SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 11-K

                                  ANNUAL REPORT
                        PURSUANT TO SECTION 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

[X]      ANNUAL  REPORT  PURSUANT  TO  SECTION  15(D) OF THE  SECURITIES
         EXCHANGE  ACT OF 1934  [NO FEE  REQUIRED, EFFECTIVE OCTOBER 7, 1996].

For the fiscal year ended           December 31, 1998
                          ------------------------------------------------------

                                       OR

[  ]     TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE
         ACT OF 1934 [NO FEE REQUIRED].

For the transition period from _______________ to  ______________________

                         Commission File Number 0-23971
                                                _______

         A. Full  title of the plan and the  address of the plan,  if  different
            from that of the issuer named below:

         Gaston Federal Savings and Loan Association Employees' Savings
                             and Profit Sharing Plan

         B:  Name of  issuer  of the  securities  held  pursuant  to the  plan
             and the  address  of its  principal executive office:

                          Gaston Federal Bancorp, Inc.
                              245 West Main Avenue
                                  P.O. Box 2249
                       Gastonia, North Carolina 28053-2249


























                              SUMMARY ANNUAL REPORT

                 FOR GASTON FEDERAL SAVINGS AND LOAN ASSOCIATION
               EMPLOYEES' SAVINGS & PROFIT SHARING PLAN AND TRUST


This is a summary of the annual report for the Gaston  Federal  Savings and Loan
Association  Employees' Savings & Profit Sharing Plan and Trust, EIN 56-0233080,
Plan No. 002,  for the period  January 1, 1998 through  December  31, 1998.  The
annual  report has been filed with the  Internal  Revenue  Service,  as required
under the Employee Retirement Income Security Act of 1974 (ERISA).

                            Basic Financial Statement

Benefits  under the plan are provided  through a trust fund.  Plan expenses were
$46,925.  These expenses included $7,585 in administrative  expenses and $39,340
in benefits paid to participants and  beneficiaries.  A total of 54 persons were
participants  in or  beneficiaries  of the  plan  at the end of the  plan  year,
although not all of these persons had yet earned the right to receive benefits.

The  value of plan  assets,  after  subtracting  liabilities  of the  plan,  was
$2,289,545 as of December 31, 1998, compared to $0 as of January 1, 1998. During
the plan year the plan  experienced an increase in its net assets of $2,289,545.
This increase includes unrealized  appreciation and depreciation in the value of
plan assets;  that is, the difference  between the value of the plan's assets at
the end of the year and the value of the assets at the  beginning of the year or
the cost of  assets  acquired  during  the year.  The plan had  total  income of
$2,336,470  including  employer  contributions  of $238,309,  realized  gains of
$7,767 from the sale of assets, and earnings from investments of $16,988.

                      Your Rights To Additional Information

You have the right to receive a copy of the full annual report. To obtain a copy
of the full annual  report,  or any part thereof,  write or call Gaston  Federal
Bank, 245 West Main Avenue P.O. Box 2249,  Gastonia,  North Carolina 28053-2249,
(704) 868-5200.

You also have the right to receive from the plan  administrator,  on request and
at no  charge,  a  statement  of the  assets  and  liabilities  of the  plan and
accompanying  notes,  or a  statement  of income  and  expenses  of the plan and
accompanying  notes,  or both.  If you request a copy of the full annual  report
from the plan administrator, these two statements and accompanying notes will be
included as part of that report.

You also have the legally  protected  right to examine the annual  report at the
main office of the plan  (Gaston  Federal  Bank,  245 West Main Avenue P.O.  Box
2249,  Gastonia,  North Carolina 28053-2249) and at the U.S. Department of Labor
in Washington,  D.C., or to obtain a copy from the U.S. Department of Labor upon
payment of copying  costs.  Requests to the  Department  should be addressed to:
Public  Disclosure Room,  N-5638,  Pension and Welfare Benefits  Administration,
U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210.





                                   SIGNATURES


         The Plan.  Pursuant to the requirements of the Securities  Exchange Act
of 1934,  the trustees (or other  persons who  administer  the employee  benefit
plan)  have duly  caused  this  annual  report to be signed on its behalf by the
undersigned hereunto duly authorized.


                                     GASTON FEDERAL SAVINGS AND LOAN ASSOCIATION
                                     EMPLOYEES' SAVINGS AND PROFIT SHARING PLAN






Date:   June 25, 1999             By:    /s/ Paul L. Teem, Jr.
                                         ----------------------------------
                                  Name:  Paul L. Teem, Jr.
                                  Title: Executive Vice President and Secretary;
                                  Gaston Federal Bancorp, Inc; and
                                         Administrator of Plan