities                                                     $        -                60,489
     Stockholders' equity                                                      6,377,957          6,772,771
                                                                               ---------          ---------

                                                                           $   6,377,957          6,833,260
                                                                               =========          =========
</TABLE>

                           Statements of Operations

               For the Years Ended December 31, 1996, 1995, 1994

<TABLE>
<CAPTION>
                                                                        1996             1995         1994
                                                                        ----             ----         ----
     <S>                                                          <C>                 <C>           <C>
     Interest income                                              $   15,742          147,703          -
     Interest expense                                                   -             (34,883)      (9,144)
                                                                     -------          -------      -------

          Net interest income (expense)                               15,742          112,820       (9,144)
                                                                     -------          -------      -------

     Other expenses:
        Salaries and employee benefits                                  -              69,863       31,535
        Occupancy                                                        305           12,696         -
        Other operating                                                9,319          102,435       15,876
                                                                     -------          -------      -------

          Total expenses                                               9,624          184,994       47,411
                                                                     -------          -------      -------

          Earnings (losses) before equity in
           undistributed losses of Bank                                6,118          (72,174)     (56,555)

     Equity in undistributed losses of Bank                         (402,592)         (35,617)        -
                                                                     -------          -------      -------

          Net loss                                                $ (396,474)        (107,791)     (56,555)
                                                                     ========         =======       ======
</TABLE>

                                     -15-
<PAGE>

                         GREATER ROME BANCSHARES,INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(14) GREATER ROME BANCSHARES, INC. (PARENT COMPANY ONLY) FINANCIAL INFORMATION,
     CONTINUED

                           Statements of Cash Flows

             For the Years Ended December 31, 1996, 1995 and 1994

<TABLE>
<CAPTION>
                                                                                1996                  1995            1994
                                                                                ----                  ----            ----
     <S>                                                                   <C>                  <C>              <C>
      Cash flows from operating activities:
       Net loss                                                            $    (396,474)           (107,791)      (56,555)
       Adjustments to reconcile net loss to net
         cash used in operating activities:
          Equity in undistributed losses of Bank                                 402,591              35,618             -
          Depreciation and amortization                                            7,448               3,805             -
          Other                                                                  (60,489)             31,991        28,498
                                                                               ----------       -------------    ----------

               Net cash used in operating activities                             (46,924)            (36,377)      (28,057)
                                                                               ----------       -------------    ----------
     Cash flows from investing activities:
       Infusion of capital into Bank                                                   -          (6,500,000)            -
       Purchases of premises and equipment                                             -                   -       (58,264)
       Transfer of premises and equipment to Bank                                      -             207,058             -
       Organization costs                                                              -                   -       (52,982)
       Transfer of organization cost to Bank                                           -              15,750             -
       Deferred offering expenses                                                      -              49,156       (49,156)
                                                                               ----------       -------------    ----------

               Net cash used in investing activities                                   -          (6,228,036)     (160,402)
                                                                               ----------       -------------    ----------

     Cash flows from financing activities:
       Payment of note payable - organizer                                             -            (150,739)            -
       Net change in lines of credit                                                   -            (195,820)      195,820
       Proceeds from the sale of common stock,
         net of offerings costs                                                        -           6,937,117             -
       Proceeds from the sale (redemption) of
         organization shares                                                           -                 (50)           50
                                                                               ----------       -------------    ----------

               Net cash provided by financing activities                               -           6,590,508       195,870
                                                                               ----------       -------------    ----------

     Net change in cash and cash equivalents                                     (46,924)            326,095         7,411
     Cash and cash equivalents at beginning of period                            333,506               7,411             -
                                                                               ----------       -------------    ----------

     Cash and cash equivalents at end of period                            $     286,582             333,506         7,411
                                                                               ==========       =============    ==========
</TABLE>

                                     -16-
<PAGE>

           MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's Articles of Incorporation authorize it to issue up to 10,000,000
shares of Common Stock, par value $.01 per share ("Common Stock"), of which
700,000 shares have been issued. The Company has not declared or paid any
dividends. All shares of the Company's Common Stock are entitled to share
equally in dividends from funds legally available therefor, when, as and if
declared by the Company's board of directors. The Company does not plan to
declare any dividends in the immediate future. The source of funds for the
payment of dividends by the Company is the payment of dividends by the Bank to
the Company. A condition to the approval by the Georgia Department of Banking
and Finance (the "DBF") of the Bank's charter application and the Company's
application for approval to become a bank holding company is that the Bank will
not pay any dividends without the DBF's prior approval until the Bank has made a
cumulative profit.

