<PAGE>

--------------------------------------------------------------------------------
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ______________________

                                   FORM 10-K


                ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934


              For the fiscal year ended       December 31, 1999
                                           ----------------------

         Commission file number             000-23465
                                       -------------------


                           CODDLE CREEK FINANCIAL CORP.
                        -------------------------------
             (Exact name of registrant as specified in its charter)
<TABLE>
<S>                                                         <C>
      North Carolina                                        56-2045998
-----------------------------                               ----------
(State or other jurisdiction of                     (I.R.S. Employer Identification No.)
incorporation or organization)

        347 North Main Street
      Mooresville, North Carolina                              28115
--------------------------------------------                 ----------
(Address of principal executive office)                      (Zip Code)
</TABLE>


                                (704) 664-4888
 -------------------------------------------------------------------------
             (Registrant's Telephone Number, Including Area Code)


       Securities Registered Pursuant to Section 12(b) of the Act:  None
                                                                    ----

          Securities Registered Pursuant to Section 12(g) of the Act:

                          Common Stock, no par value
                     -----------------------------------
                                (Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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
                                              -------                -------

Indicate by check mark if disclosure of delinquent filers in response to Item
405 of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K.            [ X  ]

State the aggregate market value of the voting stock held by non-affiliates of
the registrant (excluding five percent owners as non-affiliates).  The aggregate
market value shall be computed by reference to the price at which the stock was
sold, or the average bid and asked prices of such stock, as of a specified date
within 60 days prior to the date of filing.  $23,072,148 common stock, no par
value, based on the closing price of such common stock on March 3, 1999.


Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date. 699,156 shares of common
stock, no par value, outstanding at March 3, 1999.


<PAGE>

                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Annual Report of Coddle Creek Financial Corp. for the year ended
December 31, 1999 (the "1999 Annual Report"), are incorporated by reference into
Part I, Part II and Part IV.


Portions of the Proxy Statement for the 2000 Annual Meeting of Shareholders of
Coddle Creek Financial Corp. to be held on April 20, 2000, are incorporated by
reference into Part III.

Portions of the Registration Statement of Coddle Creek Financial Corp. On Form
S-1, Registration No. 333-35497, dated September 12, 1997, as amended on
November 5 and 10, 1997, are incorporated by reference into Part IV.

<PAGE>

                                     PART I


ITEM 1.  BUSINESS

General

     Prior to December 30, 1997, Mooresville Savings Bank, Inc., S.S.B. (the
"Bank") operated as a mutual North Carolina-chartered savings bank.  On December
30, 1997, the Bank converted from a North Carolina-chartered mutual savings bank
to a North Carolina-chartered stock savings bank (the "Conversion").  In
connection with the Conversion, all of the issued and outstanding capital stock
of the Bank was acquired by Coddle Creek Financial Corp., a North Carolina
corporation (the "Company") which was organized to become the holding company
for the Bank.  At that time, the Company had an initial public offering of its
common stock, no par value (the "Common Stock").

     The Company is a bank holding company registered with the Board of
Governors of the Federal Reserve System (the "Federal Reserve") under the Bank
Holding Company Act of 1956, as amended (the "BHCA") and the savings bank
holding company laws of North Carolina.  The Company's office is located at 347
North Main Street, Mooresville, North Carolina.  The Company's activities
consist of investing the proceeds of its initial public offering which were
retained at the holding company level, holding the indebtedness outstanding from
the Mooresville Savings Bank, Inc., SSB Employee Stock Ownership Plan (the
"ESOP") and owning the Bank.  The Company's principal sources of income are
earnings on its investments and interest payments received from the ESOP with
respect to the ESOP loan.   In addition, the Company will receive any dividends
which are declared and paid by the Bank on its capital stock.

     At December 31, 1999, the Company and the Bank had total assets of $143.9
million, net loans of $124.9 million, deposits of $90.6 million and
stockholders' equity of $34.4 million.

     The Bank was originally chartered in 1937.  It has been a member of the
Federal Home Loan Bank ("FHLB") system, and its deposits have been federally
insured since 1947.  The Bank's deposits are insured by the Savings Association
Insurance Fund (the "SAIF") of the Federal Deposit Insurance Corporation (the
"FDIC") to the maximum amount permitted by law.  The Bank conducts business
through three (3) full service offices in Mooresville, Cornelius and
Huntersville, North Carolina.

     The Bank is engaged primarily in the business of attracting retail deposits
from the general public and using such deposits to make mortgage loans secured
by real estate.  The Bank makes one-to-four family residential real estate
loans, loans secured by multi-family residential and commercial property,
construction loans and equity line of credit loans.  The Bank also makes loans
which are not secured by real property, such as loans secured by pledged deposit
accounts and various types of secured and unsecured consumer loans.  The Bank's
primary source of revenue is interest  income from its lending activities.  The
Bank's other major sources of revenue are interest and dividend income from
investments, interest income from its interest-earning deposit balances in other
depository institutions, and transactions and fee income from its lending and
deposit activities.  The major expenses of the Bank are interest on deposits and
general and administrative expenses such as employee compensation and benefits,
federal deposit insurance premiums, data processing expenses and occupancy
expenses.

     The operations of the Bank and depository institutions in general are
significantly influenced by general economic conditions and by related monetary
and fiscal policies of depository institution regulatory agencies, including the
Federal Reserve, the FDIC and the North Carolina Administrator, Savings
Institutions Division, North Carolina Department of Commerce (the
"Administrator").  Deposit flows and cost of funds are influenced by interest
rates on competing investments and general market rates of interest.  Lending
activities are affected by the demand for financing of real estate and other
types of loans, which in turn are affected by the interest rates at which such
financing may be offered and other factors affecting local demand and
availability of funds.
<PAGE>

     At December 31, 1999, the Company and the Bank had a total of 30 full-time
employees and 2 part-time employees.

     The Company has no operations and conducts no business of its own other
than owning the Bank, investing its portion of the net proceeds received in the
Conversion and lending funds to the ESOP.  Accordingly, the discussion of the
business which follows in the Form 10-K concerns the business conducted by the
Bank, unless otherwise indicated.

Lending Activities

     General.   The Bank is engaged primarily in the business of attracting
deposits from the general public and using such deposits to make mortgage loans
secured by real estate.  The Bank's primary source of revenue is interest and
fee income from its lending activities, consisting primarily of mortgage loans
for the purchase or refinancing of one-to-four family residential real property
located in its primary market area.  The Bank also makes loans secured by multi-
family and nonresidential properties, construction loans, equity line loans,
savings account loans and various types of secured and unsecured consumer loans.
Approximately 97% of the Bank's gross loan portfolio is secured by real estate.
As of December 31, 1999, all of the loans in the Bank's real estate loan
portfolio were secured by properties in North Carolina.  On December 31, 1999,
the Bank's largest single outstanding loan had a balance of approximately
$654,000.  This loan was performing in accordance with its original terms.  In
addition to interest earned on loans, the Bank receives fees in connection with
loan originations, loan servicing, loan modifications, late payments, loan
assumptions and other miscellaneous services.  The Bank generally does not sell
its loans; both fixed and adjustable rate loans are originated with the
intention that they will be held in the Bank's loan portfolio.

