##### Table of Contents



U. S. SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-QSB
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the quarterly period ended June 30, 2006
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the transition period from  to
 Commission File Number: 000-50265
 GBC Bancorp, Inc.
 (Exact name of small business issuer as specified in its charter)
 Georgia
    
    58-2265327(State or other jurisdiction of
incorporation or organization)
    
    (IRS Employer
Identification No.)
 165 Nash Street, Lawrenceville, Georgia 30045
  (770) 995-0000
 (Issuers telephone number)
  
  þ o
 o þ
  o þ




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##### Table of Contents



GBC BANCORP, INC. AND SUBSIDIARY
  
 INDEX
 PagePART I.
    
    FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheet  June 30, 2006
    
    
    3Consolidated Statements of Income and
Comprehensive Income  Three Months Ended June 30, 2006 and 2005
and Six Months Ended June 30, 2006 and 2005
    
    
    4Consolidated Statements of Cash Flows  Six
Months Ended June 30, 2006 and 2005
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis or Plan of Operations
    
    
    9Item 3. Controls and Procedures
    
    
    16PART II.
    
    OTHER INFORMATIONItem 6 - Exhibits and Reports on Form 8-K
    
    
    17Signatures
    
    
    18EX-31.1 SECTION 302 CERTIFICATION OF CEOEX-31.2 SECTION 302 CERTIFICATION OF CFOEX-32 SECTION 906 CERTIFICATION OF CEO/CFO




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PART I  FINANCIAL INFORMATION
 
 ITEM I  FINANCIAL STATEMENTS
 GBC BANCORP, INC. AND SUBSIDIARY
 
 CONSOLIDATED BALANCE SHEET
 JUNE 30, 2006
(Unaudited)
 AssetsCash and due from banks
    
    $
    6,941,537Federal funds sold
    
    
    15,396,000Securities available-for-sale, at fair value
    
    
    32,426,382Loans
    
    
    343,568,247Less allowance for loan losses
    
    
    4,128,639Loans, net
    
    
    339,439,608Premises and equipment
    
    
    277,700Cash surrender value of life insurance
    
    
    5,813,687Accrued interest
    
    
    2,834,508Other assets
    
    
    7,154,166Total assets
    
    $
    410,283,588Liabilities and Stockholders EquityDepositsNoninterest-bearing
    
    $
    28,836,289Interest-bearing
    
    
    331,844,843Total deposits
    
    
    360,681,132Securities sold under repurchase agreements
    
    
    843,985Other liabilities
    
    
    7,705,234Total liabilities
    
    
    369,230,351Commitments and contingenciesStockholders equityCommon stock, par value $1; 3,000,000 shares authorized;
2,136,608 shares issued and outstanding
    
    
    2,136,608Capital surplus
    
    
    23,119,805Retained earnings
    
    
    16,655,961Accumulated other comprehensive loss
    
    
    (859,137
    )Total stockholders equity
    
    
    41,053,237Total liabilities and stockholders equity
    
    $
    410,283,588
 See Notes to Consolidated Financial Statements.
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GBC BANCORP, INC. AND SUBSIDIARY
 
 CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 THREE MONTHS ENDED JUNE 30, 2006 AND 2005 AND
 SIX MONTHS ENDED JUNE 30, 2006 AND 2005
 (Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Interest incomeLoans
    
    $
    8,203,765
    
    
    $
    5,719,112
    
    
    $
    15,747,607
    
    
    $
    10,686,778Taxable securities
    
    
    313,522
    
    
    
    281,223
    
    
    
    617,835
    
    
    
    556,226Nontaxable securities
    
    
    48,215
    
    
    
    48,385
    
    
    
    96,534
    
    
    
    97,022Federal funds sold
    
    
    194,902
    
    
    
    68,574
    
    
    
    350,703
    
    
    
    125,248Total interest income
    
    
    8,760,404
    
    
    
    6,117,294
    
    
    
    16,812,679
    
    
    
    11,465,274Interest expenseDeposits
    
    
    3,765,274
    
    
    
    2,132,118
    
    
    
    7,114,430
    
    
    
    3,910,547Repurchase agreements
    
    
    10,960
    
    
    
