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, 2001
                           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.   $9,214,381
                                                           ----------

The aggregate market value of the voting stock as of March 08, 2002, held by
non-affiliates is $7,079,610 computed by reference to the price of the most
recent trades of the Company's common stock.

As of March 08, 2002, the Company had 701,766 shares of common stock issued and
outstanding.

Portions of the following documents are incorporated by reference: (1) 2001
Annual Report to Shareholders, into Part II; (2) Proxy Statement (the "Proxy
Statement") for the Annual Meeting of Shareholders to be held May 16, 2002, into
Part III.

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


                                       1
<PAGE>


                                     PART I

Item 1.  Description of Business
--------------------------------
                           FORWARD LOOKING STATEMENTS

Various statements contained in this Annual Report, which are not statements of
historical fact, constitute forward-looking statements. Examples of
forward-looking statements include, but are not limited to:

  (1) projections of revenues, income or loss, earnings or loss per share, the
      payment or non-payment of dividends, capital structure and other financial
      items;
  (2) statements of plans and objectives of the Company or its management or
      board of directors, including those relating to products or services;
  (3) statements of future economic performance; and
  (4) statements of assumptions underlying these statements.

Words such as "believes," "anticipates," "expects," "intends," "targeted," and
similar expressions are intended to identify forward-looking statements but are
not the exclusive means of identifying such statements.

Forward-looking statements involve risks and uncertainties, which may cause
actual results to differ materially from the results in the forward-looking
statements. Facts that could cause actual results to differ from those discussed
in the forward-looking statements include, but are not limited to:

  (1) the strength of the U.S. economy in general and the strength of the local
      economies in which operations are conducted;
  (2) the effects of and changes in trade, monetary and fiscal policies and
      laws, including interest rate policies of the Board of Governors of the
      Federal Reserve System;
  (3) inflation, interest rate, market and monetary fluctuations;
  (4) the timely development and acceptance of new products and services and
      perceived overall value of these products and services by users;
  (5) changes in consumer spending, borrowing and saving habits;
  (6) technological changes;
  (7) acquisitions;
  (8) the ability to increase market share and control expenses;
  (9) the effect of changes in laws and regulations (including laws and
      regulations concerning taxes, banking, securities and insurance) with
      which the Company and its subsidiary must comply;
 (10) the effect of changes in accounting policies and practices, as may be
      adopted by the regulatory agencies as well as the Financial Accounting
      Standards Board;
 (11) changes in the Company's organization, compensation and benefit plans;
 (12) the costs and effects of litigation and of unexpected or adverse outcomes
      in such litigation; and
 (13) the Company's success at managing the risks involved in the foregoing.

Such forward-looking statements speak only as of the date on which they are
made. The Company undertakes no obligation to update any forward-looking
statement to reflect events or circumstances after the date on which the
statement is made to reflect the occurrence of unanticipated events.

                                     General

Greater Rome Bancshares, Inc. (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 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.

                                       2
<PAGE>

                            Location and Service Area

The Bank provides general commercial banking services within Floyd County,
emphasizing the needs of individuals and small- to medium-sized businesses.
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 miles east of Birmingham, Alabama. The 2000
census indicated Floyd County had a population of 86,700 with a median family
income of $31,269 per household. Rome is reached via U.S. 411, which connects to
Interstate 75 at Cartersville 25 miles southeast of Rome. It is also served by
major rail carriers and by the Richard B. Russell Airport, which is located 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.

                                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, money market accounts and time deposits. The
transaction accounts and time certificates of deposit 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-term 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 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. All loans to directors or
executive officers of the Bank are approved by the Bank's board of directors and
are made on terms no more favorable than would be available to a person not
affiliated with the Bank. See "Lending Activities."

The Bank also engages 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
various types of commercial paper. The Bank concentrates its investment
activities primarily in intermediate term government, agency and mortgage-backed
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.

                                       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 various 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 the following:

   - 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 these 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. Various 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 underwritten 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.

The Bank also originates 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 for 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 market investor and receiving the
investor's underwriting approval prior to closing the loan.

                                       4
<PAGE>
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 borrowers. The risk associated with commercial loans varies with many
factors including the economy in the Bank's lending area. In addition many 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 90-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
terminate 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 if the
quality of the loan decreases.

Lending Limit

Under the Financial Institutions Code of Georgia, 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.

At December 31, 2001, the Bank's lending limit was approximately $975,000 for
loans not fully secured plus an additional $650,000 (or an aggregate of
approximately $1.625 million) for loans fully secured. These limits will
increase and decrease as the Bank's statutory capital base increases and
decreases. If a borrower's credit needs exceeds these limits, the Bank may sell

                                       5
<PAGE>

participations in the loan to the extent necessary to maintain these lending
limits.

                                   Competition

The Bank competes with other commercial banks, savings and loan associations,
credit unions and money market mutual funds operating in Floyd County and
elsewhere. As of December 2001, nine FDIC-insured institutions were operating in
Floyd County. 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
various services, such as extensive and established branch networks and trust
services, which the Bank does not now provide. Management believes that the Bank
can compete effectively with these institutions but cannot assure that it will
do so.

                                    Employees

The Bank had 44 equivalent full-time employees on December 31, 2001. The Bank's
employees are not subject to a collective bargaining agreement. The Company has
no employees other than its officers, none of whom receives compensation for
their services to the Company. The Company reimburses the Bank for management
services performed by the Bank's officers. The Company conducts no business
other than serving as the holding company for the Bank. The Company currently
has three officers:

    o  Thomas D. Caldwell, III, President and Chief Executive Officer;
    o  Robert L. Berry, Secretary; and
    o  E. Grey Winstead, III, Chief Financial Officer.