     Loan Portfolio Composition.  The Bank's net loan portfolio totaled
approximately $124.9 million at December 31, 1999 representing 86.8% of the
Bank's total assets at such date.  At December 31, 1999, 80% of the Bank's gross
loan portfolio was composed of one-to-four family residential mortgage loans.
Multi-family residential and non-residential real estate loans represented 3.2%
on such date.  Construction loans and equity line lines represented 7.5% and
6.3%, respectively, of the Bank's loan portfolio, before net items, on such
date.  As of December 31, 1999, 23.5% of the loans in the Bank's loan portfolio,
before net items, had adjustable interest rates.

     One to Four Family Residential Real Estate Lending.  The Bank's primary
lending activity, which it intends to continue to emphasize, is the origination
of fixed and adjustable rate mortgage loans to enable borrowers to purchase or
refinance one-to-four family residential real property.  Consistent with the
Bank's emphasis on being a community-oriented financial institution, it is and
has been the Bank's strategy to focus its lending efforts in its primary market
area.  On December 31, 1999, approximately 82.4% of the Bank's real estate loan
portfolio, before net items, consisted of one-to-four family residential real
estate loans.  These include both loans secured by detached single-family
residences and condominiums and loans secured by housing containing not more
than four separate dwelling units.  Of such loan amounts, 11.7% had adjustable
interest rates.

     Adjustable rate loans are generally considered to involve a greater degree
of credit risk than fixed rate loans because borrowers may have difficulty
meeting their payment obligations if interest rates and required payment amounts
increase substantially.  Substantially all of the fixed-rate loans in the Bank's
mortgage loan portfolio have due on sale provisions allowing the Bank to declare
the unpaid balance due and payable in full upon the sale or transfer of an
interest in the property securing the loan.

     Historically, the Bank has not originated its one-to-four family
residential mortgage or other loans with the intention that they will be sold in
the secondary market.  Accordingly, the Bank originates fixed rate one-to-four
family residential real estate loans which satisfy the Bank's underwriting
requirements and are tailored to its local community, but do not necessarily
satisfy various technical FHLMC and FNMA underwriting requirements and purchase
requirements not related to documentation.


     Although the Bank believes that many of its one to four family residential
loans could be sold in the secondary market, some of such nonconforming loans
could be sold only after the Bank incurred certain costs and/or discounted
<PAGE>

the purchase price. As a result, the Bank's loan portfolio is less liquid than
would be the case if it was composed entirely of loans originated in conformity
with secondary market requirements.

     As of December 31, 1999, the Bank had 88 loan relationships with individual
borrowers in excess of $200,000, totaling approximately $24.6 million or 18.7%
of the Bank's total loan portfolio.  The majority of these loans are secured by
residential real estate located near or on Lake Norman, North Carolina, which is
located in parts of Catawba, Iredell, Lincoln and Mecklenburg counties.  While
these loans are currently performing according to the terms of their loan
documents, an economic downturn in the Bank's primary market area, in which Lake
Norman is located, could have an adverse effect on the performance of these
loans.

     See also Note 3 of the "Notes to Consolidated Financial Statements" in the
1999 Annual Report.

Investment Securities

     Interest and dividend income from investment securities generally provides
the second largest source of income to the Company and the Bank after interest
on loans.  In addition, the Bank receives interest income from  deposits in
other financial institutions.

     At December 31, 1999, the Company's investment portfolio totaled
approximately $12.7 million and consisted of U.S. government and agency
securities, FHLB and municipal bonds, equity securities, interest-earning
deposits and certificates of deposit in other financial institutions and stock
of the FHLB of Atlanta.

     As a member of the FHLB of Atlanta, the Bank is required to maintain an
investment in stock of the FHLB of Atlanta equal to the greater of 1% of the
Bank's outstanding home loans or 5% of its outstanding advances from the FHLB of
Atlanta.  No ready market exists for such stock, which is carried at cost.  As
of December 31, 1999, the Bank's investment in stock of the FHLB of Atlanta was
$1.1 million.

     North Carolina regulations require the Bank to maintain a minimum amount of
liquid assets which may be invested in specified short-term securities.  The
Bank's current investment policy provides that investment decisions will be made
by George W. Brawley, Jr., President and Chief Executive Officer, or by Dale W.
Brawley, Executive President and Treasurer, in his absence, and reviewed monthly
by the Board of Directors.  The investment policy provides that the objectives
of the investment portfolio are to:  (i) establish an acceptable level of
interest rate and credit risk for all investments; (ii) generate an acceptable
rate of return on investments; (iii) provide for adequate levels of liquidity
for the Bank; and (iv) provide guidance to management by the Board of Directors
on the investments desired for the Bank.

     Permitted investments include FHLB daily time deposits, insured
certificates of deposit, government securities and government agency securities.
The investment policy also permits investment in the general obligations of
municipalities primarily located within North Carolina.  Such general
obligations are considered less risky since they are repaid with taxes collected
by the municipality, not with revenues from a particular project.  At December
31, 1999, $2.2 million or 17.5% of the Company's investment portfolio consisted
of municipal bonds issued by municipalities located in North Carolina, all of
which had an A or above rating by Moodys Investment Service.

     At December 31, 1999, the market value of the Company's investment
securities available for sale and held to maturity, excluding interest-earning
deposits, certificates of deposit and stock of the FHLB of Atlanta (all of which
had a total market value of $8.1 million) were $3.4 million and $1.2 million,
respectively.

     See Note 2 of "Notes to Consolidated Financial Statements" in the 1999
Annual Report.
<PAGE>

Deposits and Borrowings

     Deposits.  Deposits are the primary source of the Bank's funds for lending
and other investment purposes.  In addition to deposits, the Bank derives funds
from loan principal repayments, interest payments, investment income and
principal repayments, interest from its own interest-earning deposits, interest
income and advances from the FHLB of Atlanta and otherwise from its operations.
Loan repayments are a relatively stable source of funds while deposit inflows
and outflows may be significantly influenced by general interest rates and money
market conditions.

