<PAGE>
 
================================================================================

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

                                  Form 10-KSB

Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934

                  For the fiscal year ended December 31, 1997

                          Commission File No. 0-28280

                         GREATER ROME BANCSHARES, INC.
          -----------------------------------------------------------
                (Name of Small Business Issuer in Its Charter)

            Georgia                                           58-2117940
   ---------------------------                         ----------------------
  (State or Other Jurisdiction                            (I.R.S. Employer
of Incorporation or Organization)                       Identification No.)

        1490 Martha Berry Blvd.
            Rome, Georgia                                         30162-5271
----------------------------------------                         ------------
(Address of Principal Executive Offices)                           (Zip Code)

                                (706) 295-9300
                         ----------------------------
               (Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act: Common Stock,
$.01 par value

Check whether the issuer: (1) 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 contained in this Form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.  [ X ]

State issuer's revenues for its most recent fiscal year.   $2,997,083
                                                           ----------

The aggregate market value of the voting stock as of March 27, 1998, held by
non-affiliates computed by reference to the price at which the stock was sold is
$5,371,498.

Seven hundred thousand (700,000) shares of the issuer's common stock were issued
and outstanding as of March 27, 1998.

Portions of the following documents are incorporated by reference:  (1) 1997
Annual Report to Shareholders, into Part II;  (2) Proxy Statement (the "Proxy
Statement") for the Annual Meeting of Shareholders to be held May 14, 1998, into
Part III.

Transitional Small Business Disclosure Format (check one).   Yes     No  X
                                                                 ---    ---


================================================================================
<PAGE>
 
                                    PART I

Item 1.  Description of Business
--------------------------------

General

Greater Rome Bancshares, Inc. (the "Registrant" or the "Company") was
incorporated as a Georgia corporation on June 17, 1994, primarily to own and
control all of the capital stock of Greater Rome Bank (the "Bank").  The Company
concluded its initial public offering (the "Offering") on September 30, 1995 by
selling 700,000 shares of its common stock, $0.01 par value per share (the
"Common Stock"), at a price of $10.00 per share.  The Company acquired the Bank
on February 26, 1996 and the Bank opened for business on the same date.  The
Bank is chartered under the laws of the State of Georgia and engages in the
commercial banking business from a main office location in Rome Georgia with
deposits insured by the Federal Deposit Insurance Corporation ("FDIC").

Location and Service Area

The Bank conducts general commercial banking services within its service area,
with emphasis on the needs of individuals and small to medium sized businesses.
The Bank began operations in a temporary modular building located on Bank
property at 1490 Martha Berry Boulevard. Construction of the new Bank building
began in spring 1996 at the same location and was substantially completed by
October 12, 1996.  Operations were moved out of the temporary facilities and
into the new building during the weekend of October 12th and normal banking
operations were resumed on October 15th in the new 9,000 square foot facility.
See "Item 2.  Description of Properties."  The Bank has obtained most of its
customer deposits from, and has made most of its loans to, customers who reside
within the Bank's primary service area of Floyd County.

Floyd County is located in northwest Georgia, almost directly in the center of
what is referred to as the "ABC" (Atlanta, Birmingham, and Chattanooga)
triangle.  Rome, the county seat of Floyd County, and the only major
incorporated area of the County, is located 60 miles northwest of Atlanta, 62
miles south of Chattanooga, Tennessee and 123 east of Birmingham, Alabama.  The
1990 census indicated Floyd County had a population of 81,251.  Recent estimates
indicate Floyd County to have a current population of approximately 82,300 with
a median effective buying income of $28,500 per household.  Rome is reached via
U.S. 411, which connects to Interstate 75 just 25 miles southeast of Rome at
Cartersville.  It is also served by major rail carriers and by the Richard B.
Russell Airport, which is located just 7 miles north of the Bank and maintains a
6,000-foot instrument runway with ILS and VOR approaches.  Rome is home to
several institutes of higher learning including Berry College (undergraduate and
graduate), Shorter College (private) and Floyd College (a two-year unit of the
University System of Georgia).  Technical training is available through one of
Georgia's most advanced training schools, Coosa Valley Technical Institute.
Rome is also home to one of the state's most prestigious private schools, The
Darlington School, which offers kindergarten through 12th grade and attracts
students from throughout the United States and many foreign countries.

The principal area of growth in Floyd County during recent years has been in the
health care industry.  Presently approximately 5,500 jobs are centered on health
care because there are several major providers within the community and Rome has
grown to become a major regional medical center.   Floyd Medical Center (one of
the largest employers in the County) is a publicly owned hospital.  Redmond
Regional Medical Center, a proprietary care hospital, completed a $30 million
expansion in 1996.  Northwest Georgia Regional Hospital is a State of Georgia
Public Hospital operated primarily as a mental and tubercular treatment center.
The Harbin Clinic is a proprietary care outpatient clinic, which completed a $10
million expansion in December 1995.  The remaining jobs in health care are
support staff for the other practicing physicians and employees of the 4 nursing
and 2 intermediate care facilities located in Floyd County.

Other major employers in Floyd County include: Floyd County School System; Rome
City School System; Inland-Rome Corporation; Lindale Mills; Galey & Lord;
Container Corporation of America; WADA Metals; 


                                       2
<PAGE>
 
Oglethorpe Power Co.; Georgia Power Co.; Katsushiro of Rome and Hopton
Technologies. An 80 room Hampton Inn opened in 1996. A new Best Western was
opened in the summer of 1997. An article appearing in the Atlanta Business
                                                          ----------------
Chronicle, referred to Floyd County as a "sleeping giant" and opined as to how
---------
Rome is located in the center of an area that, into the 21st century, would be
one of the fastest growing areas of the nation (referring to the northwest
quadrant of Georgia).

Banking Services

The Bank offers a full range of deposit services that are typically available in
most banks and savings and loan associations, including checking accounts, NOW
accounts, savings accounts and other time deposits of various types, ranging
from daily money market accounts to longer-term certificates of deposit.  The
transaction accounts and time certificates are tailored to the Bank's principal
market area at rates intended to be competitive to those offered in the area.
In addition, the Bank offers Individual Retirement Accounts (IRAs).  All deposit
accounts are insured by the FDIC up to the maximum amount allowed by law
(generally, $100,000 per depositor subject to aggregation rules).  The Bank
solicits these accounts from individuals, businesses, associations and
organizations, and governmental entities.

The Bank offers a full range of short-to-medium term commercial and personal
loans.  Commercial loans include both secured and unsecured loans for working
capital (including inventory and receivables), business expansion (including
acquisition of real estate and improvements), and purchase of equipment and
machinery.  Consumer loans include secured and unsecured loans for financing
automobiles, other consumer goods, home improvements, education and personal
investments.  Additionally, the Bank offers loans for the purpose of community
development and/or improvement.  The Bank also originates and holds or sells
into the secondary market fixed and variable rate mortgage loans and real estate
construction and acquisition loans.  The Bank's lending activities are subject
to a variety of lending limits imposed by state law.  While differing limits
apply in certain circumstances based on the type of loan or the nature of the
borrower (including the borrower's relationship to the Bank), in general, the
Bank is subject to a loan-to-one-borrower limit of an amount equal to 15% of the
Bank's statutory capital base.   In no event, however, may the amount loaned to
any borrower exceed 25% of the Bank's statutory capital base.  The Bank may not
make any loans to any director or executive officer of the Bank unless the loan
is approved by the Bank's board of directors and is made on terms not more
favorable to such person than would be available to a person not affiliated with
the Bank.  See "Lending Activities."