                                       6
<PAGE>

                             STATISTICAL INFORMATION

The following tables set forth statistical information and should be read in
conjunction with the financial statements of Greater Rome Bancshares, Inc.

I.  Distribution of Assets, Liabilities, and Stockholders' Equity; Interest
    Rates and Interest Differential
<TABLE>
<CAPTION>
                                            2001           2000          2001          2000         2001        2000
                                           Average       Average        Income/       Income/       Yield        Yield
                                           Balance       Balance      (Expense)      (Expense)   (Rate Paid) (Rate Paid)
                                           -------       -------      ---------      ---------   ----------- -----------
    <S>                              <C>               <C>             <C>           <C>           <C>         <C>
     Loans                            $   75,616,990    62,753,539      6,949,998     6,226,911     9.19%        9.92%
     Taxable investment securities        14,547,105    13,337,580        884,794       843,753     6.08%        6.33%
     Non-taxable investment
       securities                          8,021,096     4,472,139        412,105       243,261     5.14%        5.44%
     Interest bearing deposits
       in other banks                        774,998       774,574         27,886        48,298     3.60%        6.24%
     Federal funds sold                    3,420,176     2,994,578        126,175       189,084     3.69%        6.31%
                                         -----------------------------------------------------------------------------
          Average earning assets      $  102,380,365    84,332,410      8,400,958     7,551,307     8.21%        8.95%
                                         -----------------------------------------------------------------------------

     Cash & due from banks                 2,492,133     1,960,134
     Premises and equipment                3,594,160     3,046,022
     Other assets                          2,538,412     2,567,941
     Loan loss reserve                      (926,942)     (752,286)
                                         -------------------------
          Average total assets        $  110,078,128    91,154,221
                                         -------------------------

     Interest bearing demand deposits      7,123,578     5,830,029       (118,315)     (121,476)   -1.66%       -2.08%
     Savings and money market deposits    13,776,121    11,429,252       (399,673)     (490,928)   -2.90%       -4.30%
     Time deposits                        57,351,672    45,894,641     (3,414,963)   (2,789,659)   -5.95%       -6.08%
     Borrowed funds                       12,958,041    11,280,789       (669,224)     (686,811)   -5.16%       -6.09%
                                         -----------------------------------------------------------------------------
          Average interest bearing
          liabilities                 $   91,209,412      74,434,711   (4,602,175)   (4,088,874)   -5.05%       -5.49%
                                         -----------------------------------------------------------------------------

     Non-interest bearing deposits         9,068,950     8,459,346
     Other liabilities                       671,289       496,297
     Stockholders' equity                  9,128,477     7,763,867
                                         -------------------------
          Average total liabilities
          and equity                  $  110,078,128    91,154,221
                                         -------------------------

                                         -----------------------------------------------------------------------------
     Net interest income yield on
     average earning assets           $  102,380,365    84,332,410      3,798,783     3,462,435     3.71%        4.11%
                                         -----------------------------------------------------------------------------
</TABLE>

Notes:
1   Non-accruing loans are included in the average balances.
    Average non-accruing loans were $136,121 in 2001 and were $169,302 in 2000.
2   Loan fees are included in the interest income computation and were $154,661
    in 2001 and $130,878 in 2000.

                                       7
<PAGE>



The following table sets forth a summary of the changes in interest income and
interest expense resulting from changes in volume and rates from 2000 to 2001.
<TABLE>
<CAPTION>

                                                                        Increase/(Decrease)
                                                                        -------------------
                                                               Net           Due to           Due to
                                                             Change         Rate (1)        Volume (1)
                                                             ------         --------        ----------
<S>                                             <C>                        <C>              <C>
Interest Earning Assets
Loans                                            $          723,087         (484,104)        1,207,191
Taxable investment securities                                41,041          (33,405)           74,446
Non-taxable investment securities                           168,844          (13,493)          182,337
Interest bearing deposits in other banks                    (20,412)         (20,427)               15
Federal funds sold                                          (62,909)         (86,936)           24,027
                                                            -------          -------         ---------
       Total Interest Income                                849,651         (638,365)        1,488,016
                                                            -------          -------         ---------
Interest Bearing Liabilities
Interest bearing demand deposits                             (3,161)         (27,258)           24,097
Savings and money market deposits                           (91,255)        (179,383)           88,128
Time deposits                                               625,304          (57,969)          683,273
Borrowed funds                                              (17,587)        (112,035)           94,448
                                                            -------          -------         ---------
       Total Interest Expense                               513,301         (376,645)          889,946
                                                            -------          -------         ---------
Net Interest Income                               $         336,350         (261,720)          598,070
                                                            =======          =======         =========
</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 2001 Annual Report, which is incorporated herein by
reference.

The weighted average tax equivalent yield of investment securities maturing in
one year or less as of December 31, 2001 was 6.67%. The weighted average tax
equivalent yield of investment securities maturing from one to five years as of
December 31, 2001 was 6.50%. The weighted average tax equivalent yield of
investment securities maturing in greater than five years as of December 31,
2001 was 6.25%

                                       8
<PAGE>


III.  Loan Portfolio
                                             12/31/01            12/31/00
               Loan Types                     Balance            Balance
               ----------                     -------            -------
      Commercial                      $     12,400,567   $     13,625,570

      Real estate - construction             3,512,480          3,884,681

      Real estate - mortgage                48,939,839         42,579,865

      Consumer loans                        13,149,830         13,215,763
                                            ----------         ----------

                              Total   $     78,002,716    $    73,305,879
                                            ==========         ==========

<TABLE>
<CAPTION>

                                                           Maturity and Repricing by Type

                                                                   Due from 1
                                    Due in 1 year                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          $  4,779,616      3,122,473         3,444,994       1,038,487           5,195              -

      Real estate -
        construction         2,863,817        168,442               -           480,223             -                -

      Real estate -
        mortgage            13,498,560      4,708,768        23,342,115       6,030,922          27,016        1,323,786

      Consumer loans         5,988,529        302,343         6,492,728         116,682          34,397              -
                            ----------      ---------        ----------       ---------          ------        ---------

               Total      $ 27,130,522      8,302,026        33,279,837       7,666,314          66,608       1,323,786
                            ==========      =========        ==========       =========          ======       =========
</TABLE>

The maturity distribution is less than the total at year-end by the amount of
non-accrual loans totaling $233,623.