     The Bank attracts both short-term and long-term deposits from the general
public by offering a variety of accounts and rates.  The Bank offers passbook
savings accounts, statement savings accounts, negotiable order of withdrawal
("NOW") accounts, money market demand accounts, non-interest-bearing accounts,
and fixed interest rate certificates with varying maturities.  At December 31,
1999, 65.1% of the Bank's deposits consisted of certificate accounts, 11.2%
consisted of passbook savings accounts, 21.9% consisted of interest-bearing
transaction (NOW and Money Market) accounts and 1.8% consisted of noninterest-
bearing transaction accounts.  Deposit flows are greatly influenced by economic
conditions, the general level of interest rates, competition, and other factors,
including the restructuring of the thrift industry.  The Bank's savings deposits
traditionally have been obtained primarily from its primary market area.  The
Bank utilizes traditional marketing methods to attract new customers and savings
deposits, including print, television and radio media advertising and direct
mailings.  The Bank does not advertise for deposits outside of its local market
area or utilize the services of deposit brokers.

     At December 31, 1999, 1998 and 1997, the Bank's deposits totaled $90.6
million, $87.6 million and $99.4 million, respectively.

     See Note 5 to the "Notes to Consolidated Financial Statements" in the 1999
Annual Report.

     Borrowings.  Borrowings may be used on a short-term basis to compensate for
reductions in the availability of funds from other sources.  They may also be
used on a longer term basis for general business purposes.  The Bank's principal
source of long-term borrowings are advances from the FHLB of Atlanta.  The FHLB
system functions in a reserve credit capacity for savings institutions.  As a
member, the Bank is required to own capital stock in the FHLB of Atlanta and is
authorized to apply for advances from the FHLB of Atlanta on the security of
that stock and a floating lien on certain of its real estate secured loans and
other assets.  Each credit program has its own interest rate and range of
maturities.  Depending on the program, limitations on the amount of advances are
based either on a fixed percentage of an institution's net worth or on the FHLB
of Atlanta's assessment of the institution's creditworthiness.  At December 31,
1999, the Bank had outstanding advances from the FHLB equal to $5,000,000.
Interest on such advances is payable at a 6.24% interest rate with the balance
due on November 30, 2000.  Advances from the FHLB are collateralized by the
Bank's stock in the FHLB and qualifying first mortgage loans.

     The Company has a note payable outstanding for $10,500,000 at December 31,
1999.  Interest installment payments are due quarterly at the prime rate less
1.25% with the principal balance due February 28, 2001.  The note is
collateralized by the Bank's common stock.

     See Note 6 to the "Notes to Consolidated Financial Statements" in the 1999
Annual Report.

Subsidiaries

     The Company has no subsidiaries other than the Bank.  The Bank has no
subsidiaries.

Results of Operations

     The Bank's results of operations are dependent primarily on net interest
income, which is the difference between the income earned on its interest-
earning assets, such as loans and investments, and the cost of its interest-
bearing liabilities, consisting of deposits and FHLB advances.  The Bank's
operations are affected to a much lesser degree by non-interest income, such as
transaction and other service fee income, and other sources of income.  The
<PAGE>

Bank's net income is also affected by, among other things, provisions for loan
losses and operating expenses.  The Bank's  principal operating expenses, aside
from interest expense, consist of compensation and employee benefits, office
occupancy costs, data processing expenses and federal deposit insurance
premiums.  The Bank's results of operations are also significantly affected by
general economic and competitive conditions, particularly changes in market
interest rates, government legislation and policies concerning monetary and
fiscal affairs, housing and financial institutions and the attendant actions of
regulatory authorities.

Market Area

     The Bank's primary market area consists of the communities in an
approximately fifteen (15) mile radius around its headquarters office in
Mooresville, North Carolina.  This area includes portions of Iredell,
Mecklenburg, Lincoln, Catawba, Rowan and Cabarrus counties in North Carolina.
Mooresville is located only thirty (30) miles north of Charlotte, North Carolina
and the Bank's primary market area is and will continue to be significantly
affected by its close proximity to this major metropolitan area.

     Employment in the Bank's primary market area is diversified among
manufacturing, agricultural, retail and wholesale trade, government, services
and utilities.  Major employers include Lake Norman Regional Medical Center,
Panasonic, and Mashushita Compressor Corporation.

Competition

     The Bank has operated in the Mooresville community for more than 60 years
and is the only financial institution headquartered in Mooresville.  However,
the Bank faces strong competition both in attracting deposits and making real
estate and other loans.  Its most direct competition for deposits has
historically come from other savings institutions, credit unions, brokerage
firms and commercial banks located in its primary market area, including large
financial institutions which have greater financial and marketing resources
available to them.  Two national money center commercial banks are currently
headquartered in Charlotte, North Carolina, which is only 30 miles from the
Bank's primary market area.  As of December 31, 1999, there were 8, 9 and 8
depository institutions with 14, 10 and 9 offices in Mooresville, Cornelius and
Huntersville, North Carolina, respectively.  Based upon June 30, 1999
comparative data, the Bank had 20.2% and 7.11% of the deposits in Mooresville
and Iredell County, respectively.  As a result of this intense competition, the
Bank's branch offices, excluding the Mooresville office, have lower levels of
deposits than the industry average.

     The Bank has also faced additional significant competition for investors'
funds from short-term money market securities and other corporate and government
securities.  While the Bank's market share of deposits has decreased in recent
years, its deposit base has grown principally due to economic growth in the
Bank's market area.  The ability of the Bank to attract and retain savings
deposits depends on its ability to generally provide a rate of return, liquidity
and risk comparable to that offered by competing investment opportunities.

     The Bank experiences strong competition for real estate loans from other
savings institutions, commercial banks, and mortgage banking companies.  The
Bank competes for loans primarily through the interest rates and loan fees it
charges, the efficiency and quality of services it provides borrowers, and its
more flexible underwriting standards.  Competition may increase as a result of
the continuing reduction of restrictions on the interstate operations of
financial institutions.

Supervision and Regulation

     Bank holding companies and state savings banks are extensively regulated
under both federal and state law.  The following is a brief summary of certain
statutes and rules and regulations that affect or will affect the Company and
the Bank.  This summary is qualified in its entirety by reference to the
particular statute and regulatory provisions referred to below and is not
intended to be an exhaustive description of the statutes or regulations
applicable to the business of the Company and the Bank.  Supervision, regulation
and examination of the Company and the Bank by the regulatory agencies are
intended primarily for the protection of depositors rather than shareholders of
the Company.
<PAGE>

     Regulation of the Company

     General.  The Company was organized for the purpose of acquiring and
holding all of the capital stock of the Bank to be issued in the Conversion.  As
a savings bank holding company subject to the Bank Holding Company Act of 1956,
as amended ("BHCA"), the Company is subject to certain regulations of the
Federal Reserve.  Under the BHCA, the Company's activities and those of its
subsidiaries are limited to banking, managing or controlling banks, furnishing
services to or performing services for its subsidiaries or engaging in any other
activity which the Federal Reserve determines to be so closely related to
banking or managing or controlling banks as to be a proper incident thereto.
The BHCA prohibits the Company from acquiring direct or indirect control of more
than 5% of the outstanding voting stock or substantially all of the assets of
any bank or savings bank or merging or consolidating with another bank holding
company or savings bank holding company without prior approval of the Federal
Reserve.