The Bank may also engage in investment activities.  It is authorized to invest
without limit in obligations of the United States or any state or territorial
government or any agency of such governments or in any securities that are
guaranteed as to principal and interest by such governments.  Subject to
limitations, the Bank may also invest in investment grade securities issued by
political subdivisions, in deposits in other financial institutions, and in
certain types of commercial paper.  The Bank concentrates its investment
activities primarily in intermediate term government and agency securities.

Other bank services include cash management services, safe deposit boxes,
travelers' checks, direct deposit of payroll and social security checks, and
automatic drafts for various accounts.  The Bank is a member of a shared network
of automated teller machines that may be used by Bank customers throughout
Georgia and other regions.

The Bank does not plan to exercise trust powers during its initial years of
operation.  The Bank may in the future offer a full-service trust department,
but cannot do so without prior regulatory approval.

                                       3
<PAGE>
 
Lending Activities

General.  The Bank offers a range of lending services, including real estate,
commercial and consumer loans, to individuals and small-to-medium-sized
businesses and professional concerns that are located in or conduct a
substantial portion of their business in the Bank's market area.

Credit Risk.  There are certain risks inherent in making all loans.  A principal
economic risk inherent in making loans is the creditworthiness of the borrower.
Other risks inherent in making loans include risks with respect to the period of
time over which loans may be repaid, risks resulting from changes in economic
and industry conditions, risks inherent in dealing with individual borrowers
and, in the case of a collateralized loan, risks resulting from uncertainties as
to the future value of the collateral.  Management maintains an allowance for
loan losses based on, among other things, an evaluation of economic conditions
and regular reviews of delinquencies and loan portfolio quality.  Based upon
such factors, management makes various assumptions and judgments about the
ultimate collectibility of the loan portfolio and provides an allowance for
potential loan losses based upon a percentage of the outstanding balances and
for specific loans when their ultimate collectibility is considered
questionable.  Certain specific risks with regard to each category of loans are
described under the separate subheading for each type of loan below.

Real Estate Loans.  Loans secured generally by first or second mortgages on real
estate are one of the primary components of the Bank's loan portfolio.  These
loans consist of commercial real estate loans, construction and development
loans, residential real estate loans and home equity loans.  Loan terms
generally are limited to five years and often do not exceed three years,
although installment payments may be structured up to a fifteen-year
amortization basis.  Interest rates may be fixed or adjustable, and tend to be
fixed in the case of three-year term loans and adjustable in the case of five-
year term loans.  The Bank generally charges an origination fee. Management
attempts to reduce credit risk in the commercial real estate portfolio by
emphasizing loans on owner-occupied office and retail buildings where the loan-
to-value ratio, established by qualified appraisals, will generally not exceed
80%.  In addition, the Bank typically requires personal guarantees of the
principal owners of the property backed with a review by the Bank of the
principal owner's personal financial statements.  A number of the loans that are
classified as commercial real estate loans are actually commercial loans for
which a security interest in real estate is taken as additional collateral.
These loans are subject to underwriting as commercial loans as described below.
The principal economic risk associated with each category of loans, including
real estate loans, is the creditworthiness of the Bank's borrowers.  The risk
associated with real estate loans varies with many factors including employment
levels and fluctuations in the value of real estate.

In 1997, the Bank began originating one-to-four family residential real estate
loans for sale into the secondary market.  This provides long term home
financing for qualified customers and generates origination fee income to the
Bank. The Bank limits interest rate and credit risk on these loans by locking in
the interest rate for each loan with the secondary investor and receiving the
investor's underwriting approval prior to closing the loan.

Commercial Loans.  The Bank makes loans for commercial purposes in various lines
of businesses.  Equipment loans are typically made for a term of up to five
years (more typically three years) at fixed or variable rates, with the loan
fully amortized over the term and secured by the financed equipment with a loan-
to-value ratio of 80% or less.  Working capital loans are made for a term
typically not exceeding one year, and are usually secured by accounts
receivable, inventory and/or personal guarantees of the principals of the
business, and bear interest at floating rates which are payable monthly, or less
typically, quarterly.  In the case of the loans secured by accounts receivable
or inventory, principal is repaid as the assets securing the loan are converted
into cash, and in other cases, principal is due at maturity.  The principal
economic risk associated with each category of loans, including commercial
loans, is the creditworthiness of the Bank's borrowers.  The risk associated
with commercial loans varies with many factors including the economy in the
Bank's lending area.  In addition many 


                                       4
<PAGE>
 
of the Bank's commercial loans are made to small-to-medium sized businesses and
professionals who may be less able to withstand competitive, economic and
financial conditions than larger borrowers.

Consumer Loans.  The Bank makes a variety of loans to individuals for personal
and household purposes, including secured and unsecured installment and term
loans, home equity loans and lines of credit and revolving lines of credit.
These loans typically carry balances of less than $35,000 and, in the case of
non-revolving loans, are either amortized over a period not exceeding 60 months
or are ninety-day term loans, and in each case bear interest at a fixed rate.
The revolving loans bear interest at a fixed or variable rate and require
monthly payments of interest and a portion of the principal balance (typically
2-3% of the outstanding balance).  The underwriting criteria in the case of home
equity loans and lines of credit, is the same as applied by the Bank when making
a first mortgage loan, as described above, and home equity lines of credit
typically expire ten years after their origination.  As with the other
categories of loans, the principal economic risk associated with consumer loans
is the creditworthiness of the Bank's borrowers.

Loan Approval and Review.  The Bank's loan approval policies provide for various
levels of officer lending authority.  When the aggregate outstanding loans to a
single borrower exceed that individual officer's lending authority, the loan
request requires prior approval of the President or senior loan officer.  Any
loan in excess of the President's or senior loan officer's authority requires
prior approval by the loan committee of the Bank's board of directors.  The Bank
has a continuous loan review procedure involving several Bank officers. The
procedures are designed to provide early identification of credit quality
problems.  All loan officers are charged with the responsibility of rating each
of their loans and reviewing those loans on a periodic basis, the frequency of
which will increase as the quality of the loans decreases.

Lending Limit.  Under the Financial Institutions Code of Georgia (the "Financial
Institutions Code"), the Bank is limited in the amount it can loan to a single
borrower (including the borrower's related interests) by the amount of the
Bank's statutory capital base.  The limit is 15% of the statutory capital base
unless each loan in excess of 15% is approved by the Bank's board of directors
and the entire amount of the loan is secured by good collateral or other ample
security.  In no event may the amount loaned to any borrower exceed 25% of the
Bank's statutory capital base.  Based on the initial capitalization of the Bank
at a level of $6.5 million as required by the Department of Banking and Finance
("DBF") and FDIC and the statutory method of calculating the lending limit
requirements, the Bank's lending limit is approximately $900,000 for loans not
fully secured plus an additional $600,000 (or an aggregate of approximately $1.5
million) for loans for which the entire amount is properly secured.  These
limits will increase and decrease as the Bank's statutory capital base increases
and decreases.  Most of the Bank's expected loan demand will be from borrowers
who will not require loans in excess of these limits.  In the event that a
borrower's credit needs would exceed these limits, the Bank may seek to sell
participations in the loan to the extent necessary to maintain these lending
limits.