There is currently no market for the Common Stock and there are no present plans
for the Company's Common Stock to be traded on any stock exchange or in the over
the counter market. As a result, investors who need or wish to dispose of all or
part of their Common Stock may be unable to do so except in private, directly
negotiated sales. The Company has approximately 686 shareholders. The Company
has not had any unregistered sales of equity securities since its organization
(June 17, 1994).

           MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

GENERAL

The Company was organized on June 17, 1994 (the "Inception Date"). From the
Inception Date to September 30, 1995, the Company's principal activities related
to its organization, the conducting of its initial public offering, the pursuit
of approvals from the DBF and FDIC of its application to charter the Bank, and
the pursuit of approvals from the Federal Reserve Board for the Company to
acquire control of the Bank.

On September 30, 1995, the Company completed its offering of shares of the
Company's Common Stock by receiving subscriber deposits for 700,000 shares, the
maximum number authorized to be sold, at $10.00 per share. Deferred offering
expenses which reduced Paid-in capital totaled $62,883. The Company was
capitalized with $7,000 of Common stock, par value $.01 per share and $6,930,117
of Paid-in capital on November 17, 1995. On that date, the Company invested
$6,500,000 in exchange for 650,000 shares of Common stock of the Bank, and the
Bank was capitalized with $3,250,000 in Common stock, par value $5.00 per share,
$2,750,000 Paid-in capital and a Reserve for initial operating losses of
$500,000, as required by the DBF.

On February 26, 1996, the Bank commenced operations after receiving all
regulatory approvals and insurance on its deposits from the FDIC.

USE OF PROCEEDS

The following table sets forth the use of the net proceeds of the Offering as
was described in the Supplement to the Company's Registration Statement dated
April 6, 1995, and compares it to the actual use as of December 31, 1996.
<PAGE>

Management's Discussion and Analysis, continued

USE OF PROCEEDS BY THE COMPANY

<TABLE>
<CAPTION>
                                                  Amount Under           Maximum              Actual
                                                  DBF Condition          Offering          Proceeds Use
                                                  -------------        ------------        -------------
<S>                                               <C>                  <C>                 <C>
Net Proceeds from Offering                        $6,500,000           $6,880,000          $6,937,117  (a)
Investment in Stock of the Bank                   (6,500,000)          (6,500,000)         (6,500,000)
Remaining Proceeds                                       --               380,000             437,117
Reimbursement of the Company for Amounts
     Advanced by the Company to the Bank
     to Pay Organizational and Pre-opening
     expenses of the Bank                                --               205,000             378,186  (b)
Repayment of Advances under Line of
     Credit and Loans to Company                         --               (50,000)           (687,527) (c)
                                                                          -------             -------
Remaining working capital retained by the
     Company                                             --               535,000             127,776  (d)
                                                                          =======             =======
</TABLE>

____________________
(a)  The Company sold the maximum allowable number of shares, 700,000 shares,
which produced gross proceeds of $7,000,000. This was a non-underwritten public
offering and the offering expenses were $62,883. The original estimates of
offering expenses ($120,000) included amounts for possible underwriting
discounts and commissions.

(b)  The expected reimbursement of the Company by the Bank includes $63,012 in
organizational and pre-opening expenses of the Bank plus $315,174 for the Bank
site, site preparation and improvements. The Registration Statement estimated
organizational and pre-opening expenses of the Bank, which were expected to be
paid by the Company, at $205,000. The actual amount was $141,988 higher because
the Offering took longer than expected. Salaries and benefits which were
originally planned to be devoted to preopening bank activities were, in fact,
committed towards the effort of selling the stock to form the Company. The
Offering was originally scheduled to be completed by February 28, 1995 and was
actually completed on September 30, 1995.