     Additionally, the BHCA prohibits the Company from engaging in, or acquiring
ownership or control of, more than 5% of the outstanding voting stock of any
company engaged in a nonbanking business unless such business is determined by
the Federal Reserve to be so closely related to banking as to be properly
incident thereto.  The BHCA does not place territorial restrictions on the
activities of such non-banking related activities.

     Similarly, Federal Reserve approval (or, in certain cases, non-disapproval)
must be obtained prior to any person acquiring control of the Company.  Control
is conclusively presumed to exist if, among other things, a person acquires more
than 25% of any class of voting stock of the holding company or controls in any
manner the election of a majority of the directors of the holding company.
Control is presumed to exist if a person acquires more than 10% of any class of
voting stock and the stock is registered under Section 12 of the Exchange Act or
the acquiror will be the largest shareholder after the acquisition.

     There are a number of obligations and restrictions imposed on bank holding
companies and their depository institution subsidiaries by law and regulatory
policy that are designed to minimize potential loss to the depositors of such
depository institutions and the FDIC insurance funds in the event the depository
institution becomes in danger of default or in default.  For example, to avoid
receivership of an insured depository institution subsidiary, a bank holding
company is required to guarantee the compliance of any insured depository
institution subsidiary that may become "undercapitalized" with the terms of any
capital restoration plan filed by such subsidiary with its appropriate federal
banking agency up to the lesser of (i) an amount equal to 5% of the
institution's total assets at the time the institution became undercapitalized
or (ii) the amount which is necessary (or would have been necessary) to bring
the institution into compliance with all acceptable capital standards as of the
time the institution fails to comply with such capital restoration plan.  Under
a policy of the Federal Reserve with respect to bank holding company operations,
a bank holding company is required to serve as a source of financial strength to
its subsidiary depository institutions and to commit resources to support such
institutions in circumstances where it might not do so absent such policy.  The
Federal Reserve under the BHCA also has the authority to require a bank holding
company to terminate any activity or to relinquish control of a nonbank
subsidiary (other than a nonbank subsidiary of a bank) upon the Federal
Reserve's determination that such activity or control constitutes a serious risk
to the financial soundness and stability of any bank subsidiary of the bank
holding company.

     In addition, insured depository institutions under common control are
required to reimburse the FDIC for any loss suffered by either the SAIF or the
Bank Insurance Fund (the "BIF") as a result of the default of a commonly
controlled insured depository institution or for any assistance provided by the
FDIC to a commonly controlled insured depository institution in danger of
default.  The FDIC may decline to enforce the cross-guarantee provisions if it
determines that a waiver is in the best interest of the SAIF or the BIF or both.
The FDIC's claim for damages is superior to claims of stockholders of the
insured depository institution or its holding company but is subordinate to
claims of depositors, secured creditors and holders of subordinated debt (other
than affiliates) of the commonly controlled insured depository institutions.

     Federal regulations require that the Company must notify the Federal
Reserve Bank of Richmond prior to repurchasing Common Stock in excess of ten
percent of its net worth during a rolling twelve month period unless the Company
(i) both before and after the redemption satisfies capital requirements for
"well capitalized" state member
<PAGE>

banks, (ii) received a one or two rating in its last examination, and (iii) is
not the subject of any unresolved supervisory issues. As a result of the
Company's ownership of the Bank, the Company is registered under the savings
bank holding company laws of North Carolina. Accordingly, the Company is also
subject to regulation and supervision by the Administrator.

     Capital Adequacy Guidelines for Holding Companies.  The Federal Reserve has
adopted capital adequacy guidelines for bank holding companies and banks that
are members of the Federal Reserve system and have consolidated assets of $150
million or more.  For bank holding companies with less than $150 million in
consolidated assets, the guidelines are applied on a bank-only basis unless the
parent bank holding company (i) is engaged in nonbank activity involving
significant leverage or (ii) has a significant amount of outstanding debt that
is held by the general public.

     Bank holding companies subject to the Federal Reserve's capital adequacy
guidelines are required to comply with the Federal Reserve's risk-based capital
guidelines. Under these regulations, the minimum ratio of total capital to risk-
weighted assets (including certain off-balance sheet activities, such as standby
letters of credit) is 8%.  At least half of the total capital is required to be
"Tier I capital," principally consisting of common stockholders' equity,
noncumulative perpetual preferred stock, and a limited amount of cumulative
perpetual preferred stock, less certain goodwill items.  The remainder ("Tier II
capital") may consist of a limited amount of subordinated debt, certain hybrid
capital instruments and other debt securities, perpetual preferred stock, and a
limited amount of the general loan loss allowance.  In addition to the risk-
based capital guidelines, the Federal Reserve has adopted a minimum Tier I
capital (leverage) ratio, under which a bank holding company must maintain a
minimum level of Tier I capital to average total consolidated assets of at least
3% in the case of a bank holding company which has the highest regulatory
examination rating and is not contemplating significant growth or expansion.
All other bank holding companies are expected to maintain a Tier I capital
(leverage) ratio of at least 1% to 2% above the stated minimum.

     Dividend and Repurchase Limitations.  In connection with the Conversion,
the Bank has agreed with the FDIC that, during the first three years after
consummation of the Conversion, neither the Company nor the Bank will pay any
taxable dividend or make any other taxable distribution to its stockholders in
excess of their current or retained earnings.  Also, the Company and the Bank
have agreed to notify the FDIC before making a return of capital during the
first three years following the Conversion.  The Company must obtain Federal
Reserve approval prior to repurchasing Common Stock for in excess of 10% of its
net worth during any twelve-month period unless the Company (i) both before and
after the redemption satisfies capital requirements for "well capitalized" state
member banks; (ii) received a one or two rating in its last examination; and
(iii) is not the subject of any unresolved supervisory issues.

     Although the payment of dividends and repurchase of stock by the Company
are subject to certain notice requirements with the Administrator in addition to
other requirements and limitations of North Carolina corporate law, except as
set forth in this paragraph, neither the Administrator nor the FDIC have
promulgated any regulations specifically limiting the right of the Company to
pay dividends and repurchase shares.  However, the ability of the Company to pay
dividends or repurchase shares may be dependent upon the Company's receipt of
dividends from the Bank.  The Bank's ability to pay dividends is limited.  See "
-- Regulation of the Bank -- Restrictions on Dividends and Other Capital
Distributions."