Competition

The banking business is highly competitive.  Management believes that the sale
of three locally-owned financial institutions (First Rome Bank, Georgia State
Bank of Rome and Home Federal Savings Bank, Rome) in recent years to out-of-
state holding companies, supports the need for a locally owned, community bank
in Rome.  Deposit growth in Floyd County has averaged 3.0% per year from June
1993 to June 1997 and was 6.5% from June 1996 to June 1997.  The Bank competes
as a financial intermediary with other commercial banks, savings and loan
associations, credit unions and money market mutual funds operating in Floyd
County and elsewhere.  As of June 1996, there were 30 existing financial
institution offices in Floyd County representing a total of 13 commercial banks,
savings associations and credit unions.  A number of these competitors are well
established in the Floyd County area.  Most of them have substantially greater
resources and lending limits and may have a lower cost of funds than the Bank.
These banks offer certain services, such as extensive and established branch
networks and trust services, which the Bank does not expect to provide in the
foreseeable future.  As a result of 


                                       5
<PAGE>
 
these competitive factors, the Bank may have to pay higher rates of interest and
provide superior customer service in order to attract deposits. Management
believes that the Bank can compete effectively with these institutions but
cannot assure that it will do so.

Employees

The Bank commenced operations on February 26, 1996 with 14 full-time employees
and had 23 equivalent full-time employees on December 31, 1997.   The Bank's
employees are not subject to a collective bargaining agreement.  The Company has
no employees other than its officers, none of whom receive remuneration for
their services to the Company.  The Company conducts no business other than that
of the being a bank holding company.  The Company currently has three officers,
Thomas D. Caldwell, III, President and Chief Executive Officer, Robert L. Berry,
Secretary, and E. Grey Winstead, III, Chief Financial Officer and Principal
Accounting Officer.





                                      6 
<PAGE>

                             STATISTICAL INFORMATION

The following tables set forth certain statistical information and should be
read in conjunction with the financial statements of Greater Rome Bancshares,
Inc. The Company became a bank holding company on February 26, 1996, when the
Bank commenced operations. Information for 1996 reflects 10 full months of bank
operations.




I. Distribution of Assets, Liabilities, and Stockholders Equity; Interest Rates
   and Interest Differential

<TABLE>
<CAPTION>
                                                  1997            1996         1997          1996        1997         1996
                                                 Average         Average      Income/       Income/      Yield        Yield
                                                 Balance         Balance     (Expense)     (Expense)  (Rate Paid)  (Rate Paid)
                                                 -------         -------     ---------     ---------  -----------  -----------
     <S>                                   <C>                  <C>          <C>           <C>        <C>          <C>   
     Loans                                 $    22,517,410      6,035,929    2,255,079       605,126     10.01%       10.03%
     Taxable investment securities               7,791,229      4,502,533      482,641       280,826      6.19%        6.24%
     Federal funds sold                          1,858,945      3,326,058      100,499       175,449      5.41%        5.27%
                                            --------------------------------------------------------------------------------
     Average earning assets                $    32,167,584     13,864,520    2,838,219     1,061,401      8.82%        7.66%
                                            --------------------------------------------------------------------------------
                                                                                                                
     Cash & due from banks                         872,616        448,566                                       
     Fixed assets                                2,274,665        971,300                                       
     Other assets                                  317,356        168,702                                       
                                            -----------------------------
     Average total assets                  $    35,632,221     15,453,088                                       
                                            -----------------------------
                                                                                                                
     Interest bearing demand deposits            2,810,804      1,068,875      (55,224)      (26,066)    -1.96%       -2.44%
     Savings and money market deposits           4,424,565      2,076,121     (160,563)      (75,701)    -3.63%       -3.65%
     Time deposits                              16,518,978      3,902,904     (963,689)     (211,831)    -5.83%       -5.43%
     Borrowed funds                              1,367,814            475      (79,841)          (26)    -5.84%       -5.47%
                                            --------------------------------------------------------------------------------
     Average interest bearing liabilities  $    25,122,161      7,048,375   (1,259,317)     (313,624)    -5.01%       -4.45%
                                            --------------------------------------------------------------------------------
                                                                                                                
     Non-interest bearing deposits               3,733,515      1,723,249                                       
     Other liabilities                             158,381        103,562                                       
     Stockholders' equity                        6,320,840      6,577,902                                       
                                            -----------------------------
     Average total liabilities and equity  $    35,334,897     15,453,088                                       
                                            -----------------------------
                                                                                                                
     Net interest income yield on           --------------------------------------------------------------------------------
         average earning assets            $    32,167,584     13,864,520    1,578,902       747,777      4.91%        5.39%
                                            --------------------------------------------------------------------------------
</TABLE>

Notes:

1 Non-accruing loans are included in the average balances. Average non-accruing
  loans were $38,547 in 1997 and were less than $1,000 in 1996.
2 Loan fees are included in the interest income computation and were $123,908
  in 1997 and $33,163 in 1996.

<PAGE>
 
STATISTICAL INFORMATION, continued
 
The following table sets forth a summary of the changes in interest income and
interest expense resulting from changes in volume and rates from 1996 to 1997.

<TABLE> 
<CAPTION>  
                                                        Increase/(Decrease)
                                          -------------------------------------------- 
                                                Net            Due to         Due to
                                              Change          Rate (1)      Volume (1)
                                              ------          --------      ----------
<S>                                     <C>                <C>              <C> 
Interest Earning Assets
Loans                                   $   1,649,953            (639)      1,650,592
Taxable investment securities                 201,815          (1,922)        203,737
Federal funds sold                            (74,950)          4,263         (79,213)
                                          -------------------------------------------- 
       Total Interest Income                1,776,818           1,702       1,775,116
                                          -------------------------------------------- 
 
Interest Bearing Liabilities
Interest bearing demand deposits               29,158          (5,945)         35,103
Savings and money market deposits              84,862            (362)         85,224
Time deposits                                 751,858          17,018         734,840
Borrowed funds                                 79,815               2          79,813
                                          -------------------------------------------- 
       Total Interest Expense                 945,693          10,713         934,980
                                          -------------------------------------------- 
 
Net Interest Income                     $     831,125          (9,011)        840,136
                                          ============================================
</TABLE> 
 
(1)    The changes in interest income and expense not due solely to rate or
       volume have been allocated proportionately to the rate and volume amounts
       calculated before allocation.
       

 
II.    Investment Portfolio
 
       Refer to note (2) Investment Securities of the Notes to Consolidated
       Financial Statements included in the 1997 Annual Report, which is
       incorporated herein by reference.