    14,034
    
    
    
    26,684
    
    
    
    24,823Total interest expense
    
    
    3,776,234
    
    
    
    2,146,152
    
    
    
    7,141,114
    
    
    
    3,935,370Net interest income
    
    
    4,984,170
    
    
    
    3,971,142
    
    
    
    9,671,565
    
    
    
    7,529,904Provision for loan losses
    
    
    30,000
    
    
    
    149,579
    
    
    
    481,069
    
    
    
    405,266Net interest income after
provision for loan losses
    
    
    4,954,170
    
    
    
    3,821,563
    
    
    
    9,190,496
    
    
    
    7,124,638Other incomeService charges on deposit accounts
    
    
    42,644
    
    
    
    50,490
    
    
    
    100,047
    
    
    
    92,258Gain on Sale of Loans
    
    
    477,273
    
    
    
    832,467
    
    
    
    637,135
    
    
    
    1,352,876Gain (loss) on Sale of Other Real Estate Owned
    
    
    (274
    )
    
    
    (384
    )
    
    
    15,096
    
    
    
    43,364Other operating income
    
    
    231,567
    
    
    
    101,272
    
    
    
    442,815
    
    
    
    192,830Total other income
    
    
    751,210
    
    
    
    983,845
    
    
    
    1,195,093
    
    
    
    1,681,328Other expensesSalaries and employee benefits
    
    
    1,585,988
    
    
    
    1,376,747
    
    
    
    3,112,393
    
    
    
    2,717,633Equipment and occupancy expenses
    
    
    183,128
    
    
    
    208,238
    
    
    
    363,587
    
    
    
    421,127Other operating expenses
    
    
    545,801
    
    
    
    709,459
    
    
    
    1,040,222
    
    
    
    1,218,490Total other expenses
    
    
    2,314,917
    
    
    
    2,294,444
    
    
    
    4,516,202
    
    
    
    4,357,250Net income before income taxes
    
    
    3,390,463
    
    
    
    2,510,964
    
    
    
    5,869,387
    
    
    
    4,448,716Income tax expense
    
    
    1,252,827
    
    
    
    917,000
    
    
    
    2,162,000
    
    
    
    1,619,000Net income
    
    
    2,137,636
    
    
    
    1,593,964
    
    
    
    3,707,387
    
    
    
    2,829,716Other comprehensive income (loss) :Unrealized gains (losses) on securities
available-for-sale arising during period, net of tax
    
    
    (298,427
    )
    
    
    296,241
    
    
    
    (421,808
    )
    
    
    (36,004
    )Comprehensive income
    
    $
    1,839,209
    
    
    $
    1,890,205
    
    
    $
    3,285,579
    
    
    $
    2,793,712Basic earnings per share
    
    $
    1.11
    
    
    $
    0.91
    
    
    $
    2.01
    
    
    $
    1.62Diluted earnings per share
    
    $
    1.04
    
    
    $
    0.87
    
    
    $
    1.85
    
    
    $
    1.54Cash dividends per share
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 See Notes to Consolidated Financial Statements.
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GBC BANCORP, INC. AND SUBSIDIARY
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 SIX MONTHS ENDED JUNE 30, 2006 AND 2005
 (Unaudited)
 2006
    
    
    2005OPERATING ACTIVITIESNet income
    
    $
    3,707,387
    
    
    $
    2,829,716Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation
    
    
    55,455
    
    
    
    76,188Provision for loan losses
    
    
    481,069
    
    
    
    405,266Gain on sale of Other Real Estate Owned
    
    
    (15,096
    )
    
    
    (43,364
    )Gain on sale of loans
    
    
    (637,135
    )
    
    
    (1,352,876
    )Loans originated for sale
    
    
    (4,501,639
    )
    
    
    (10,104,346
    )Proceeds from the sale of loans
    
    
    5,138,774
    
    
    
    11,457,222Increase in interest receivable
    
    
    (349,729
    )
    
    
    (209,048
    )Increase in interest payable
    
    
    355,092
    
    
    
    194,797Increase (decreases) in taxes payable
    
    
    (363,292
    )
    