     In 1999, the Company paid a return of capital dividend to its shareholders
in the amount of $17.18 per share.  All appropriate notices were delivered prior
to paying the return of capital.

     Federal Securities Law.  The Company has registered its Common Stock with
the SEC pursuant to Section 12(g) of the Securities Exchange Act of 1934 (the
"Exchange Act") and will not deregister the Common Stock for a period of three
years following the completion of the Conversion.  As a result of such
registration, the proxy and tender offer rules, insider trading reporting
requirements, annual and periodic reporting and other requirements of the
Exchange Act are applicable to the Company.
<PAGE>

     Regulation of the Bank

     General.  Federal and state legislation and regulation significantly affect
the operations of federally insured savings institutions and other federally
regulated financial institutions.  The operations of regulated depository
institutions, including the Bank, is subject to changes in applicable statutes
and regulations from time to time.  Such changes may or may not be favorable to
the Bank.

     The Bank is a North Carolina-chartered savings bank, is a member of the
FHLB system, and its deposits are insured by the FDIC through the SAIF.  It is
subject to examination and regulation by the FDIC and the Administrator and to
regulations governing such matters as capital standards, mergers, establishment
of branch offices, subsidiary investments and activities, and general investment
authority.  Generally, North Carolina state chartered savings banks whose
deposits are issued by the SAIF are subject to restrictions with respect to
activities and investments, transactions with affiliates and loans-to-one
borrower similar to those applicable to SAIF insured savings associations. Such
examination and regulation is intended primarily for the protection of
depositors and the federal deposit insurance funds.

     The Bank is subject to various regulations promulgated by the Federal
Reserve including, without limitation, Regulation B (Equal Credit Opportunity),
Regulation D (Reserves), Regulation E (Electronic Fund Transfers), Regulation O
(Loans to Executive Officers, Directors and Principal Shareholders), Regulation
Z (Truth in Lending), Regulation CC (Availability of Funds) and Regulation DD
(Truth in Savings).  As creditors of loans secured by real property and as
owners of real property, financial institutions, including the Bank, may be
subject to potential liability under various statutes and regulations applicable
to property owners generally, including statutes and regulations relating to the
environmental condition of real property.

     The FDIC has extensive enforcement authority over North Carolina-chartered
savings banks, including the Bank.  This enforcement authority includes, among
other things, the ability to assess civil money penalties, to issue cease and
desist or removal orders and to initiate injunctive actions.  In general, these
enforcement actions may be initiated in response to violations of laws and
regulations and unsafe or unsound practices.

     The grounds for appointment of a conservator or receiver for a North
Carolina savings bank on the basis of an institution's financial condition
include: (i) insolvency, in that the assets of the savings bank are less than
its liabilities to depositors and others; (ii) substantial dissipation of assets
or earnings through violations of law or unsafe or unsound practices; (iii)
existence of an unsafe or unsound condition to transact business; (iv)
likelihood that the savings bank will be unable to meet the demands of its
depositors or to pay its obligations in the normal course of business; and (v)
insufficient capital or the incurring or likely incurring of losses that will
deplete substantially all of the institution's capital with no reasonable
prospect of replenishment of capital without federal assistance.

     Transactions with Affiliates.  Under current federal law, transactions
between the Bank and any affiliate are governed by Sections 23A and 23B of the
Federal Reserve Act.  An affiliate of the Bank is any company or entity that
controls, is controlled by or is under common control with the savings bank.
Generally, subsidiaries of a bank, other than a bank subsidiary, and certain
other types of companies are not considered to be affiliates.  Generally,
Sections 23A and 23B (i) establish certain collateral requirements for losses to
affiliates; (ii) limit the extent to which the Bank or its subsidiaries may
engage in "covered transactions" with any one affiliate to an amount equal to
10% of such the Bank's capital stock and surplus, and contain an aggregate limit
on all such transactions with all affiliates to an amount equal to 20% of such
capital stock and surplus and (iii) require that all such transactions be on
terms substantially the same, or at least as favorable, to the Bank or the
subsidiary as those provided to a nonaffiliate.  The term "covered transaction"
includes the making of loans or other extensions of credit to an affiliate, the
purchase of assets from an affiliate, the purchase of, or an investment in, the
securities of an affiliate, the acceptance of securities of an affiliate as
collateral for a loan or extension of credit to any person, or issuance of a
guarantee, acceptance or letter of credit on behalf of an affiliate.

     Further, current federal law has extended to savings banks the restrictions
contained in Section 22(h) of the Federal Reserve Act and its implementing
regulations with respect to loans to directors, executive officers and principal
stockholders.  Under Section 22(h), loans to directors, executive officers and
stockholders who own more than 10% of
<PAGE>

a savings bank, and certain affiliated entities of any of the foregoing, may not
exceed, together with all other outstanding loans to such person and affiliated
entities, the savings bank's loans-to-one borrower limit as established by
federal law and all loans to such persons may not exceed the institution's
unimpaired capital and unimpaired surplus. Section 22(h) also prohibits loans
above amounts prescribed by the appropriate federal banking agency to directors,
executive officers and stockholders who own more than 10% of a savings bank, and
their respective affiliates, unless such loan is approved in advance by a
majority of the disinterested directors of the board of directors of the Bank.
Any "interested" director may not participate in the voting. The Federal Reserve
has prescribed the loan amount (which includes all other outstanding loans to
such person), as to which such prior board of director approval is required, as
being the greater of $25,000 or 5% of unimpaired capital and unimpaired surplus
(up to $500,000). Further, pursuant to Section 22(h), the Federal Reserve
requires that loans to directors, executive officers, and principal stockholders
be made on terms substantially the same as offered in comparable transactions to
other persons and not involve more than the normal risk of repayment or present
other unfavorable features. Section 22(h) also generally prohibits a depository
institution from paying the overdrafts of any of its executive officers or
directors.

     Deposit Insurance Assessments.  The Bank is also subject to insurance
assessments imposed by the FDIC.  Under current law, the insurance assessment to
be paid by the Savings Association Insurance Fund ("SAIF") members such as the
Bank shall be as specified in a schedule required to be issued by the FDIC.
Effective January 1, 1997, the FDIC equalized the assessment rates for SAIF
members as well as those institutions with deposits insured by the Bank
Insurance Fund ("BIF").  Thus, for the semi-annual period beginning January 1,
1997, the assessments imposed on all FDIC deposits for deposit insurance have an
effective rate ranging from 0 to 27 basis points per $100 of insured deposits,
depending on the institution's capital position and other supervisory factors.
However, because legislation enacted in 1996 requires that both SAIF-insured and
BIF-insured deposits pay a pro rata portion of the interest due on the
obligations issued by the Financing Corporation, for the quarters ended or
ending December 31, 1999, March 31, 2000 and June 30, 2000, the FDIC has
assessed or is assessing BIF-insured deposits an additional 1.184, 2.120, and
2.08 basis points per $100 of deposits, respectively, and SAIF-insured deposits
an additional 5.920, 2.120, and 2.08 basis points per $100 of deposits,
respectively, to cover those obligations.  Based on the current financial
condition and capital levels of the Bank, the Bank does not expect that the FDIC
insurance assessments will have a material impact on the Bank's future earnings.