The Bank site and site preparation as described in the Company's Registration
Statement was to be initially funded by the Bank. Instead, the Company purchased
and improved the site prior to the completion of the Offering, since the
offering time frame had become extended. When the Company acquired the Bank's
Common Stock, the Bank purchased the improved site at the Company's book value
in the improved land of $315,174.

(c)  The amount of the repayment of advances under the Line of Credit and Loans
by Organizers to the Company is significantly higher than stated in the
Registration Statement due to the extended time frame of the Offering and the
purchase of the Bank site and improvements by the Company prior to
capitalization of the Bank. The working capital line of $400,000 was used to
fund operating costs, primarily salaries, benefits and offering expenses. On
November 17, 1995, this line which had an outstanding balance of $355,500 was
repaid. The Company had a note payable to a local bank for $332,027 which was
used to pay off the $150,739 note from an organizer to purchase the Bank site
and to fund the improvements to the Bank site. The Company repaid this note when
the Bank was capitalized and had purchased the Bank site from the Company.

(d)  The remaining proceeds have been used to provide working capital for the
Company and may be used to provide additional capital to the Bank in the future,
if necessary. This amount is less than that projected under the maximum offering
assumption in the Registration Statement primarily due to the extended time
frame to complete the Offering and the associated costs.
<PAGE>

Management's Discussion and Analysis, continued

USE OF PROCEEDS BY THE BANK

<TABLE>
<CAPTION>
                                                            As Described                     Actual
                                                            In the Offering               Proceeds Use
                                                            ---------------               ------------
<S>                                                         <C>                           <C>
Investment by the Company in the Bank's Common Stock        $6,500,000                    $6,500,000
Reimbursement of the Company for Amounts Advanced
    by the Company to Pay Organizational and Pre-
    opening Expenses of the Bank:
           Purchase of Bank Site & Site Preparation           (253,000)                     (315,174) (e)
           For organizational & other expenses                (205,000)                      (63,012) (f)
                                                               -------                       -------
                  Total Reimbursed                            (458,000)                     (378,186)
                                                               -------                       -------
Furniture, fixtures & equipment                               (278,000)                     (448,153) (g)
Construction of Bank's Permanent Facility                   (1,200,000)                    (1,254155) (h)
Bank Site Improvements                                                                      (113,551) (i)
                                                             ---------                     ---------
Remainder                                                   $4,564,000                    $4,305,955
                                                             =========                     =========
</TABLE>

___________________

(e)  The actual cost of the Bank site improvements was higher than expected, due
primarily to grading and drainage work.

(f)  See note (b), above.

(g)  Initial plans for office furniture and fixtures were based on estimates
made in 1994. These estimates were developed under the assumption that the Bank
would not open until the Bank building was finished, and therefore would open
with minimal staff and equipment requirements. Instead, the Bank has began
operations on February 26, 1996 in temporary facilities with rented furniture.
When the Building was completed in October 1996, the Bank had completed almost
eight months of operations and needed additional furniture and equipment to
support a growing staff and operations. As of September 30, 1996, earning assets
had reached $16.5 million, exceeding budget by $1 million.

(h)  The construction of the building cost $1,137,000 and architectural fees
exceeded $110,000 for design work and construction supervision and follow-up.

(i)  Site improvement costs included the construction of a deceleration lane
on Martha Berry Blvd. in front of the Bank and additional grading
and storm sewer work for drainage of the site.  The deceleration lane was
required by the Georgia Department of Transportation and the storm sewer work
was required by the city. These expenses were not anticipated in the initial
proposal.

FINANCIAL CONDITION

At December 31, 1996, the Company had concluded ten months of
banking operations with $26,508,641 in total assets as compared to
$6,862,351 at the end of 1995

At year end total deposits had grown to $19,844,536 and total loans had grown to
$13,095,601. The Bank's loan to deposit ratio at year end was 66.9%, but during
the year had reached as high as 84%. Management's long term target for this
ratio is 75%, but given the Bank's strong capital position and available
liquidity, the Bank's net interest margin is benefited by higher loan to deposit
ratios.