       The weighted average yield of investment securities maturing in one year
       or less as of December 31, 1997 was 6.24%. The weighted average yield of
       investment securities maturing from one to five years as of December 31,
       1997 was 6.14%.
<PAGE>

                       STATISTICAL INFORMATION, continued

III.  Loan Portfolio
<TABLE> 
<CAPTION> 

                                        12/31/97                       12/31/96
              Loan types                Balance                        Balance
              ----------                -------                        -------
      <S>                          <C>                          <C> 
      Commercial                   $      7,527,458             $        4,155,632

      Real estate -- construction           475,431                        355,635

      Real estate -- mortgage            14,976,035                      5,112,913

      Consumer loans                      7,310,351                      3,656,887

                                     ---------------              -----------------
                            Total  $     30,289,275             $       13,281,067
                                     ===============              =================
</TABLE> 


<TABLE> 
<CAPTION> 
                                                                  Maturity and repricing by type
                                   -----------------------------------------------------------------------------------------------
                                           due in 1 year           due from 1 through 5 years            due after 5 years
                                   -----------------------------------------------------------------------------------------------
                                    Fixed rate    Variable rate    Fixed rate      Variable rate      Fixed rate    Variable rate
                                    ----------    -------------    ----------      -------------      ----------    -------------
      <S>                          <C>            <C>              <C>             <C>                <C>           <C>    
      Commercial                   $ 2,065,322        1,520,142     2,166,220         1,775,774              -               -

      Real estate -- construction      342,560           99,423        33,448                 -              -               -

      Real estate -- mortgage        1,930,104        1,326,214    10,763,936           935,781              -               -

      Consumer loans                 3,057,303          301,070     3,747,653           143,563         49,957               -

                                   -----------------------------------------------------------------------------------------------
                            Total  $ 7,395,289        3,246,849    16,711,257         2,855,118         49,957               -
                                   ===============================================================================================
</TABLE> 

      The maturity distribution is less than the total at year end by the amount
of non-accrual loans totaling $30,805.

<TABLE> 
<CAPTION> 

             Risk Elements                                                             12/31/97                   12/31/96
             -------------                                                              Balance                    Balance
                                                                                       --------                   --------       
      Nonaccrual, Past Due and Restructured Loans
      -------------------------------------------
      <S>                                                                              <C>                         <C> 
      Non-accrual loans                                                                $ 30,805                    $ 1,781
      Accruing loans contractually past due 90 days or more                            $    -                      $   -
      Troubled debt restructurings                                                     $    -                      $   -
</TABLE> 

      The amount of interest that would have been included in income on the
      above nonaccrual loans if they had been current in accordance with their
      original terms was $63 in 1996 and $1,127 in 1997. The amount of interest
      that was included in interest on the above loans was $57 in 1996 and
      $1,994 in 1997.

      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.

      Potential Problem Loans
      -----------------------
      Management expects to incurr losses on loans from time to time when
      borrowers' financial conditions deteriorate. Where feasible, loans charged
      down or charged off will continue to be collected. Management considers
      the year end allowance adequate to cover potential losses in the loan
      portfolio.

<PAGE>

<TABLE> 
<CAPTION> 

                                 STATISTICAL INFORMATION, continued

IV.   Summary of Loan Loss Experience
                                                                                            12/31/97              12/31/96
                                                                                            --------              --------
      <S>                                                                         <C>                    <C> 
      Allowance for possible loan losses at the beginning of the year             $           133,342    $                -

      Charge-offs:
            Commercial                                                                              -                     -
            Real estate - construction                                                              -                     -
            Real estate - mortgage                                                                  -                     -
            Consumer loans                                                                     87,254                   658
                                                                                     -----------------      ----------------
                                    Total                                                      87,254                   658
                                                                                     -----------------      ----------------
      Recoveries:
            Commercial                                                                              -                     -
            Real estate - construction                                                              -                     -
            Real estate - mortgage                                                                  -                     -
            Consumer loans                                                                        762                     -
                                                                                     -----------------      ----------------
                                    Total                                                         762                     -
                                                                                     -----------------      ----------------
      Net charge-offs:                                                                         86,492                   658
      Additions charged to operations                                                         433,694               134,000

                                                                                     -----------------      ----------------
      Balance at end of year                                                      $           480,544    $          133,342
                                                                                     =================      ================

      Average loans outstanding, net of unearned income                           $        22,517,410    $        6,035,929
                                                                                     =================      ================
      Ratio of net charge-offs during the period to average loans
            outstanding during the period                                                        0.38%                 0.01%
                                                                                     =================      ================
</TABLE> 

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 second year of operations, it does not have a sufficient history
of portfolio performance on which to base additions. 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
1.46% (national peer) and 1.45% (Georgia). 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.
<PAGE>


                       STATISTICAL INFORMATION, continued

V.    Deposits

<TABLE> 
<CAPTION> 
                                                                    Average          Average     Average     Average
                                                                    Balance          Balance       Rate        Rate
                                                                     1997             1996         1997        1996
                                                                     ----             ----         ----        ----
           <S>                                          <C>                         <C>          <C>         <C> 
           Non-interest bearing deposits                $          3,733,515        1,723,249
           Interest bearing demand deposits                        2,810,804        1,068,875      1.96%       2.44%     
           Savings and money market deposits                       4,424,565        2,076,121      3.63%       3.65%     
           Time deposits                                          16,518,978        3,902,904      5.83%       5.43%     

                                                           -----------------------------------------------------------
                       Total average deposits           $         27,487,862        8,771,149      4.29%       3.58%
                                                           ===========================================================
</TABLE> 

      As of December 31, 1997 the amount outstanding of time certificates of
      deposit of $100,000 or more was $5,583,231. Amounts by time remaining
      until maturity on time deposits of $100,000 or more were:

                       3 months or less                 $            577,264
                       over 3 through 6 months                       932,050
                       over 6 through 12 months                    3,264,591
                       over 12 months                                809,326
                                                           ------------------
                                                        $          5,583,231
                                                           ==================



VI.   Return on Equity and Assets
                                                       1997              1996
                                                       ----              ----

           Return on average assets                    0.12%            -2.57%

           Return on average equity                    0.66%            -6.03%

           Dividend payout ratio                       0.00%             0.00%

           Average equity to average asset ratio      17.74%            42.57%

<PAGE>
 
                           SUPERVISION AND REGULATION

The following discussion sets forth the material elements of the regulatory
framework applicable to banks and bank holding companies and provides certain
specific information related to the Company.

General

The Company is a bank holding company registered with the Board of Governors of
the Federal Reserve System (the "Federal Reserve") under the Bank Holding
Company Act of 1956, as amended (the "BHC Act").  As such, the Company and, if
applicable, its non-bank subsidiaries are subject to the supervision,
examination, and reporting requirements of the BHC Act and the regulations of
the Federal Reserve.

The BHC Act requires every bank holding company to obtain the prior approval of
the Federal Reserve before:  (a) it may acquire direct or indirect ownership or
control of any voting shares of any bank if, after such acquisition, the bank
holding company will directly or indirectly own or control more than 5% of the
voting shares of the bank; (b) it or any of its subsidiaries, other than a bank,
may acquire all or substantially all of the assets of any bank; or (c) it may
merge or consolidate with any other bank holding company.

The BHC Act further provides that the Federal Reserve may not approve any
transaction that would result in a monopoly or would be in furtherance of any
combination or conspiracy to monopolize or attempt to monopolize the business of
banking in any section of the United States, or the effect of which may be
substantially to lessen competition or to tend to create a monopoly in any
section of the country, or that in any other manner would be in restraint of
trade, unless the anticompetitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community to be served.  The Federal Reserve is also required to consider
the financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the community to
be served.  Consideration of financial resources generally focuses on capital
adequacy, which is discussed below.