     Community Reinvestment Act. The Bank, like other financial institutions, is
subject to the Community Reinvestment Act, as amended (the "CRA"). A purpose of
the CRA is to encourage financial institutions to help meet the credit needs of
its entire community, including the needs of low- and moderate-income
neighborhoods. Financial institutions' compliance with the CRA is regularly
evaluated by their regulatory agencies.  Under recently adopted regulations,
institutions are first evaluated and rated under three categories: a lending
test, an investment test and a service test.  For each of these three tests, the
institution is given a rating of either "outstanding," "high satisfactory," "low
satisfactory," "needs to improve" or "substantial non-compliance."  A set of
criteria for each rating has been developed and is included in the regulation.
If an institution disagrees with a particular rating, the institution has the
burden of rebutting the presumption by clearly establishing that the
quantitative measures do not accurately present its actual performance, or that
demographics, competitive conditions or economic or legal limitations peculiar
to its service area should be considered.  The ratings received under the three
tests are used to determine the overall composite CRA rating.  The composite
ratings are "outstanding," "satisfactory," "needs to improve" or "substantial
non-compliance."

     During the Bank's last compliance examination the Bank received a
"satisfactory" rating with respect to CRA compliance.  The Bank's rating with
respect to CRA compliance would be a factor to be considered by the Federal
Reserve and FDIC in considering applications submitted by the Bank to acquire
branches or to acquire or combine with other financial institutions and take
other actions and could result in the denial of such applications.  For further
discussion regarding the CRA, See "-- The Gram-Leach-Bliley Act."

     Capital Requirements Applicable To The Bank.  The FDIC requires the Bank to
have a minimum leverage ratio of Tier I capital (principally consisting of
common stockholders' equity, noncumulative perpetual preferred stock and
minority interests in consolidated subsidiaries, less certain intangible items,
goodwill items, identified losses and investments in securities subsidiaries) to
total assets of at least 3%; provided, however that all institutions, other than
those (i) receiving the highest rating during the examination process and (ii)
not anticipating or experiencing any
<PAGE>

significant growth, are required to maintain a ratio of 1% or 2% above the
stated minimum, with an absolute minimum leverage ratio of not less than 4%. The
FDIC also requires the Bank to have a ratio of total capital to risk-weighted
assets, including certain off-balance sheet activities, such as standby letters
of credit, of at least 8%. At least half of the total capital is required to be
Tier I capital. The remainder ("Tier II capital") may consist of a limited
amount of subordinated debt, certain hybrid capital instruments, other debt
securities, certain types of preferred stock and a limited amount of loan loss
allowance.

     An institution which fails to meet minimum capital requirements may be
subject to a capital directive which is enforceable in the same manner and to
the same extent as a final cease and desist order, and must submit a capital
plan within 60 days to the FDIC.  If the leverage ratio falls to 2% or less, the
Bank may be deemed to be operating in an unsafe or unsound condition, allowing
the FDIC to take various enforcement actions, including possible termination of
insurance or placement of the institution in receivership.  At December 31,
1999, the Bank had a leverage ratio of 22.1%.

     The Administrator requires that net worth equal at least 5% of total
assets.  Intangible assets must be deducted from net worth and assets when
computing compliance with this requirement.

     At December 31, 1999, the Bank complied with each of the capital
requirements of the FDIC and the Administrator.

     Each federal banking agency is required to establish risk-based capital
standards that take adequate account of interest rate risk, concentration of
credit risk, and the risk of nontraditional activities, as well as reflect the
actual performance and expected risk of loss on multifamily mortgages.  On
August 2, 1995, the federal banking agencies issued a joint notice of adoption
of final risk based capital rules to take account of interest rate risk.  The
final regulation required an assessment of the need for additional capital on a
case-by-case basis, considering both the level of measured exposure and
qualitative risk factors.  The final rule also stated an intent to, in the
future, establish an explicit minimum capital charge for interest rate risk
based on the level of a bank's measured interest rate risk exposure.

     Effective June 26, 1996, the federal banking agencies issued a joint policy
statement announcing the agencies' election not to adopt a standardized measure
and explicit capital charge for interest rate risk at that time.  Rather, the
policy statement (i) identifies the main elements of sound interest rate risk
management, (ii) describes prudent principles and practices for each of those
elements, and (iii) describes the critical factors affecting the agencies'
evaluation of a bank's interest rate risk when making a determination of capital
adequacy.

     Loans-To-One-Borrower.  The Bank is subject to the Administrator's loans-
to-one-borrower limits.  Under these limits, no loans and extensions of credit
to any borrower outstanding at one time and not fully secured by readily
marketable collateral shall exceed 15% of the net worth of the savings bank.
Loans and extensions of credit fully secured by readily marketable collateral
may comprise an additional 10% of net worth.  Notwithstanding the limits just
described, savings institutions may make loans-to-one-borrower, for any purpose,
in an amount up to $500,000.  A savings institution is also authorized to make
loans-to-one-borrower to develop domestic residential housing units, not to
exceed the lesser of $30 million or 30% of the savings institution's net worth,
provided that the aggregate amount of loans made under this authority does not
exceed 150% of net worth.  These limits also authorize a savings bank to make
loans-to-one-borrower to finance the sale of real property acquired in
satisfaction of debts in an amount up to 50% of net worth.

     As of December 31, 1999, the largest aggregate amount of loans which the
Bank had to any one borrower was $721,000.  These loans were performing in
accordance with their original terms as of December 31, 1999.  The Bank had no
loans outstanding which management believes violate the applicable loans-to-one-
borrower limits.  The Bank does not believe that the loans-to-one-borrower
limits will have a significant impact on its business, operations and earnings.

     Limitations on Rates Paid for Deposits.  Regulations promulgated by the
FDIC place limitations on the ability of insured depository institutions to
accept, renew or roll over deposits by offering rates of interest which are
<PAGE>

significantly higher than the prevailing rates of interest on deposits offered
by other insured depository institutions having the same type of charter in such
depository institution's normal market area.  Under these regulations, "well
capitalized" depository institutions may accept, renew or roll such deposits
over without restriction, "adequately capitalized" depository institutions may
accept, renew or roll such deposits over with a waiver from the FDIC (subject to
certain restrictions on payments of rates) and "undercapitalized" depository
institutions may not accept, renew or roll such deposits over.  The definitions
of "well capitalized," "adequately capitalized" and "undercapitalized" are the
same as the definitions adopted by the FDIC to implement the corrective action
provisions of the Federal Deposit Insurance Corporation Improvement Act of 1991.
See "--Prompt Corrective Regulatory Action."  As of December 31, 1999, the Bank
was considered "well capitalized" and, thus, was not subject to the limitations
on rates payable on its deposits.