    
    84,186Net other operating activities
    
    
    604,445
    
    
    
    (508,376
    )Net cash provided by operating activities
    
    
    4,475,331
    
    
    
    2,829,365INVESTING ACTIVITIESPurchases of securities available-for-sale
    
    
    (1,000,000
    )
    
    
    (993,794
    )Proceeds from maturities of securities available-for-sale
    
    
    304,122
    
    
    
    414,643Net decrease in federal funds sold
    
    
    1,260,000
    
    
    
    9,816,000Net increase in loans
    
    
    (26,092,437
    )
    
    
    (41,806,639
    )Proceeds from sale of Other Real Estate Owned
    
    
    28,764
    
    
    
    1,194,430Purchase of life insurance
    
    
    (93,937
    )
    
    
    (95,340
    )Purchase of premises and equipment
    
    
    (40,515
    )
    
    
    (18,954
    )Net cash used in investing activities
    
    
    (25,634,003
    )
    
    
    (31,489,654
    )FINANCING ACTIVITIESNet increase in deposits
    
    
    19,510,399
    
    
    
    26,724,011Net increase in securities sold under repurchase agreements
    
    
    14,644
    
    
    
    822,407Net proceeds from exercise of stock options
    
    
    4,774,425
    
    
    
    341,375Net cash provided by financing activities
    
    
    24,299,468
    
    
    
    27,887,793Net increase (decrease) in cash and due from banks
    
    
    3,140,796
    
    
    
    (772,496
    )Cash and due from banks at beginning of period
    
    
    3,800,741
    
    
    
    5,390,288Cash and due from banks at end of period
    
    $
    6,941,537
    
    
    $
    4,617,792SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATIONCash paid during the period for :Interest
    
    $
    6,786,022
    
    
    $
    3,740,573Income taxes
    
    $
    2,521,394
    
    
    $
    1,567,814Noncash transaction:Loans transferred to Other Real Estate Owned
    
    $
    1,624,979
    
    
    $
    602,759
 See Notes to Consolidated Financial Statements.
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GBC BANCORP, INC. AND SUBSIDIARY
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)
 NOTE 1.
    
    NATURE OF BUSINESS AND BASIS OF PRESENTATIONThe consolidated financial information for GBC Bancorp, Inc. (the Company)
included herein is unaudited; however, such information reflects all adjustments
(consisting solely of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair statement of results for the interim period.The results of operations for the three and six month periods ended June 30, 2006
are not necessarily indicative of the results to be expected for the full year.NOTE 2.
    
    STOCK COMPENSATION PLANAt June 30, 2006, the Company has a stock-based compensation plan that includes
employees and directors. Prior to January 1, 2006, the Company accounted for the plan
under the recognition and measurement provisions of APB Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations, as permitted by FASB Statement
No. 123, Accounting for Stock-Based Compensation. No stock-based employee
compensation cost was recognized in the Statement of Operations for the six months
ended June 30, 2005, as all options granted under the plan had an exercise price equal
to the market value of the underlying common stock on the date of grant. Effective
January 1, 2006, the Company adopted the fair value recognition provisions of FASB
Statement No. 123(R), Share-Based Payment, using the modified-prospective-transition
method. Under that transition method, compensation cost recognized includes: (a)
compensation cost for all share-based payments granted prior to, but not yet vested as
of January 1, 2006, based on the grant date fair value estimated in accordance with
the original provisions of Statement 123, and (b) compensation cost for all
share-based payments granted subsequent to January 1, 2006, based on the grant-date
fair value estimated in accordance with the provisions of Statement 123(R). No stock
options were granted or no previously granted options vested during the six months
ended June 30, 2006 or 2005, therefore no compensation cost was recognized. The
adoption of the provisions of Statement 123 (R) did not have a material affect on the
financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 NOTE 3.
    