Risk Elements
-------------
<TABLE>
<CAPTION>

Nonaccrual, Past Due and Restructured Loans                                   2001         2000
-------------------------------------------                                   ----         ----
<S>                                                                 <C>                  <C>
Nonaccrual loans                                                     $      233,623       64,296
Accruing loans contractually past due 90 days or more                $          -            -
Troubled debt restructurings                                         $       70,485       68,007
</TABLE>

The amount of interest that would have been included in income on the above
non-accrual loans if they had been current in accordance with their original
terms was $14,244 in 2001 and $7,488 in 2000. ___ The amount of interest that
was included in interest income on the above loans was $16,589 in 2001 and
$1,831 in 2000.

The Bank's policy is to place loans on non-accrual status when it appears that
the collection of principal and interest in accordance with the terms of the
loan is doubtful. Any loan that becomes 90 days past due as to principal or
interest is automatically placed on non-accrual, unless corrective action is
certain and imminent.

                                       9
<PAGE>

IV. Summary of Loan Loss Experience

    Allowance for possible loan losses                  2001           2000
    ----------------------------------                  ----           ----
Balance at the beginning of the period           $     856,902        684,131
Charge-offs:
    Commercial                                         201,578         39,916
    Real estate - mortgage                                 -           27,781
    Consumer loans                                     102,763         72,412
                                                       -------        -------
    Total                                              304,341        140,109
                                                       -------        -------
Recoveries:
    Commercial                                          15,784            -
    Consumer loans                                      42,358         27,557
                                                       -------        -------
    Total                                               58,142         27,557
                                                       -------        -------
Net charge-offs:                                       246,199        112,552
Additions charged to operations                        302,685        285,323
                                                       -------        -------
Balance at end of period                      $        913,388        856,902
                                                       =======        =======

Average loans outstanding                     $     75,616,990     62,753,539
Ratio of net charge-offs to average loans                0.33%          0.18%
Ratio of allowance to average loans                      1.21%          1.37%

The provision for loan losses was $302,685 for 2001, up $17,362 from 2000.
Management and the board evaluate the adequacy of the loan loss reserve on a
quarterly basis. This evaluation considers historical loan losses by risk grade
under each major category of loans, i.e., commercial, real estate and consumer.
It also considers current portfolio risk, industry concentrations and the
uncertainty associated with changing economic conditions.

In addition, management performs an on-going loan review process. All new loans
are risk rated under loan policy guidelines. On a monthly basis, management
evaluates the composite risk ratings in a model that assesses the adequacy of
the current allowance for loan losses, and management presents this evaluation
to the board of directors each month. Management performs loan reviews for
compliance with underwriting policy on new loans and presents the review results
in the weekly asset review committee meeting. Management also reviews past due
loans weekly and large loans are reviewed periodically. Management may change
risk ratings 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.

The amounts charged to operations in the provision for loan losses are based on
an annual budget that is developed from the most recent monthly and quarterly
reviews. These amounts may be adjusted in any period based on the results of
more current evaluations that indicate that the allowance might be inadequate or
excessive.

Management expects to incur 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.

                                       10
<PAGE>

Allocation of the Allowance for Loan Losses

Under the Bank's credit risk loan grading policy, each loan in the portfolio is
assigned one of the following risk grades:

                  Grade            Short Definition
                  -----            ----------------
                    1         Negligible credit risk
                    2         Minimal credit risk
                    3         Average credit risk
                    4         Acceptable, but more than average credit risk
                    5         Greater than normal credit risk
                    6         Excessive credit risk
                    7         Potential loss
                    8         Uncollectable

The policy provides more explicit guidance on the application of risk grades. On
a monthly basis, loan balances are aggregated for each grade and a loan loss
allowance is calculated using factors that represent management's estimate of
the allowance applicable to each grade. These factors are compared to historical
charge-offs for reasonableness and adjusted as necessary.

The approximate anticipated amount of charge-offs for 2002 allocated by major
category is:

                                         Projected
                  Category              Charge-offs
                  --------              -----------
                  Real Estate       $      22,425
                  Commercial               99,659
                  Consumer                107,626
                                          -------
                  Total             $     229,710
                                          =======



                                       11
<PAGE>


V.   Deposits
<TABLE>
<CAPTION>
                                                  Average          Average      Average     Average
                                                  Balance          Balance        Rate        Rate
                                                   2001             2000          2001        2000
                                                   ----             ----          ----        ----
    <S>                                    <C>                  <C>              <C>         <C>
     Non-interest bearing deposits          $    9,068,950        8,459,346
     Interest bearing demand deposits            7,123,578        5,830,029       1.66%       2.08%
     Savings and money market deposits          13,776,121       11,429,252       2.90%       4.30%
     Time deposits                              57,351,672       45,894,641       5.95%       6.08%
                                                ---------------------------------------------------
                Total average deposits      $   87,320,321       71,613,268       4.50%       4.75%
                                                ===================================================
</TABLE>