     Federal Home Loan Bank System.  The FHLB system provides a central credit
facility for member institutions.  As a member of the FHLB of Atlanta, the Bank
is required to own capital stock in the FHLB of Atlanta in an amount at least
equal to the greater of 1% of the aggregate principal amount of its unpaid
residential mortgage loans, home purchase contracts and similar obligations at
the end of each calendar year, or 5% of its outstanding advances (borrowings)
from the FHLB of Atlanta.  On December 31, 1999, the Bank was in compliance with
this requirement.

     Each FHLB is required to contribute a portion of its reserves and undivided
profits to fund the principal and a portion of the interest on certain bonds and
certain other obligations which are used to fund the resolution of troubled
savings association cases, and to transfer a percentage of its annual net
earnings to the Affordable Housing Program.  These contributions continue to
reduce the FHLB of Atlanta's earnings and the Bank's dividends on its FHLB of
Atlanta stock.

     Federal Reserve System.  Federal Reserve regulations require savings banks,
not otherwise exempt from the regulations, to maintain reserves against their
transaction accounts (primarily negotiable order of withdrawal accounts) and
certain nonpersonal time deposits.  The reserve requirements are subject to
adjustment by the Federal Reserve. As of December 31, 1999, the Bank was in
compliance with the applicable reserve requirements of the Federal Reserve.

     Restrictions on Acquisitions.  Federal law generally provides that no
"person," acting directly or indirectly or through or in concert with one or
more other persons, may acquire "control," as that term is defined in FDIC
regulations, of an insured institution without giving at least 60 days' written
notice to the FDIC and providing the FDIC an opportunity to disapprove the
proposed acquisition.  Pursuant to regulations governing acquisitions of
control, control of an insured institution is conclusively deemed to have been
acquired, among other things, upon the acquisition of more than 25% of any class
of voting stock.  In addition, control is presumed to have been acquired,
subject to rebuttal, upon the acquisition of more than 10% of any class of
voting stock.  Such acquisitions of control may be disapproved if it is
determined, among other things, that (i) the acquisition would substantially
lessen competition; (ii) the financial condition of the acquiring person might
jeopardize the financial stability of the savings bank or prejudice the
interests of its depositors; or (iii) the competency, experience or integrity of
the acquiring person or the proposed management personnel indicates that it
would not be in the interest of the depositors or the public to permit the
acquisitions of control by such person.

     For three years following completion of the Conversion, North Carolina
conversion regulations require the prior written approval of the Administrator
before any person may directly or indirectly offer to acquire or acquire the
beneficial ownership of more than 10% of any class of an equity security of the
Bank.  If any person were to so acquire the beneficial ownership of more than
10% of any class of any equity security without prior written approval, the
securities beneficially owned in excess of 10% would not be counted as shares
entitled to vote and would not be voted or counted as voting shares in
connection with any matter submitted to stockholders for a vote.  Approval is
not required for (i) any offer with a view toward public resale made exclusively
to the Bank or its underwriters or the selling group acting on its behalf or
(ii) any offer to acquire or acquisition of beneficial ownership of more than
10% of the common stock of the Bank by a corporation whose ownership is or will
be substantially the same as the ownership of the Bank, provided that the offer
or acquisition is made more than one year following the consummation of the
Conversion.  The regulation provides that within one year following the
Conversion, the Administrator would approve the acquisition of more than 10% of
beneficial ownership only to protect the safety and soundness of the
institution.  During the second
<PAGE>

and third years after the Conversion, the Administrator may approve such an
acquisition upon a finding that (i) the acquisition is necessary to protect the
safety and soundness of the Company and the Bank or the Boards of Directors of
the Company and the Bank support the acquisition and (iii) the acquiror is of
good character and integrity and possesses satisfactory managerial skills, the
acquiror will be a source of financial strength to the Company and the Bank and
the public interests will not be adversely affected.

     Liquidity.  The Bank is subject to the Administrator's requirement that the
ratio of liquid assets to total assets equal at least 10%.  The computation of
liquidity under North Carolina regulation allows the inclusion of mortgage-
backed securities and investments which, in the judgment of the Administrator,
have a readily marketable value, including investments with maturities in excess
of five years.  At December 31, 1999, the Bank's liquidity ratio, calculated in
accordance with North Carolina regulations, was approximately 10.73%.

     Prompt Corrective Regulatory Action.  The Federal Deposit Insurance
Corporation Improvement Act of 1991 provided the federal banking agencies with
broad powers to take corrective action to resolve problems of insured depository
institutions.  The extent of these powers depends upon whether the institutions
in question are "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized," or "critically
undercapitalized."  Under the FDIC regulations applicable to the Bank, an
institution is considered "well capitalized" if it has (i) a total risk-based
capital ratio of 10% or greater, (ii) a Tier I risk-based capital ratio of 6% or
greater, (iii) a leverage ratio of 5% or greater and (iv) is not subject to any
order or written directive to meet and maintain a specific capital level for any
capital measure.  An "adequately capitalized" institution is defined as one that
has (i) a total risk-based capital ratio of 8% or greater, (ii) a Tier I risk-
based capital ratio of 4% or greater and (iii) a leverage ratio of 4% or greater
(or 3% or greater in the case of an institution with the highest examination
rating and which is not experiencing or anticipating significant growth).  An
institution is considered (A) "undercapitalized" if it has (i) a total risk-
based capital ratio of less than 8%, (ii) a Tier I risk-based capital ratio of
less than 4% or (iii) a leverage ratio of less than 4% (or 3% in the case of an
institution with the highest examination rating and which is not experiencing or
anticipating significant growth); (B) "significantly undercapitalized" if the
institution has (i) a total risk-based capital ratio of less than 6%, or (ii) a
Tier I risk-based capital ratio of less than 3% or (iii) a leverage ratio of
less than 3% and (C) "critically undercapitalized" if the institution has a
ratio of tangible equity to total assets equal to or less than 2%.  The Bank is
considered to be "well capitalized" under the rules set forth above.

     Interstate Banking.   The Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "Interstate Banking Act"), effective September 29,
1995, permits adequately capitalized bank and savings bank holding companies to
acquire control of banks and savings banks in any state.  The states may
specifically permit interstate acquisitions prior to September 29, 1995, by
enacting legislation that provides for such transactions.  North Carolina
adopted nationwide reciprocal interstate acquisition legislation in 1994.