The BHC Act, as amended by the interstate banking provisions of the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Banking
Act"), which became effective on September 29, 1995, repealed the prior
statutory restrictions on interstate acquisitions of banks by bank holding
companies, such that the Company, and any other bank holding company located in
Georgia may now acquire a bank located in any other state, and any bank holding
company located outside Georgia may lawfully acquire any Georgia-based bank,
regardless of state law to the contrary, in either case subject to certain
deposit-percentage, aging requirements, and other restrictions.  The Interstate
Banking Act also generally provides that, after June 1, 1997, national and
state-chartered banks may branch interstate through acquisitions of banks in
other states.  By adopting legislation prior to that date, a state had the
ability either to "opt in" and accelerate the date after which interstate
branching is permissible or "opt out" and prohibit interstate branching
altogether.

In response to the Interstate Banking Act, the Georgia General Assembly adopted
the Georgia Interstate Banking Act, which was effective on July 1, 1995.  The
Georgia Interstate Banking Act provides that (a) interstate acquisitions by
institutions located in Georgia will be permitted in states that also allow
national interstate acquisitions and (b) interstate acquisitions of institutions
located in Georgia will be permitted by institutions in states that allow
national interstate acquisitions.

Additionally, on January 26, 1996, the Georgia Assembly adopted the Georgia
Interstate Branching Act which permits Georgia-based banks and bank holding
companies owning or acquiring banks outside of Georgia and all non-Georgia banks
and bank holding companies owning or acquiring banks in Georgia to merge any
lawfully acquired bank into an interstate branch network.  The Georgia
Interstate Branching Act also allows 

                                       12
<PAGE>
 
banks to establish de novo branches on a limited basis as of July 1, 1996.
Beginning July 1, 1998, the number of de novo branches which may be established
will no longer be limited.

The BHC Act generally prohibits the Company from engaging in activities other
than banking or managing or controlling banks or other permissible subsidiaries
and from acquiring or retaining direct or indirect control of any company
engaged in any activities other than those activities determined by the Federal
Reserve to be so closely related to banking or managing or controlling banks as
to be a proper incident thereto.  In determining whether a particular activity
is permissible, the Federal Reserve must consider whether the performance of
such an activity reasonably can be expected to produce benefits to the public,
such as greater convenience, increased competition, or gains in efficiency, that
outweigh possible adverse effects, such as undue concentration of resources,
decreased or unfair competition, conflicts of interest, or unsound banking
practices.  For example, factoring accounts receivable, acquiring or servicing
loans, leasing personal property, conducting discount securities brokerage
activities, performing certain data processing services, acting as agent or
broker in selling credit life insurance and certain other types of insurance in
connection with credit transactions, and performing certain insurance
underwriting activities all have been determined by the Federal Reserve to be
permissible activities of bank holding companies.  The BHC Act does not place
territorial limitations on permissible non-banking activities of bank holding
companies.  Despite prior approval, the Federal Reserve has the power to order a
holding company or its subsidiaries to terminate any activity or to terminate
its ownership or control of any subsidiary when it has reasonable cause to
believe that continuation of such activity or such ownership or control
constitutes a serious risk to the financial safety, soundness, or stability of
any bank subsidiary of that bank holding company.

The bank subsidiary of the Company is a member of the Federal Deposit Insurance
Corporation (the "FDIC"), and as such, its deposits are insured by the FDIC to
the maximum extent provided by law.  Such subsidiary is also subject to numerous
state and federal statutes and regulations that affect its business, activities,
and operations, and it is supervised and examined by one or more state or
federal bank regulatory agencies.

The FDIC and the Georgia Department of Banking and Finance (the "Georgia
Department") regularly examine the operations of the Bank and is given authority
to approve or disapprove mergers, consolidations, the establishment of branches,
and similar corporate actions.  The FDIC and the Georgia Department also have
the power to prevent the continuance or development of unsafe or unsound banking
practices or other violations of law.

Payment of Dividends

The Company is a legal entity separate and distinct from its banking subsidiary.
The principal sources of cash flow of the Company, including cash flow to pay
dividends to its shareholders, are dividends by the Bank.  There are statutory
and regulatory limitations on the payment of dividends by the Bank to the
Company as well as by the Company to its shareholders.

If, in the opinion of the federal banking regulator, a depository institution
under its jurisdiction is engaged in or is about to engage in an unsafe or
unsound practice (which, depending on the financial condition of the depository
institution, could include the payment of dividends), such authority may
require, after notice and hearing, that such institution cease and desist from
such practice.  The federal banking agencies have indicated that paying
dividends that deplete a depository institution's capital base to an inadequate
level would be an unsafe and unsound banking practice.  Under the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), a depository
institution may not pay any dividend if payment would cause it to become
undercapitalized or if it already is undercapitalized.  See "-- Prompt
Corrective Action."  Moreover, the federal agencies have issued policy
statements that provide that bank holding companies and insured banks should
generally only pay dividends out of current operating earnings.

                                       13
<PAGE>
 
At December 31, 1997, under dividend restrictions imposed under federal and
state laws, and the conditions included in the Georgia Department's approval of
the Bank's charter application, the Bank could not declare dividends to the
Company.

The payment of dividends by the Company and the Bank may also be affected or
limited by other factors, such as the requirement to maintain adequate capital
above regulatory guidelines.

Capital Adequacy

The Company and the Bank are required to comply with the capital adequacy
standards established by the Federal Reserve and the appropriate federal banking
regulator in the case of Bank.  There are two basic measures of capital adequacy
for bank holding companies that have been promulgated by the Federal Reserve: a
risk-based measure and a leverage measure.  All applicable capital standards
must be satisfied for a bank holding company to be considered in compliance.

The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profile among banks and bank
holding companies, to account for off-balance-sheet exposure, and to minimize
disincentives for holding liquid assets.  Assets and off-balance-sheet items are
assigned to broad risk categories, each with appropriate weights.  The resulting
capital ratios represent capital as a percentage of total risk-weighted assets
and off-balance-sheet items.

The minimum guideline for the ratio (the "Total Risk-Based Capital Ratio") of
total capital ("Total Capital") to risk-weighted assets (including certain off-
balance-sheet items, such as standby letters of credit) is 8%.  At least half of
Total Capital must comprise common stock, minority interests in the equity
accounts of consolidated subsidiaries, noncumulative perpetual preferred stock,
and a limited amount of cumulative perpetual preferred stock, less goodwill and
certain other intangible assets ("Tier 1 Capital").  The remainder may consist
of subordinated debt, other preferred stock, and a limited amount of loan loss
reserves ("Tier 2 Capital").  At December 31, 1997, the Company's consolidated
Total Risk-Based Capital Ratio and its Tier 1 Risk-Based Capital Ratio (i.e.,
the ratio of Tier 1 Capital to risk-weighted assets) were 21.4% and 20.1%,
respectively.