As of December 31, 2001 the amount outstanding of time certificates of deposit
of $100,000 or more was $18,734,923. Amounts by time remaining until maturity on
time deposits of $100,000 or more were:

                3 months or less                $   3,225,782
                over 3 through 6 months             4,456,225
                over 6 through 12 months            8,457,747
                over 12 months                      2,595,169
                                                   ----------
                                                $  18,734,923
                                                   ==========

VI.  Return on Equity and Assets
                                                           2001           2000
                                                           ----           ----

          Return on average assets                         0.92%          0.81%

          Return on average equity                        11.07%          9.48%

          Dividend payout ratio                            0.00%          0.00%

          Average equity to average asset ratio            8.29%          8.52%


                                       12
<PAGE>


                           Supervision and Regulation

Both the Company and the Bank are subject to extensive state and federal banking
regulations that impose restrictions on and provide for general regulatory
oversight of their operations. These laws are generally intended to protect
depositors and not shareholders. The following discussion describes the material
elements of the regulatory framework that applies to us.

The Company

Since the Company owns all of the capital stock of the Bank, it is a bank
holding company under the federal Bank Holding Company Act of 1956. As a result,
the Company is primarily subject to the supervision, examination, and reporting
requirements of the Bank Holding Company Act and the regulations of the Federal
Reserve.

Acquisitions of Banks. The Bank Holding Company Act requires every bank holding
---------------------
company to obtain the Federal Reserve's prior approval before:

o  Acquiring direct or indirect ownership or control of any voting shares of any
   bank if, after the acquisition, the bank holding company will directly or
   indirectly own or control more than 5% of the bank's voting shares;

o  Acquiring all or substantially all of the assets of any bank; or

o  Merging or consolidating with any other bank holding company.

Additionally, the Bank Holding Company Act provides that the Federal Reserve may
not approve any of these transactions if it would result in or tend to create a
monopoly or, substantially lessen competition or otherwise function as a
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. The Federal Reserve's consideration of financial
resources generally focuses on capital adequacy, which is discussed below.

Under the Bank Holding Company Act, if adequately capitalized and adequately
managed, the Company or any other bank holding company located in Georgia may
purchase a bank located outside of Georgia. Conversely, an adequately
capitalized and adequately managed bank holding company located outside of
Georgia may purchase a bank located inside Georgia. In each case, however,
restrictions may be placed on the acquisition of a bank that has only been in
existence for a limited amount of time or will result in specified
concentrations of deposits. For example, Georgia law prohibits a bank holding
company from acquiring control of a financial institution until the target
financial institution has been incorporated for five years. Because the Bank has
been incorporated for more than five years, this limitation does not apply to
the Bank or to the Company.

Change in Bank Control. Subject to various exceptions, the Bank Holding Company
----------------------
Act and the Change in Bank Control Act, together with related regulations,
require Federal Reserve approval prior to any person or company acquiring
"control" of a bank holding company. Control is conclusively presumed to exist
if an individual or company acquires 25% or more of any class of voting
securities of the bank holding company. Control is also presumed to exist,
although refutable, if a person or company acquires 10% or more, but less than
25%, of any class of voting securities and either:

o  the bank holding company has registered securities under Section 12 of the
   Securities Act of 1934; or

                                       13
<PAGE>

o  no other person owns a greater percentage of that class of voting securities
   immediately after the transaction.

Our common stock is registered under the Securities Exchange Act of 1934. The
regulations provide a procedure for challenge of the rebuttable control
presumption.

Permitted Activities. Since we have not qualified or elected to become a
--------------------
financial holding company, we are generally prohibited under the Bank Holding
Company Act, from engaging in or acquiring direct or indirect control of more
than 5% of the voting shares of any company engaged in any activity other than:

o  Banking or managing or controlling banks; and

o  An activity that the Federal Reserve determines to be so closely related to
   banking as to be a proper incident to the business of banking.

Activities that the Federal Reserve has found to be so closely related to
banking as to be a proper incident to the business of banking include:

o  Factoring accounts receivable;

o  Making, acquiring, brokering or servicing loans and usual related activities;

o  Leasing personal or real property;

o  Operating a non-bank depository institution, such as a savings association;

o  Trust company functions;

o  Financial and investment advisory activities;

o  Conducting discount securities brokerage activities;

o  Underwriting and dealing in government obligations and money market
   instruments;

o  Providing specified management consulting and counseling activities;

o  Performing selected data processing services and support services;

o  Acting as agent or broker in selling credit life insurance and other types of
   insurance in connection with credit transactions; and

o  Performing selected insurance underwriting activities.

Despite prior approval, the Federal Reserve may order a bank holding company or
its subsidiaries to terminate any of these activities or to terminate its
ownership or control of any subsidiary when it has reasonable cause to believe
that the bank holding company's continued ownership, activity or control
constitutes a serious risk to the financial safety, soundness, or stability of
it or any of its bank subsidiaries.

Generally, if the Company qualifies and elects to become a financial holding
company, it may engage in activities that are financial in nature or incidental
or complementary to financial activity. The Bank Holding Company Act expressly
lists the following activities as financial in nature:

                                       14
<PAGE>

o  Lending, trust and other banking activities;

o  Insuring, guaranteeing, or indemnifying against loss or harm, or providing
   and issuing annuities, and acting as principal, agent, or broker for these
   purposes, in any state;

o  Providing financial, investment, or advisory services;

o  Issuing or selling instruments representing interests in pools of assets
   permissible for a bank to hold directly;

o  Underwriting, dealing in or making a market in securities;

o  Other activities that the Federal Reserve may determine to be so closely
   related to banking or managing or controlling banks as to be a proper
   incident to managing or controlling banks;

o  Foreign activities permitted outside of the United States if the Federal
   Reserve has determined them to be usual in connection with banking operations
   abroad;

o  Merchant banking through securities or insurance affiliates; and

o  Insurance company portfolio investments.