    EARNINGS PER SHAREPresented below is a summary of the components used to
calculate basic and diluted earnings per common share.
 Three Months Ended June 30,2006
    
    
    2005Basic Earnings Per Share:Weighted average common shares outstanding
    
    
    1,920,164
    
    
    
    1,751,069Net income
    
    $
    2,137,636
    
    
    $
    1,593,964Basic earnings per share
    
    $
    1.11
    
    
    $
    .91Diluted Earnings Per Share:Weighted average common shares outstanding
    
    
    1,920,164
    
    
    
    1,751,069Net effect of the assumed exercise of stock
options based on the treasury stock method
using average market prices for the period
    
    
    135,373
    
    
    
    90,470Total weighted average common shares and
common stock equivalents outstanding
    
    
    2,055,537
    
    
    
    1,841,540Net income
    
    $
    2,137,636
    
    
    $
    1,593,964Diluted earnings per share
    
    $
    1.04
    
    
    $
    .87
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 NOTE 3.
    
    EARNINGS PER SHARE (Continued)
 Six Months Ended June 30,2006
    
    
    2005Basic Earnings Per Share:Weighted average common shares outstanding
    
    
    1,846,843
    
    
    
    1,745,370Net income
    
    $
    3,707,387
    
    
    $
    2,829,716Basic earnings per share
    
    $
    2.01
    
    
    $
    1.62Diluted Earnings Per Share:Weighted average common shares outstanding
    
    
    1,846,843
    
    
    
    1,745,370Net effect of the assumed exercise of stock
options based on the treasury stock method
using average market prices for the period
    
    
    152,646
    
    
    
    91,780Total weighted average common shares and
common stock equivalents outstanding
    
    
    1,999,490
    
    
    
    1,837,150Net income
    
    $
    3,707,387
    
    
    $
    2,829,716Diluted earnings per share
    
    $
    1.85
    
    
    $
    1.54
 NOTE 4.
    
    CURRENT ACCOUNTING DEVELOPMENTSThere are no recent accounting pronouncements that have had, or are expected to
have, a material effect on the Companys financial statements.NOTE 5.
    
    PROPOSED BUSINESS COMBINATIONOn June 1, 2006, the Board of Directors of GBC Bancorp, Inc. unanimously approved
a merger of GBC with First Charter Corporation, Charlotte, North Carolina. Under the
proposed merger, shareholders of GBC will have the opportunity to elect to receive
consideration in the form of 1.989 shares of First Charter common stock, $47.74 in
cash, or a combination of both stock and cash for each share of GBC common stock. The
proposed merger is contingent upon the required regulatory and shareholder approvals.
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GBC BANCORP, INC. AND SUBSIDIARY
 
 ITEM 2. Managements Discussion and Analysis or Plan of Operations
  Forward-Looking Statements
  Critical Accounting Policies
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Liquidity and Capital Resources
   RegulatoryActual
    
    MinimumConsolidated
    
    Bank
    
    RequirementLeverage capital ratios
    
    
    10.21
    %
    
    
    8.79
    %
    
    
    5.00
    %Risk-based capital ratios:Core capital
    
    
    11.58
    
    
    
    9.97
    
    
    
    6.00Total capital
    
    
    12.72
    
    
    
    11.11
    
    
    
    10.00
 Off-Balance Sheet Risk
   June 30,2006Commitments to extend credit
    
    $
    133,525,426Letters of credit
    
    
    5,988,600$
    139,514,026
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Related Party Transactions
  Financial Condition
  June 30,
    
    
    December 31,2006
    
    
    2005(Dollars in Thousands)Cash and due from banks
    
    $
    6,942
    
    
    $
    3,801Federal funds sold
    
    
    15,396
    
    
    
    16,656Securities
    
    
    32,426
    
    
    
    32,411Loans, net
    
    
    339,440
    
    
    
    315,453Premises and equipment
    
    
    278
    
    
    
    293Other assets
    
    
    15,802
    
    
    
    11,092$
    410,284
    
    
    $
    379,706Deposits
    
    $
    360,682
    
    
    $
    341,171Securities sold under repurchase agreements
    
    
    844
    
    
    
    829Other liabilities
    
    
    7,705
    
    
    
    4,713Stockholders equity
    
    
    41,053
    
    
    
    32,993$
    410,284
    
    
    $
    379,706
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Results of Operations For The Three Months Ended June 30, 2006 and 2005 and For The Six Months
Ended June 30, 2006 and 2005
  Three Months EndedJune 30,2006
    