CAPITAL

At December 31, 1996, the Bank's capital position was well in excess of FDIC
guidelines to meet the definition of "well capitalized". Based on
the level of the Bank's risk weighted assets at year end, the Bank had $4.6
<PAGE>

Management's Discussion and Analysis, continued

million more capital than necessary to satisfy the "well-capitalized" criteria.
The Bank's capital adequacy is monitored quarterly by the Bank's Asset/Liability
Committee, as asset and liability growth, mix and pricing strategies are
developed.

LIQUIDITY

The Bank's internal and external liquidity resources are considered by
management to be adequate to handle expected growth and normal cash flow demands
from existing deposits and loans. At December 31, 1996, the securities held to
maturity had grown from $1,000,000 to $4,748,925 and securities available for
sale were $1,489,375. Federal funds sold were $4,058,912, down from $5,410,000
at the end of the prior year.


Net deposit growth and federal funds sold provide the primary liquidity resource
for loan disbursements and Bank working capital. If deposit growth were to
diminish or temporarily cease, the Bank would fund loan and working capital
demands in the short term with Federal funds purchase lines of credit which have
been established at each of its correspondent banks. These lines total
$3,000,000, are unsecured and may be revoked at any time by the correspondent
banks. In addition to these unsecured lines, the Bank has established master
repurchase agreements with its correspondent banks under which the Bank's
investment securities may be temporarily pledged to raise funds for longer
terms. Under these repurchase agreements, margin requirements tend to be less
than 10% of the current market value of the underlying security and the
borrowing rate tends to have a spread of between 25 and 50 points over the
comparable U.S. Treasury rate. The repurchase agreements allow the Bank to raise
funds out of its total securities portfolio ($5.5 million at year end) without
being forced to sell the securities.

Given the potential need to use its securities to raise liquidity, the Bank's
current investment practices limit securities to final maturities not exceeding
five years from date of purchase settlement and to U.S. Treasuries and triple A
rated government agency securities. In early 1997, the Bank will apply to the
Federal Home Loan Bank of Atlanta ("FHLBA") for membership. FHLBA membership
will provide an additional source of liquidity through FHLBA credit programs
which can provide term funding for up to 10 years and in certain qualified
program up to 20 years. The Bank's first mortgage loans would be used as
collateral for such financings.

Despite the anticipated losses in the first years of operations, the Company
expects earnings from loans and investments and other banking services as well
as steady deposit growth to provide sufficient liquidity for both the short and
long term. The Bank intends to manage its loan growth such that deposit flows
will provide the primary funding for all loans as well as cash reserves for
working capital and short to intermediate term marketable investments.

RESULTS OF OPERATIONS

The Company had a net loss of $396,474 ($0.57 per share) for 1996 as compared to
a net loss of $107,791 ($0.15 per share) for 1995.

The 1995 losses resulted from expenses incurred in connection with activities
related to the organization of the Company and the Bank. These activities
included (without limitation) the preparation and filing of an application with
the DBF and the FDIC to charter the Bank, the preparation and filing of an
application with the Federal Reserve Board for approval for the Company to
acquire the Bank, responding to questions and providing additional information
to the DBF, the FDIC and the Federal Reserve Board in connection with the
application process, the selling of the Company's Common Stock in the Offering,
meetings and discussions among various organizers regarding application
information, target markets, and capitalization issues, and planning and
organizing for the opening of the Bank. Because the Company was in the
organizational stage through the end of 1995, it had no operations from which to
generate revenues, and its only source of revenues, which amounted
<PAGE>

Management's Discussion and Analysis, continued

to $184,160, were associated with the short term investment of the funds
provided by the subscribers' deposits which subsequently formed the Company's
capital.

The 1996 loss included the first ten months of operations of the Bank. Interest
income from loans and investments, including loan fees of $33,163, was
$1,061,401, representing a yield of 7.66% on average earning assets of
$13,864,520. Interest expense was $313,624, representing a cost of 4.45% on
average interest bearing liabilities of $7,048,375. Net interest income was
$747,777, producing a net yield of 5.39% on average earning assets.