To qualify to become a financial holding company, the Bank and any other
depository institution subsidiary of the Company must be well capitalized and
well managed and must have a Community Reinvestment Act rating of at least
"satisfactory." Additionally, the Company must file an election with the Federal
Reserve to become a financial holding company and must provide the Federal
Reserve with 30 days' written notice prior to engaging in a permitted financial
activity. While the Company meets the qualification standards applicable to
financial holding companies, the Company has not yet elected to become a
financial holding company at this time.

Support of Subsidiary Institutions. Under Federal Reserve policy, the Company is
----------------------------------
expected to act as a source of financial strength for the Bank and to commit
resources to support the Bank. This support may be required at times when,
without this Federal Reserve policy, the Company might not be inclined to
provide it. In addition, any capital loans made by the Company to the Bank will
be repaid only after its deposits and various other obligations are repaid in
full. In the unlikely event of the Company's bankruptcy, any commitment by it to
a federal bank regulatory agency to maintain the capital of the Bank will be
assumed by the bankruptcy trustee and entitled to a priority of payment.

The Bank

Since the Bank is a commercial bank chartered under the laws of the State of
Georgia, it is primarily subject to the supervision, examination and reporting
requirements of the FDIC and the Georgia Department of Banking and Finance. The
FDIC and Georgia Department of Banking and Finance regularly examine the Bank's
operations and have the authority to approve or disapprove mergers, the
establishment of branches and similar corporate actions. Both regulatory
agencies have the power to prevent the continuance or development of unsafe or
unsound banking practices or other violations of law. Additionally, the Bank's
deposits are insured by the FDIC to the maximum extent provided by law. The Bank
is also subject to numerous state and federal statutes and regulations that
affect its business, activities and operations.

Branching. Under current Georgia law, the Bank may open branch offices
---------
throughout Georgia with the prior approval of the Georgia Department of Banking
and Finance. In addition, with prior regulatory approval, the Bank may acquire

                                       15
<PAGE>

branches of existing banks located in Georgia. The Bank and any other national
or state-chartered bank generally may branch across state lines by merging with
banks in other states if allowed by the applicable states' laws. Georgia law,
with limited exceptions, currently permits branching across state lines through
interstate mergers.

Under the Federal Deposit Insurance Act, states may "opt-in" and allow
out-of-state banks to branch into their state by establishing a new start-up
branch in the state. Currently, Georgia has not opted-in to this provision.
Therefore, interstate merger is the only method through which a bank located
outside of Georgia may branch into Georgia. This provides a limited barrier of
entry into the Georgia banking market, which protects us from an important
segment of potential competition. However, because Georgia has elected not to
opt-in, our ability to establish a new start-up branch in another state may be
limited. Many states that have elected to opt-in have done so on a reciprocal
basis, meaning that an out-of-state bank may establish a new start-up branch
only if their home state has also elected to opt-in. Consequently, until Georgia
changes its election, the only way we will be able to branch into states that
have elected to opt-in on a reciprocal basis will be through interstate merger.

Prompt Corrective Action. The Federal Deposit Insurance Corporation Improvement
------------------------
Act of 1991 establishes a system of prompt corrective action to resolve the
problems of undercapitalized financial institutions. Under this system, the
federal banking regulators have established five capital categories, well
capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized and critically undercapitalized, in which all institutions are
placed. The federal banking agencies have also specified by regulation the
relevant capital levels for each of the other categories. At December 31, 2001,
we qualified for the well-capitalized category.

Federal banking regulators are required to take some mandatory supervisory
actions and are authorized to take other discretionary actions with respect to
institutions in the three undercapitalized categories. The severity of the
action depends upon the capital category in which the institution is placed.
Generally, subject to a narrow exception, the banking regulator must appoint a
receiver or conservator for an institution that is critically undercapitalized.

An institution in any of the undercapitalized categories is required to submit
an acceptable capital restoration plan to its appropriate federal banking
agency. A bank holding company must guarantee that a subsidiary depository
institution meets its capital restoration plan, subject to various limitations.
The controlling holding company's obligation to fund a capital restoration plan
is limited to the lesser of 5% of an undercapitalized subsidiary's assets at the
time it became undercapitalized 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 under
an accepted capital restoration plan or with FDIC approval. The regulations also
establish procedures for downgrading an institution to a lower capital category
based on supervisory factors other than capital.

FDIC Insurance Assessments. The FDIC has 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: (1) well capitalized; (2) adequately capitalized; and (3)
undercapitalized. These three categories are substantially similar to the prompt
corrective action categories described above, with the "undercapitalized"
category including institutions that are undercapitalized, significantly
undercapitalized, and critically undercapitalized for prompt corrective action
purposes. The FDIC also assigns an institution to one of three supervisory
subgroups based on a supervisory evaluation that the institution's primary
federal regulator provides to the FDIC and information that the FDIC determines
to be relevant to the institution's financial condition and the risk posed to
the deposit insurance funds. Assessments range from 0 to 27 cents per $100 of
deposits, depending on the institution's capital group and supervisory subgroup.
In addition, the FDIC imposes assessments to help pay off the $780 million in
annual interest payments on the $8 billion Financing Corporation bonds issued in

                                       16
<PAGE>

the late 1980s as part of the government rescue of the thrift industry. This
assessment rate is adjusted quarterly and is set at 1.82 cents per $100 of
deposits for the first quarter of 2002.