In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies.  These guidelines provide for a minimum
ratio (the "Leverage Ratio") of Tier 1 Capital to average assets, less goodwill
and certain other intangible assets, of 3% for bank holding companies that meet
certain specified criteria, including having the highest regulatory rating.  All
other bank holding companies generally are required to maintain a Leverage Ratio
of at least 3%, plus an additional cushion of 100 to 200 basis points.  The
Company's Leverage Ratio at December 31, 1997 was 15.1%.  The guidelines also
provide that bank holding companies experiencing internal growth or making
acquisitions will be expected to maintain strong capital positions substantially
above the minimum supervisory levels without significant reliance on intangible
assets.  Furthermore, the Federal Reserve has indicated that it will consider a
"tangible Tier 1 Capital Leverage Ratio" (deducting all intangibles) and other
indicia of capital strength in evaluating proposals for expansion or new
activities.

The Bank is subject to risk-based and leverage capital requirements adopted by
the FDIC, which are substantially similar to those adopted by the Federal
Reserve for bank holding companies.

The Bank was in compliance with applicable minimum capital requirements as of
December 31, 1997.  The Company has not been advised by any federal banking
agency of any specific minimum capital ratio requirement applicable to it or its
subsidiary depository institution.

                                       14
<PAGE>
 
Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including issuance of a capital directive, the termination
of deposit insurance by the FDIC, a prohibition on the taking of brokered
deposits, and certain other restrictions on its business.  As described below,
substantial additional restrictions can be imposed upon FDIC-insured depository
institutions that fail to meet applicable capital requirements.  See "-- Prompt
Corrective Action."

The federal bank regulators continue to indicate their desire to raise capital
requirements applicable to banking organizations beyond their current levels.
In this regard, the Federal Reserve and the FDIC have, pursuant to FDICIA,
recently adopted final regulations, which will become mandatory on January 1,
1998, requiring regulators to consider interest rate risk (when the interest
rate sensitivity of an institution's assets does not match the sensitivity of
its liabilities or its off-balance-sheet position) in the evaluation of a bank's
capital adequacy.  The bank regulatory agencies' methodology for evaluating
interest rate risk requires banks with excessive interest rate risk exposure to
hold additional amounts of capital against such exposures.  The market risk
rules apply to any bank or bank holding company whose trading activity equals
10% or more of its total assets, or whose trading activity equals $1 billion or
more.

Support of Subsidiary Institutions

Under Federal Reserve policy, the Company is expected to act as a source of
financial strength for, and to commit resources to support, each of its banking
subsidiaries.  This support may be required at times when, absent such Federal
Reserve policy, the Company may not be inclined to provide it.  In addition, any
capital loans by a bank holding company to any of its banking subsidiaries are
subordinate in right of payment to deposits and to certain other indebtedness of
such banks.  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 banking subsidiary will be assumed by the bankruptcy trustee and
entitled to a priority of payment.

Under the Federal Deposit Insurance Act ("FDIA"), a depository institution
insured by the FDIC can be held liable for any loss incurred by, or reasonably
expected to be incurred by, the FDIC after August 9, 1989, in connection with
(a) the default of a commonly controlled FDIC-insured depository institution or
(b) any assistance provided by the FDIC to any commonly controlled FDIC-insured
depository institution "in danger of default."  "Default" is defined generally
as the appointment of a conservator or receiver, and "in danger of default" is
defined generally as the existence of certain conditions indicating that a
default is likely to occur in the absence of regulatory assistance.  The FDIC's
claim for damages is superior to claims of shareholders of the insured
depository institution or its holding company, but is subordinate to claims of
depositors, secured creditors, and holders of subordinated debt (other than
affiliates) of the commonly controlled insured depository institution.  The
subsidiary depository institutions of the Company are subject to these cross-
guarantee provisions.  As a result, any loss suffered by the FDIC in respect of
these subsidiaries would likely result in assertion of the cross-guarantee
provisions, the assessment of such estimated losses against the depository
institution's banking affiliates, and a potential loss of the Company's
investment in such other subsidiary depository institutions.

Prompt Corrective Action

FDICIA establishes a system of prompt corrective action to resolve the problems
of undercapitalized institutions.  Under this system, which became effective in
December 1992, the federal banking regulators are required to establish five
capital categories (well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, and critically undercapitalized) and to take
certain mandatory supervisory actions, and are authorized to take other
discretionary actions, with respect to institutions in the three
undercapitalized categories, the severity of which will depend upon the capital
category in which the institution is placed.  Generally, subject to a narrow
exception, FDICIA requires the banking regulator to appoint a 

                                       15
<PAGE>
 
receiver or conservator for an institution that is critically undercapitalized.
The federal banking agencies have specified by regulation the relevant capital
level for each category.

The capital levels established for each of the categories are as follows:

<TABLE>
<CAPTION>

==================================================================================================
                                                Total           Tier 1 Risk-  
Capital Category      Tier 1 Capital     Risk-Based Capital     Based Capital          Other
==================================================================================================
<S>                    <C>                  <C>                  <C>             <C>
Well Capitalized       5% or more           10% or more          6% or more      Not subject to a
                                                                                 capital directive
-------------------------------------------------------------------------------------------------- 
Adequately             4% or more           8% or more           4% or more             --
Capitalized
--------------------------------------------------------------------------------------------------  
Undercapitalized       less than 4%         less than 8%         less than 4%           --
--------------------------------------------------------------------------------------------------  
Significantly          less than 3%         less than 6%         less than 3%           --
Undercapitalized
-------------------------------------------------------------------------------------------------- 
Critically             2% or less                --                   --                --
Undercapitalized       tangible equity
==================================================================================================
</TABLE>

For purposes of the regulation, the term "tangible equity" includes core capital
elements counted as Tier 1 Capital for purposes of the risk-based capital
standards, plus the amount of outstanding cumulative perpetual preferred stock
(including related surplus), minus all intangible assets with certain
exceptions.  A depository institution may be deemed to be in a capitalization
category that is lower than is indicated by its actual capital position if it
receives an unsatisfactory examination rating.

An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency.
Under FDICIA, a bank holding company must guarantee that a subsidiary depository
institution meets its capital restoration plan, subject to certain limitations.
The obligation of a controlling holding company under FDICIA to fund a capital
restoration plan is limited to the lesser of 5% of an undercapitalized
subsidiary's assets or the amount required to meet regulatory capital
requirements.  An undercapitalized institution is also generally prohibited from
increasing its average total assets, making acquisitions, establishing any
branches, or engaging in any new line of business, except in accordance with an
accepted capital restoration plan or with the approval of the FDIC.  In
addition, the appropriate federal banking agency is given authority with respect
to any undercapitalized depository institution to take any of the actions it is
required to or may take with respect to a significantly undercapitalized
institution as described below if it determines "that those actions are
necessary to carry out the purpose" of FDICIA.

At December 31, 1997, the Bank had the requisite capital levels to qualify as
well capitalized.