The provision for loan losses in 1996 was $134,000. Total loan charge-offs were
$658 and were related to the Bank's consumer loan portfolio. At December 31,
1996, the Bank had no loans past due 90 days or more and had one non-accrual
loan totaling $1,781. The allowance for loan losses at year end was $133,342,
representing 1.00% of total loans.

Management takes a number of factors into consideration when determining the
additions to be made to the loan loss allowance. Since the Bank is approaching
the end of its first year of operations, it does not have a sufficient history
of portfolio performance on which to base additions. Accordingly, additions to
the reserve are primarily based on achieving a targeted ratio of the allowance
for loan losses to total loans of 1.50% by the end of 1997. This target is based
on national peer group ratios and Georgia ratios which reflect average ratios of
0.99% (national peer) and 1.50% (Georgia). The Georgia data includes more mature
banks and management feels that, absent any meaningful historical data on the
Bank's loan portfolio, 1.50% is a more conservative target. Under this
methodology, charge-offs will increase the amount of additions to the allowance
and recoveries will reduce additions.

In addition, management performs an on-going loan review process. All new loans
are risk rated under loan policy guidelines. On a monthly basis, the composite
risk ratings are evaluated in a model which assesses the adequacy of the current
allowance for loan losses, and this evaluation is presented to the Board of
Directors each month. On a weekly basis, loan reviews are performed on new loans
and presented in the officers weekly loan meeting. Large loans are reviewed
periodically. Risk ratings may be changed if it appears that new loans may not
have received the proper initial grading or, if on existing loans, credit
conditions have improved or worsened.

As the Bank matures, the additions to the loan loss allowance will be based more
on historical performance, the detailed loan review and allowance adequacy
evaluation.

The Bank's policy is to place loans on nonaccrual status when it appears that
the collection of principal and interest in accordance with the terms of the
loan is doubtful. Any loan which becomes 90 days past due as to principal or
interest is automatically placed on nonaccrual.

Non-interest income in 1996 was $48,741. This consisted primarily of service
charges on deposit accounts which were $26,256 and credit life and disability
insurance premium income which was $13,664. Service charges on deposit accounts
are evaluated annually against service charges from other banks in the local
market and against the Bank's own cost structure in providing the deposit
services. This income should grow with the growth in the Bank's demand deposit
account base. The credit life and disability insurance premium income is sold
primarily on consumer installment debt and should grow with the growth in the
Bank's consumer loan portfolio.

Non-interest expenses grew to $1,058,992 in 1996 as compared to $257,068 in
1995. The expenses in 1995, as mentioned earlier, were primarily related to pre-
opening activities while expenses in 1996 included 10 months of Bank operations.
Salaries and benefits were $544,925 in 1996 as compared to $119,865 in 1995.
Until September 1995, the Company had only two employees. In February 1996, the
Bank opened with 14 employees
<PAGE>

Management's Discussion and Analysis, continued

and at year end had 18 full-time equivalent employees. Occupancy costs were
$167,716 in 1996 as compared to $16,448 in 1995. Occupancy costs were up in 1996
with operations occurring in two mobile office units (approximately 2,600 square
feet) while the permanent bank building was under construction. In 1995, one
mobile office unit (approximately 600 square feet) was used for organizational
and preopening efforts. Other operating expenses were $346,351 in 1996 as
compared to $120,755 in 1995. The current year included many expenses necessary
to run a bank which were not necessary in 1995, such as data processing
services, business development and marketing expenses, professional fees,
postage and communications costs.