The FDIC may terminate its insurance of deposits if it finds 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.

Community Reinvestment Act. The Community Reinvestment Act requires that, in
--------------------------
connection with examinations of financial institutions within their respective
jurisdictions, the Federal Reserve or the FDIC shall evaluate the record of each
financial institution in meeting the credit needs of its local community,
including low and moderate-income neighborhoods. These facts are also considered
in evaluating mergers, acquisitions, and applications to open a branch or
facility. Failure to adequately meet these criteria could impose additional
requirements and limitations on the Bank. Since our aggregate assets are not
more than $250 million, under the Gramm-Leach-Bliley Act, we are subject to a
Community Reinvestment Act examination only once every 60 months if we receive
an outstanding rating, once every 48 months if we receive a satisfactory rating
and as needed if our rating is less than satisfactory. Additionally, we must
publicly disclose the terms of various Community Reinvestment Act-related
agreements.

Other Regulations. Interest and other charges collected or contracted for by the
-----------------
Bank are subject to state usury laws and federal laws concerning interest rates.
For example, under the Soldiers' and Sailors' Civil Relief Act of 1940, a lender
is generally prohibited from charging an annual interest rate in excess of 6% on
any obligation for which the borrower is a person on active duty with the United
States military.

The Bank's loan operations are also subject to federal laws applicable to credit
transactions, such as the:

o  federal Truth-In-Lending Act, governing disclosures of credit terms to
   consumer borrowers;

o  Home Mortgage Disclosure Act of 1975, requiring financial institutions to
   provide information to enable the public and public officials to determine
   whether a financial institution is fulfilling its obligation to help meet the
   housing needs of the community it serves;

o  Equal Credit Opportunity Act, prohibiting discrimination on the basis of
   race, creed or other prohibited factors in extending credit;

o  Fair Credit Reporting Act of 1978, governing the use and provision of
   information to credit reporting agencies;

o  Fair Debt Collection Act, governing the manner in which consumer debts may be
   collected by collection agencies;

o  Soldiers' and Sailors' Civil Relief Act of 1940, governing the repayment of
   terms of, and property rights underlying, secured obligations of persons in
   military service; and

o  rules and regulations of the various federal agencies charged with the
   responsibility of implementing these federal laws.

The deposit operations of the Bank are subject to the:

o  Right to Financial Privacy Act, which imposes a duty to maintain
   confidentiality of consumer financial records and prescribes procedures for
   complying with administrative subpoenas of financial records; and

                                       17
<PAGE>

o  Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve
   to implement that act, which govern automatic deposits to and withdrawals
   from deposit accounts and customers' rights and liabilities arising from the
   use of automated teller machines and other electronic banking services.

Capital Adequacy

The Company and the Bank are required to comply with the capital adequacy
standards established by the Federal Reserve, in the case of the Company, and
the FDIC and Georgia Department of Banking and Finance, in the case of the Bank.
The Federal Reserve has established a risk-based and a leverage measure of
capital adequacy for bank holding companies. Since the Company's consolidated
total assets are less than $150 million, under the Federal Reserve's capital
guidelines, our capital adequacy is measured on a bank-only basis, as opposed to
a consolidated basis. The Bank is also 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 risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profiles 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,
such as letters of credit and unfunded loan commitments, are assigned to broad
risk categories, each with appropriate risk 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 of total capital to risk-weighted assets is
8%. Total capital consists of two components, Tier 1 Capital and Tier 2 Capital.
Tier 1 Capital generally consists of common shareholders' equity, minority
interests in the equity accounts of consolidated subsidiaries, qualifying
noncumulative perpetual preferred stock, and a limited amount of qualifying
cumulative perpetual preferred stock, less goodwill and other specified
intangible assets. Tier 1 Capital must equal at least 4% of risk-weighted
assets. Tier 2 Capital generally consists of subordinated debt, other preferred
stock and hybrid capital and a limited amount of loan loss reserves. The total
amount of Tier 2 Capital is limited to 100% of Tier 1 Capital. At December 31,
2001 our ratio of total capital to risk-weighted assets was 12% and our ratio of
Tier 1 Capital to risk-weighted assets was 11%.

In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 Capital to average assets, less goodwill and other specified
intangible assets, of 3% for bank holding companies that meet specified
criteria, including having the highest regulatory rating and implementing the
Federal Reserve's risk-based capital measure for market risk. All other bank
holding companies generally are required to maintain a leverage ratio of at
least 4%. At December 31, 2001, our leverage ratio was 8%. 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 reliance on intangible assets. The
Federal Reserve considers the leverage ratio and other indicators of capital
strength in evaluating proposals for expansion or new activities.

The Bank and the Company are also both subject to leverage capital guidelines
issued by the Georgia Department of Banking and Finance, which provide for
minimum ratios of Tier 1 capital to total assets.

Failure to meet capital guidelines could subject a bank or bank holding company
to a variety of enforcement remedies, including issuance of a capital directive,
the termination of deposit insurance by the FDIC, a prohibition on accepting
brokered deposits, and certain other restrictions on its business. As described
above, significant additional restrictions can be imposed on FDIC-insured
depository institutions that fail to meet applicable capital requirements. See
"The Bank--Prompt Corrective Action" above.

                                       18
<PAGE>

Payment of Dividends

The Company is a legal entity separate and distinct from the Bank. The principal
source of the Company's cash flow, including cash flow to pay dividends to its
shareholders, is dividends that the Bank pays to it. Statutory and regulatory
limitations apply to the Bank's payment of dividends to the Company as well as
to the Company's payment of dividends to its shareholders.