    
    2005(Dollars in Thousands)Interest income
    
    $
    8,760
    
    
    $
    6,117Interest expense
    
    
    3,776
    
    
    
    2,146Net interest income
    
    
    4,984
    
    
    
    3,971Provision for loan losses
    
    
    30
    
    
    
    150Other income
    
    
    751
    
    
    
    984Other expense
    
    
    2,315
    
    
    
    2,294Pretax income
    
    
    3,390
    
    
    
    2,511Income tax
    
    
    1,252
    
    
    
    917Net income
    
    $
    2,138
    
    
    $
    1,594
 Six Months EndedJune 30,2006
    
    
    2005(Dollars in Thousands)Interest income
    
    $
    16,813
    
    
    $
    11,465Interest expense
    
    
    7,141
    
    
    
    3,935Net interest income
    
    
    9,672
    
    
    
    7,530Provision for loan losses
    
    
    481
    
    
    
    405Other income
    
    
    1,195
    
    
    
    1,681Other expense
    
    
    4,517
    
    
    
    4,357Pretax income
    
    
    5,869
    
    
    
    4,449Income tax
    
    
    2,162
    
    
    
    1,619Net income
    
    $
    3,707
    
    
    $
    2,830
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June 30,2006
    
    2005(Dollars in Thousands)Nonaccrual loans
    
    $
    64
    
    
    $
    1,606Loans contractually past due ninety days or more as to interest
or principal payments and still accruing
    
    
    0
    
    
    
    0Restructured loans
    
    
    285
    
    
    
    304Potential problem loans
    
    
    3,817
    
    
    
    2,529Interest income that would have been recorded on nonaccrual
and restructured loans under original terms
    
    
    6
    
    
    
    77Interest income that was recorded on nonaccrual and restructured loans
    
    
    0
    
    
    
    0
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Six Months EndedJune 30,2006
    
    
    2005(Dollars in Thousands)Average amount of loans outstanding
    
    $
    344,230
    
    
    $
    276,540Balance of allowance for loan losses at beginning of period
    
    $
    3,701
    
    
    $
    3,775Loans charged offCommercial and financial
    
    $
    0
    
    
    $
    905Real estate construction
    
    
    0
    
    
    
    0Installment
    
    
    0
    
    
    
    0Other
    
    
    69
    
    
    
    069
    
    
    
    905Loans recoveredCommercial and financial
    
    
    0
    
    
    
    0Real estate construction
    
    
    0
    
    
    
    0Other
    
    
    15
    
    
    
    015
    
    
    
    0Net charge-offs
    
    
    54
    
    
    
    905Additions to allowance charged to
operating expense during period
    
    
    481
    
    
    
    405Balance of allowance for loan losses at end of period
    
    $
    4,128
    
    
    $
    3,275Ratio of net loans charged off during the period to
average loans outstanding
    
    
    .02
    %
    
    
    .32
    %
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ITEM 3. Controls and Procedures
   16




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PART II  OTHER INFORMATION
 ITEM 5. OTHER INFORMATION.
  
 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
  2.1
    
    Agreement and Plan of Merger by and between GBC
Bancorp, Inc. and First Charter Corporation, dated as of June 1, 2006
(incorporated by reference to Exhibit 2.1 to the Registrants Form 8-K
filed on June 6, 2006).31.1
    
    Certification of Chief Executive Officer Pursuant to
Rule 13a-14(a) under the Security Exchange Act of 1934, as amended.31.2
    
    Certification of Chief Financial Officer Pursuant to
Rule 13a-14(a) under The Securities Exchange Act of 1934, as amended.32
    
    Certification of the Chief Executive Officer and
Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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SIGNATURES
  GBC BANCORP, INC.(Registrant)DATE: August 10, 2006
    
    
    
    BY:
    
    /s/ Larry D. KeyLarry D. Key, President and Chief Executive Officer
(Principal Executive Officer)DATE: August 10, 2006
    
    
    
    BY:
    
    /s/ John HopkinsJohn Hopkins, Chief Financial Officer
(Principal Financial and Accounting Officer)
 18