INTEREST RATE SENSITIVITY

Improvement in earnings of the Company are dependent upon continued earning
asset growth, good asset quality and a relatively stable economic environment.
Management feels it is reasonable for the Bank to continue to experience steady
earning asset growth as long as interest rates remain relatively stable. The
Bank is asset sensitive (meaning that rising rates tend to be beneficial) in the
near and long term and is liability sensitive at the one year time horizon
(meaning that falling rates tend to be beneficial) to the Bank's net interest
margin. If interest rates were to rise in excess of 200 basis points, the Bank
could experience improved earnings in the near term, but such a rate increase
might significantly reduce the demand for loans in the Bank's local market, thus
diminishing the prospects for improved earnings. If interest rates were to fall
in excess of 200 basis points, the Bank could experience a short term decline in
net interest margin and may even have difficulty retaining maturing certificates
of deposit without having to pay above market rates.
<PAGE>

<TABLE>
<CAPTION>
                    DIRECTORS OF                                         DIRECTORS OF
           GREATER ROME BANCSHARES, INC.                             GREATER ROME BANK

<S>                                                  <C>
Thomas D. Caldwell, III                              Thomas D. Caldwell, III
Chairman of the Board                                Chairman of the Board
President and Chief Executive Officer                President and Chief Executive Officer

Bradford Lee Riddle                                  Bradford Lee Riddle
Vice Chairman of the Board                           Vice Chairman of the Board
President and Director of  Riddle, Inc.              President and Director of  Riddle, Inc.
(Office Supplies)                                    (Office Supplies)

Robert L. Berry                                      Robert L. Berry
Corporate Secretary                                  Partner of  Brinson, Askew, Berry, Seigler,
Partner of  Brinson, Askew, Berry, Seigler,          Richardson & Davis
Richardson & Davis                                   (attorneys)
(attorneys)

Frank A. Brown, Jr.                                  Frank A. Brown, Jr.
Chairman of the Board and President of               Chairman of the Board and President of
Cooper, Brown & Currie, Inc.                         Cooper, Brown & Currie, Inc.
(insurance agency)                                   (insurance agency)

Gene G. Davidson, M.D.                               Gene G. Davidson, M.D.
President of Northwest Georgia Internal Medicine     President of Northwest Georgia Internal Medicine
Associates, P.C.                                     Associates, P.C.

Henry Haskell Perry                                  Henry Haskell Perry
CEO of North Georgia Equipment Co.                   CEO of North Georgia Equipment Co.
(Heating and air contractor)                         (Heating and air contractor)

M. Wayne Robinson                                    M. Wayne Robinson
President of M. Wayne Robinson Builder               President of M. Wayne Robinson Builder
Developer, Inc.                                      Developer, Inc.

Dale G. Smith                                        Dale G. Smith
Financial Manager                                    Financial Manager

Paul E. Smith                                        Paul E. Smith
Representative, District 12, Georgia Legislature     Representative, District 12, Georgia Legislature

W. Fred Talley                                       W. Fred Talley
President, Fred Talley's Parkview Chapel             President, Fred Talley's Parkview Chapel
Funeral  Home                                        Funeral Home

Martha B. Walstad                                    Martha B. Walstad
Real Estate Agent                                    Real Estate Agent
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

            EXECUTIVE OFFICERS OF                       EXECUTIVE OFFICERS OF
        GREATER ROME BANCSHARES, INC.                     GREATER ROME BANK

<S>                                            <C>
Thomas D. Caldwell, III                        Thomas D. Caldwell, III
Chairman of the Board                          Chairman of the Board
President and Chief Executive Officer          President and Chief Executive Officer

Bradford Lee Riddle                            Bradford Lee Riddle
Vice Chairman of the Board                     Vice Chairman of the Board
President and Director of  Riddle, Inc.        President and Director of  Riddle, Inc.
(Office Supplies)                              (Office Supplies)
                                               E. Grey Winstead, III
Robert L. Berry                                Senior Vice President
Corporate Secretary                            Chief Financial Officer
Partner of  Brinson, Askew, Berry, Seigler,    Corporate Secretary
Richardson & Davis
(attorneys)
                                               John W. Branam
                                               Vice President
                                               Chief Credit Officer
                                               Senior Loan Officer
</TABLE>

Shareholders may obtain, without charge, a copy of Greater Rome Bancshares, Inc.
1996 Annual Report to the Securities and Exchange Commission on Form 10-KSB.
Written requests should be addressed to: Robert L. Berry, Corporate Secretary,
Greater Rome Bancshares, Inc., P.O. Box 5271, Rome, Georgia 30162-5271.