FDIC Insurance Assessments

Pursuant to FDICIA, the FDIC adopted a risk-based assessment system for insured
depository institutions that takes into account the risks attributable to
different categories and concentrations of assets and liabilities.  The system
assigns an institution to one of three capital categories:  (a) well
capitalized; (b) adequately capitalized; and (c) undercapitalized.  These three
categories are substantially similar to the prompt corrective action categories
described above, with the "undercapitalized" category including institutions
that are 

                                       16
<PAGE>
 
undercapitalized, significantly undercapitalized, and critically
undercapitalized for prompt corrective action purposes. An institution is also
assigned by the FDIC to one of three supervisory subgroups within each capital
group. The supervisory subgroup to which an institution is assigned is based on
a supervisory evaluation provided to the FDIC by the institution's primary
federal regulator and information which the FDIC determines to be relevant to
the institution's financial condition and the risk posed to the deposit
insurance funds (which may include, if applicable, information provided by the
institution's state supervisor). An institution's insurance assessment rate is
then determined based on the capital category and supervisory category to which
it is assigned. Under the risk-based assessment system there are nine assessment
risk classifications (i.e., combinations of capital groups and supervisory
subgroups) to which different assessment rates are applied. Assessment rates for
members of both the Bank Insurance Fund ("BIF") and the Savings Association
Insurance Fund ("SAIF") for the first half of 1995 ranged from 23 basis points
(0.23% of deposits) for an institution in the highest category (i.e., "well
capitalized" and "healthy") to 31 basis points (0.31% of deposits) for an
institution in the lowest category (i.e., "undercapitalized" and "substantial
supervisory concern"). These rates were established for both funds to achieve a
designated ratio of reserves to insured deposits (i.e., 1.25%) within a
specified period of time.

Once the designated ratio for the BIF was reached in May 1995, the FDIC reduced
the assessment rate applicable to BIF deposits in two stages, so that, beginning
in 1996, the deposit insurance premiums for 92% of all BIF members in the
highest capital and supervisory categories were set at $2,000 per year,
regardless of deposit size.  The FDIC elected to retain the existing assessment
rate range of 23 to 31 basis points for SAIF members for the foreseeable future
given the undercapitalized nature of that insurance fund.

Recognizing that the disparity between the SAIF and BIF premium rates had
adverse consequences for SAIF-insured institutions and other banks with SAIF
assessed deposits, the Deposit Insurance Funds Act of 1996 (the "Funds Act") was
enacted by Congress as part of the omnibus budget legislation and signed into
law on September 30, 1996.  As directed by the Funds Act, the FDIC implemented a
special one-time assessment of approximately 65.7 basis points (0.657%) on a
depository institution's SAIF-insured deposits held as of March 31, 1995 (or
approximately 52.6 basis points on SAIF deposits acquired by banks in certain
qualifying transactions).

In addition, the FDIC has implemented a revision in the SAIF assessment rate
schedule that effected, as of October 1, 1996 (a) a widening in the assessment
rate spread among institutions in the different capital and risk assessment
categories, (b) an overall reduction of the assessment rate range assessable on
SAIF deposits of from 0 to 27 basis points, and (c) a special interim assessment
rate range for the last quarter of 1996 of from 18 to 27 basis points on
institutions subject to Financing Corporation ("FICO") assessments.  Effective
January 1, 1997, assessments to help pay off the $780 million in annual interest
payments on the $8 billion FICO bonds issued in the late 1980's as part of the
government rescue of the thrift industry were imposed on both BIF- and SAIF-
insured deposits in annual amounts presently estimated at 1.29 basis points and
6.44 basis points, respectively.  Beginning in January 2000, BIF- and SAIF-
insured institutions will share the FICO interest costs at equal rates currently
estimated at 2.43 basis points.

Under the FDIA, insurance of deposits may be terminated by the FDIC upon a
finding that the institution has engaged in unsafe and unsound practices, is in
an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order, or condition imposed by the FDIC.

                                       17
<PAGE>
 
Proposed Legislation and Regulatory Action

New regulations and statutes are regularly proposed that contain wide-ranging
proposals for altering the structures, regulations and competitive relationships
of the nation's financial institutions.  It cannot be predicted whether or what
form any proposed regulation or statute will be adopted or the extent to which
the business of the Company may be affected by such regulation or statute.

Item 2.  Description of Property
--------------------------------

The principal place of business of both the Company and the Bank is located at
1490 Martha Berry Blvd., Rome, Georgia 30165-1618.  Construction of a new one-
story, 9,000 square foot brick, traditional bank building was completed in
October 1996.  It includes office space for administration, lending, customer
service and new accounts, operations facilities, four drive-through tellers, six
stand up teller positions, and a security vault with safe deposit boxes.  The
Bank owns the building and the 2.29 acres of graded land on which the building
sits. Prior to completion and occupancy of the building, the Bank was operated
out of two modular office units on the bank site, which provided 2,608 square
feet of office space and banking facilities.

On March 11, 1997, the Bank acquired two adjacent parcels of land, approximately
one acre in size on a corner at the intersection of Second Avenue and East
Eighth St., next to the YMCA, in East Rome.  The cost of the lots was $211,231.
In November 1997, the Bank received regulatory approval to build a 1,820 square
foot branch banking office on the site. The estimated cost of the site work, the
building, furniture, fixtures and equipment is $360,000.  Bids have been
accepted on $298,000 of this amount.  Approximately $62,000 in furniture,
fixtures and computer equipment remains to be contracted.  The Branch is
expected to be completed and operational in the second quarter of 1998.

The street address of the Branch is 800 East Second Ave.  After evaluating the
market potential for this area known as East Rome, management decided that a
Branch was necessary to service banking customers who consider our current
location to be inconvenient.  Financial projections for the new Branch show that
it will not contribute to earnings until 1999.

Item 3.  Legal Proceedings
--------------------------

There are no material legal proceedings to which the Company or the Bank or any
of their properties are subject.

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

No matter was submitted to a vote of security holders during the fourth quarter
of the fiscal year covered by this report.

                                       18
<PAGE>
 
                                    Part II

Item 5.   Market for Registrant's Common Equity and Related Stockholder Matters
-------------------------------------------------------------------------------

The information set forth under the caption "Market for Common Equity and
Related Stockholder Matters" in the 1997 Annual Report is incorporated herein by
reference.

Item 6.   Management's Discussion and Analysis of Financial Condition and
-------------------------------------------------------------------------
Results of Operations
---------------------

The information set forth under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the 1997 Annual
Report is incorporated herein by reference.

Item 7.   Financial Statements
------------------------------

The consolidated balance sheets of the Company as of December 31, 1997 and 1996,
and the related consolidated statements of operations, changes in stockholders'
equity, and cash flows, and notes to the consolidated financial statements for
each of the three years in the period ended December 31, 1997, and the report
issued thereon by the Company's independent public accountants, which appear in
the 1997 Annual Report are incorporated herein by reference.

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

No change in accountants has taken place in any period subsequent to the date of
the most recent financial statements.  The Company had no disagreement with
accountants with respect to accounting principles or practices or financial
statement disclosures or auditing scope or procedure, or disagreements with
regard to reportable events.  The Company has had the same independent
accounting firm since its inception.

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

The information set forth under the caption "Election of Directors" in the Proxy
Statement is incorporated herein by reference.

Item 10.  Executive Compensation
--------------------------------

The information set forth under the caption "Executive Compensation" in the
Proxy Statement is incorporated herein by reference.

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

The information set forth under the caption "Security Ownership of Certain
Beneficial Owners and Management" in the Proxy Statement is incorporated herein
by reference.

Item 12.  Certain Relationships and Related Transactions
--------------------------------------------------------

The information set forth under the caption "Certain Relationships and Related
Transactions" in the Proxy Statement is incorporated herein by reference.