If, in the opinion of the federal banking regulator, the Bank were engaged in or
about to engage in an unsafe or unsound practice, the federal banking regulator
could require, after notice and a hearing, that it cease and desist from its
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, a depository institution may not pay any
dividend if payment would cause it to become undercapitalized or if it already
is undercapitalized. 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. See "The
Bank--Prompt Corrective Action" above.

The Georgia Department of Banking and Finance also regulates the Bank's dividend
payments and must approve dividend payments that would exceed 50% of the Bank's
net income for the prior year. Our payment of dividends may also be affected or
limited by other factors, such as the requirement to maintain adequate capital
above regulatory guidelines.

At December 31, 2001, the Bank was able to pay approximately $623,400 in
dividends to the Company without prior regulatory approval.

Restrictions on Transactions with Affiliates

The Company and the Bank are subject to the provisions of Section 23A of the
Federal Reserve Act. Section 23A places limits on the amount of:

o  loans or extensions of credit to affiliates;

o  investment in affiliates;

o  the purchase of assets from affiliates, except for real and personal property
   exempted by the Federal Reserve;

o  loans or extensions of credit to third parties collateralized by the
   securities or obligations of affiliates; and

o  any guarantee, acceptance or letter of credit issued on behalf of an
   affiliate.

The total amount of the above transactions is limited in amount, as to any one
affiliate, to 10% of a bank's capital and surplus and, as to all affiliates
combined, to 20% of a bank's capital and surplus. In addition to the limitation
on the amount of these transactions, each of the above transactions must also
meet specified collateral requirements. The Company must also comply with other
provisions designed to avoid the taking of low-quality assets.

The Company and the Bank are also subject to the provisions of Section 23B of
the Federal Reserve Act which, among other things, prohibit an institution from
engaging in the above transactions with affiliates unless the transactions are

                                       19
<PAGE>

on terms substantially the same, or at least as favorable to the institution or
its subsidiaries, as those prevailing at the time for comparable transactions
with nonaffiliated companies.

The Bank is also subject to restrictions on extensions of credit to its
executive officers, directors, principal shareholders and their related
interests. These extensions of credit (1) must be made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with third parties, and (2) must not involve more
than the normal risk of repayment or present other unfavorable features.

Privacy

Financial institutions are required to disclose their policies for collecting
and protecting confidential information. Customers generally may prevent
financial institutions from sharing nonpublic personal financial information
with nonaffiliated third parties except under narrow circumstances, such as the
processing of transactions requested by the consumer. Additionally, financial
institutions generally may not disclose consumer account numbers to any
nonaffiliated third party for use in telemarketing, direct mail marketing or
other marketing to consumers.

Anti-Terrorism Legislation

In the wake of the tragic events of September 11th, on October 26, 2001, the
President signed the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001.
Under the USA PATRIOT Act, financial institutions are subject to prohibitions
against specified financial transactions and account relationships as well as
enhanced due diligence and "know your customer" standards in their dealings with
foreign financial institutions and foreign customers. For example, the enhanced
due diligence policies, procedures, and controls generally require financial
institutions to take reasonable steps--

o  to conduct enhanced scrutiny of account relationships to guard against money
   laundering and report any suspicious transaction;

o  to ascertain the identity of the nominal and beneficial owners of, and the
   source of funds deposited into, each account as needed to guard against money
   laundering and report any suspicious transactions;

o  to ascertain for any foreign bank, the shares of which are not publicly
   traded, the identity of the owners of the foreign bank, and the nature and
   extent of the ownership interest of each such owner; and

o  to ascertain whether any foreign bank provides correspondent accounts to
   other foreign banks and, if so, the identity of those foreign banks and
   related due diligence information.

Under the USA PATRIOT Act, financial institutions have 180 days from enactment
(or until April 25, 2002) to establish anti-money laundering programs. The USA
PATRIOT Act sets forth minimum standards for these programs, including:

o  the development of internal policies, procedures, and controls;

o  the designation of a compliance officer;

o  an ongoing employee training program; and

o  an independent audit function to test the programs.

                                       20
<PAGE>

Before the 180-day grace period expires, the Secretary of the Treasury will
prescribe regulations that consider the extent to which these new requirements
are commensurate with the size, location, and activities of financial
institutions subject to the Act.

In addition, the USA PATRIOT Act authorizes the Secretary of the Treasury to
adopt rules increasing the cooperation and information sharing between financial
institutions, regulators, and law enforcement authorities regarding individuals,
entities and organizations engaged in, or reasonably suspected based on credible
evidence of engaging in, terrorist acts or money laundering activities. Any
financial institution complying with these rules will not be deemed to have
violated the privacy provisions of the Gramm-Leach-Bliley Act, as discussed
above.

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. We cannot predict whether or in what
form any proposed regulation or statute will be adopted or the extent to which
our business may be affected by any new regulation or statute.

Effect of Governmental Monetary Polices

Our earnings are affected by domestic economic conditions and the monetary and
fiscal policies of the United States government and its agencies. The Federal
Reserve Bank's monetary policies have had, and are likely to continue to have,
an important impact on the operating results of commercial banks through its
power to implement national monetary policy in order, among other things, to
curb inflation or combat a recession. The monetary policies of the Federal
Reserve affect the levels of bank loans, investments and deposits through its
control over the issuance of United States government securities, its regulation
of the discount rate applicable to member banks and its influence over reserve
requirements to which member banks are subject. We cannot predict the nature or
impact of future changes in monetary and fiscal policies.

Item 2.  Description of Property
--------------------------------
Main Office
-----------
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 at this location
was completed in October 1996. It includes office space for administration,
lending, customer service and new accounts, operations facilities, four
drive-through teller lanes, six stand-up teller windows, and a security vault
with safe deposit boxes. The Bank owns the building and the 2.29 acres of graded
land on which it is located.