                                       19
<PAGE>
 
Item 13.  Exhibits, List and Reports on Form 8-K
------------------------------------------------

(a)  The following documents are filed as part of this report:

3.1   Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the
      Company's Registration Statement No. 33-82858 on Form SB-2).

3.2   Bylaws (Incorporated by reference to Exhibit 3.2 to the Company's
      Registration Statement No. 33-82858 on Form SB-2).

4.1   Provisions of Company's Articles of Incorporation and Bylaws Defining the
      Rights of Shareholders (Incorporated by reference to Exhibit 4.1 to the
      Company's Registration Statement No. 33-82858 on Form SB-2).

4.2   Form of Stock Certificate (Incorporated by reference to Exhibit 4.2 to the
      Company's Registration Statement No. 33-82858 on Form SB-2).

10.1  *Employment Agreement between the Company and Thomas D. Caldwell, III
      dated September 1, 1997. (Incorporated by reference to Exhibit 10.1 of the
      Company's Quarterly Report on Form 10-QSB for the quarter ended September
      30, 1997).

10.2  *Greater Rome Bancshares, Inc. 1996 Stock Incentive Plan (Incorporated by
      reference to Exhibit 10.12 of the Company's Annual Report on Form 10-KSB
      for the year ended December 31, 1995).

10.3  *Form of Incentive Stock Option Agreement (Incorporated by reference to
      Exhibit 10.13 of the Company's Annual Report on Form 10-KSB for the year
      ended December 31, 1996).

10.4  *Form of Stock Option Award to Non-employee Directors (Incorporated by
      reference to Appendix A to the Company's Proxy Statement for the 1997
      Annual Meeting of the Shareholders held May 15, 1997).

10.5  *Employment Agreement between the Company and E. Grey Winstead, III dated
      September 1, 1997. (Incorporated by reference to Exhibit 10.5 of the
      Company's Quarterly Report on Form 10-QSB for the quarter ended September
      30, 1997).

13.1  1997 Annual Report to Shareholders.

21.1  Subsidiaries of the Registrant (Incorporated by reference to Exhibit 21.1
      of the Company's Annual Report on Form 10-KSB for the year ended December
      31, 1996).

27.1  Financial Data Schedule (for S.E.C. use only).

----------------------------------
*   Indicates a management contract or compensatory arrangement.

(b)   Reports on Form 8-K
      -------------------

         No reports on Form 8-K were filed during the fourth quarter of the year
ended December 31, 1997.

                                       20
<PAGE>
 
                                   SIGNATURES

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

                                GREATER ROME BANCSHARES, INC.

                                By:/s/ Thomas D. Caldwell, III
                                   ---------------------------------------------
                                       Thomas D. Caldwell, III, President
Date: March 27, 1998
     -----------------------

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

<TABLE>
<CAPTION>
             Signature                              Title                       Date 
             ---------                              -----                       ---- 
<S>                                  <C>                                   <C>
/s/ Robert L. Berry                                Director                March 27, 1998
-------------------------------
Robert L. Berry

/s/ Frank A. Brown, Jr.                            Director                March 27, 1998
-------------------------------
Frank A. Brown, Jr.

/s/ Thomas D. Caldwell, III              Chairman, CEO and President       March 27, 1998
-------------------------------         (Principal Executive Officer)
Thomas D. Caldwell, III                 

/s/ Gene G. Davidson                               Director                March 27, 1998
-------------------------------
Gene G. Davidson

/s/ Henry Haskell Perry                            Director                March 27, 1998
-------------------------------
Henry Haskell Perry

/s/ Bradford Lee Riddle                            Director                March 27, 1998
-------------------------------
Bradford Lee Riddle

/s/ M. Wayne Robinson                              Director                March 27, 1998
-------------------------------
M. Wayne Robinson

/s/ Dale G. Smith                                  Director                March 27, 1998
-------------------------------
Dale G. Smith

/s/ Paul E. Smith                                  Director                March 27, 1998
-------------------------------
Paul E. Smith

/s/ W. Fred Talley                                 Director                March 27, 1998
-------------------------------
W. Fred Talley

/s/ Martha Berry Walstad                           Director                March 27, 1998
-------------------------------
Martha Berry Walstad

/s/ E. Grey Winstead, III            (Principal Financial and Accounting   March 27, 1998
-------------------------------                    Officer)
E. Grey Winstead, III                              
</TABLE>

                                       21
<PAGE>
 
                         GREATER ROME BANCSHARES, INC.
     Form 10-KSB Annual Report for the Fiscal Year ended December 31, 1997

                               INDEX TO EXHIBITS
 
Exhibit                                                               Sequential
Number                     Description                                   Page
------                     -----------                                   ----
                                                                  
3.1          Articles of Incorporation (Incorporated by           
             reference to Exhibit 3.1 to the Company's            
             Registration Statement No. 33-82858 on Form SB-2).           N/A
                                                                  
3.2          Bylaws (Incorporated by reference to Exhibit 3.2 to  
             the Company's Registration Statement No. 33-82858    
             on Form SB-2).                                               N/A
                                                                  
4.1          Provisions of Company's Articles of Incorporation    
             and Bylaws Defining the Rights of Shareholders       
             (Incorporated by reference to Exhibit 4.1 to the     
             Company's Registration Statement No. 33-82858 on     
             Form SB-2).                                                  N/A
                                                                  
4.2          Form of Stock Certificate (Incorporated by           
             reference to Exhibit 4.2 to the Company's            
             Registration Statement No. 33-82858 on Form SB-2).           N/A
                                                                  
10.1         *Employment Agreement between the Company and        
             Thomas D. Caldwell, III dated September 1, 1997.     
             (Incorporated by reference to Exhibit 10.1 of the    
             Company's Quarterly Report on Form 10-QSB for the    
             quarter ended September 30, 1997).                           N/A
                                                                  
10.2         *Greater Rome Bancshares, Inc. 1996 Stock Incentive  
             Plan (Incorporated by reference to Exhibit 10.12 of  
             the Company's Annual Report on Form 10-KSB for the   
             year ended December 31, 1995).                               N/A
                                                                  
10.3         *Form of Incentive Stock Option Agreement            
             (Incorporated by reference to Exhibit 10.13 of the   
             Company's Annual Report on Form 10-KSB for the year  
             ended December 31, 1996).                                    N/A
                                                                  
10.4         *Form of Stock Option Award to Non-employee          
             Directors (Incorporated by reference to Appendix A   
             to the Company's Proxy Statement for the 1997        
             Annual Meeting of the Shareholders held May 15,      
             1997).                                                       N/A
                                                                  
10.5         *Employment Agreement between the Company and E.     
             Grey Winstead, III dated September 1, 1997.          
             (Incorporated by reference to Exhibit 10.5 of the    
             Company's Quarterly Report on Form 10-QSB for the    
             quarter ended September 30, 1997).                           N/A
                                                                  
13.1         1997 Annual Report to Shareholders.                          N/A
                                                                  
21.1         Subsidiaries of the Registrant (Incorporated by      
             reference to Exhibit 21.1 of the Company's Annual    
             Report on Form 10-KSB for the year ended December    
             31, 1996).                                                   N/A
                                                                  
27.1         Financial Data Schedule (for S.E.C. use only).               N/A
        
-----------------------------------
* Indicates a management contract or compensatory arrangement.
        
                                      22