Operations Center
-----------------
The Bank purchased a 4,500 square foot office building adjacent to the main
office located on Martha Berry Blvd in October 2000. Planned modifications to
the facility were completed in the first quarter of 2001, and deposit
operations, item processing, network administration and general accounting were
relocated to the new offices. This move has made more space available in the
main office for customer service and support.

East Rome Office
----------------
The Bank also operates a 1,820 square foot branch at 800 East Second Avenue in
Rome, approximately two miles south of the Bank's main office. The East Rome
Office opened for business in the first week of June 1998. It is a full service
office with three drive-up banking lanes and has a drive-up ATM.

                                       21
<PAGE>

West Rome Office
----------------
In the second quarter of 2000, the Bank opened a branch facility at 2518 Shorter
Avenue in Rome. It is a full service office of approximately 1,600 square feet
with two drive-up banking lanes and a drive-up ATM. The site is located
approximately four miles west of the Bank's main office.

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.

                                     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 2001 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 2001 Annual
Report is incorporated herein by reference.

Item 7.  Financial Statements
-----------------------------
The consolidated balance sheets of the Company as of December 31, 2001 and 2000,
and the related consolidated statements of earnings and comprehensive income,
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, 2001, and the report issued thereon by the Company's independent public
accountants, which appear in the 2001 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.

                                       22
<PAGE>

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 "Stock Ownership" in the Proxy
Statement is incorporated herein by reference.

Item 12.  Certain Relationships and Related Transactions
--------------------------------------------------------
The information set forth under the caption "Related Party Transactions" in the
Proxy Statement is incorporated herein by reference.

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).

10.6  *Executive Supplemental Retirement Plan Agreement between the Bank and
      Thomas D. Caldwell, III dated December 28, 1998. (Incorporated by
      reference to Exhibit 10.6 of the Company's Quarterly Report on Form 10-QSB
      for the quarter ended March 31, 1999).

                                       23
<PAGE>

10.7  *Greater Rome Bancshares, Inc. Directors Stock Incentive Plan, dated
      October 14, 1999. (Incorporated by reference to Exhibit 10.7 of the
      Company's Annual Report on Form 10-KSB for the year-ended December 31,
      1999).

10.8  *Executive Supplemental Retirement Plan Agreement between the Bank and
      E. Grey Winstead, III dated January 13, 2000. (Incorporated by reference
      to Exhibit 10.8 of the Company's Quarterly Report on Form 10-QSB for the
      quarter ended March 31, 2000).

13.1  2001 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).
---------------------------------
* 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, 2001.


                                       24
<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 23, 2002
      --------------

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 24, 2002
-------------------
Robert L. Berry

/s/ Frank A. Brown, Jr.                              Director                           March 24, 2002
-----------------------
Frank A. Brown, Jr.

/s/ Thomas D. Caldwell, III                Chairman, CEO and President                  March 24, 2002
---------------------------
Thomas D. Caldwell, III                   (Principal Executive Officer)

/s/ Gene G. Davidson                                 Director                           March 24, 2002
--------------------
Gene G. Davidson

/s/ Henry Haskell Perry                              Director                           March 24, 2002
-----------------------
Henry Haskell Perry

/s/ Bradford Lee Riddle                              Director                           March 24, 2002
-----------------------
Bradford Lee Riddle

/s/ M. Wayne Robinson                                Director                           March 24, 2002
---------------------
M. Wayne Robinson

/s/ Dale G. Smith                                    Director                           March 24, 2002
-----------------
Dale G. Smith

/s/ Paul E. Smith                                    Director                           March 24, 2002
-----------------
Paul E. Smith

/s/ W. Fred Talley                                   Director                           March 24, 2002
------------------
W. Fred Talley

/s/ Martha Berry Walstad                             Director                           March 24, 2002
------------------------
Martha Berry Walstad

/s/ E. Grey Winstead, III                      Chief Financial Officer                  March 24, 2002
-------------------------
E. Grey Winstead, III                    (Principal Financial and Accounting
                                                        Officer)
</TABLE>

                                       25
<PAGE>



                          GREATER ROME BANCSHARES, INC.
      Form 10-KSB Annual Report for the Fiscal Year ended December 31, 2001

                                INDEX TO EXHIBITS
<TABLE>
<CAPTION>

  Exhibit                                                                                                Sequential
  Number                               Description                                                          Page
  ------                               -----------                                                          ----
 <S>   <C>                                                                                                  <C>

   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

  10.6  *Executive Supplemental Retirement Plan Agreement between the Bank and Thomas D.Caldwell, III
        dated December 28, 1998. (Incorporated by reference to Exhibit 10.6 of the Company's
        Quarterly Report on Form 10-QSB for the quarter ended March 31, 1999).
                                                                                                            N/A
  10.7  *Greater Rome Bancshares, Inc. Board of Directors Compensation Program, dated October 14,
        1999.  (Incorporated by reference to Exhibit 10.7 of the Company's Annual Report on Form
        10-KSB for the year ended December 31, 1999).                                                       N/A

                                       26
<PAGE>

  10.8  *Executive Supplemental Retirement Plan Agreement between the Bank and E. Grey Winstead, III
        dated January 13, 2000. (Incorporated by reference to Exhibit 10.8 of the Company's Quarterly
        Report on Form 10-QSB for the quarter ended March 31, 2000).
                                                                                                            N/A
  13.1  2001 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).                          N/A
</TABLE>
----------------------------------
*  Indicates a management contract or compensatory arrangement.



                                  Exhibit 13.1

                               2001 Annual Report

                                       27