     Such interstate acquisitions are subject to certain restrictions.  States
may require the bank or savings bank being acquired to have been in existence
for a certain length of time but not in excess of five years. In addition, no
bank or saving bank may acquire more than 10% of the insured deposits in the
United States or more than 30% of the insured deposits in any one state, unless
the state has specifically legislated a higher deposit cap. States are free to
legislate stricter deposit caps.

     The Interstate Banking Act also provides for interstate branching,
effective June 1, 1997, allowing interstate branching in all states, provided
that a particular state has not specifically denied interstate branching by
legislation prior to such time.  Unlike interstate acquisitions, a state may
deny interstate branching if it specifically elects to do so by June 1, 1997.
States may choose to allow interstate branching prior to June 1, 1997 by opting-
in to a group of states that permits these transactions.  These states generally
allow interstate branching via a merger of an out-of-state bank with an in-state
bank, or on a de novo basis.  North Carolina has enacted legislation permitting
branching transactions.

     Restrictions on Dividends and Other Capital Distributions.  A North
Carolina-chartered stock savings bank may not declare or pay a cash dividend on,
or repurchase any of, its capital stock if the effect of such transaction would
be to reduce the net worth of the institution to an amount which is less than
the minimum amount required by applicable federal and state regulations.  In
addition, a North Carolina-chartered stock savings bank, for a period of five
years after
<PAGE>

its conversion from mutual to stock form, must obtain the written approval from
the Administrator before declaring or paying a cash dividend on its capital
stock in an amount in excess of one-half of the greater of (i) the institution's
net income for the most recent fiscal year end, or (ii) the average of the
institution's net income after dividends for the most recent fiscal year end and
not more than two of the immediately preceding fiscal year ends, if applicable.

     Also, without the prior written approval of the Administrator, a North
Carolina-chartered stock savings bank, for a period of five years after its
conversion from mutual to stock form, may not repurchase any of its capital
stock. The Administrator will give approval to repurchase only upon a showing
that the proposed repurchase will not adversely affect the safety and soundness
of the institution.  Under FDIC regulations, stock repurchases may be made by
the savings bank only upon receipt of FDIC approval.

     In addition, the Bank is not permitted to declare or pay a cash dividend on
or repurchase any of its capital stock if the effect thereof would be to cause
its net worth to be reduced below the amount required for the liquidation
account established in connection with the Bank's conversion from mutual to
stock ownership.

     In connection with the Conversion, the Bank has agreed with the FDIC that,
during the first three years after the Conversion, neither the Company nor the
Bank will pay any taxable dividend or make any other taxable distribution in
excess of their current and retained earnings.  The Bank has also agreed to
notify the FDIC before making a return of capital during the first three years
following the Conversion.

     See Note 8 to the "Notes to Consolidated Financial Statements" in the 1999
Annual Report.

     Additional Limitations on Activities.  Recent FDIC law and regulations
generally provide that the Bank may not engage as principal in any type of
activity, or in any activity in an amount, not permitted for national banks, or
directly acquire or retain any equity investment of a type or in an amount not
permitted for national banks.  The FDIC has authority to grant exceptions from
these prohibitions (other than with respect to non-service corporation equity
investments) if it determines no significant risk to the insurance fund is posed
by the amount of the investment or the activity to be engaged in and if the Bank
is and continues to be in compliance with fully phased-in capital standards.
National banks are generally not permitted to hold equity investments other than
shares of service corporations and certain federal agency securities.  Moreover,
the activities in which service corporations are permitted to engage are limited
to those of service corporations for national banks.

     Savings banks are also generally prohibited from directly or indirectly
acquiring or retaining any corporate debt security that is not of investment
grade (generally referred to as "junk bonds").  State savings banks are also
required to notify the FDIC at least 30 days prior to the establishment or
acquisition of any subsidiary, or at least 30 days prior to conducting any such
new activity.  Any such activities must be conducted in accordance with the
regulations and orders of the FDIC and the Administrator.

     Other North Carolina Regulations.  As a North Carolina-chartered savings
bank, the Bank derives its authority from, and is regulated by, the
Administrator.  The Administrator has the right to promulgate rules and
regulations necessary for the supervision and regulation of North Carolina
savings banks under his jurisdiction and for the protection of the public
investing in such institutions.  The regulatory authority of the Administrator
includes, but is not limited to, the establishment of reserve requirements; the
regulation of the payment of dividends; the regulation of stock repurchases, the
regulation of incorporators, stockholders, directors, officers and employees;
the establishment of permitted types of withdrawable accounts and types of
contracts for savings programs, loans and investments; and the regulation of the
conduct and management of savings banks, chartering and branching of
institutions, mergers, conversions and conflicts of interest.  North Carolina
law requires that the Bank maintain federal deposit insurance as a condition of
doing business.

     The Administrator conducts regular examinations of North Carolina-chartered
savings banks.  The purpose of such examinations is to assure that institutions
are being operated in compliance with applicable North Carolina law and
regulations and in a safe and sound manner.  These examinations are usually
conducted on an alternating basis with the FDIC.  In addition, the Administrator
is required to conduct an examination of any institution when he has good
<PAGE>

reason to believe that the standing and responsibility of the institution is of
doubtful character or when he otherwise deems it prudent. The Administrator is
empowered to order the revocation of the license of an institution if he finds
that it has violated or is in violation of any North Carolina law or regulation
and that revocation is necessary in order to preserve the assets of the
institution and protect the interests of its depositors. The Administrator has
the power to issue cease and desist orders if any person or institution is
engaging in, or has engaged in, any unsafe or unsound practice or unfair and
discriminatory practice in the conduct of its business or in violation of any
other law, rule or regulation.

     A North Carolina-chartered savings bank must maintain net worth, computed
in accordance with the Administrator's requirements, of 5% of total assets and
liquidity of 10% of total assets, as discussed above.  Additionally, a North
Carolina-chartered savings bank is required to maintain general valuation
allowances and specific loss reserves in the same amounts as required by the
FDIC.

     Subject to limitation by the Administrator, North Carolina-chartered
savings banks may make any loan or investment or engage in any activity which is
permitted to federally chartered institutions.  However, a North Carolina-
chartered savings bank cannot invest more than 15% of its total assets in
business, commercial, corporate and agricultural loans without the prior
approval of the Administrator.  In addition to such  to such lending authority,
North Carolina-chartered savings banks are authorized to invest funds, in excess
of loan demand, in certain statutorily permitted investments, including but not
limited to (i) obligations of the United States, or those guaranteed by it; (ii)
obligations of the State of North Carolina; (iii) bank demand or time deposits;
(iv) stock or obligations of the federal deposit insurance fund or a FHLB; (v)
savings accounts of any savings institution as approved by the board of
directors; and (vi) stock or obligations of any agency of the State of North
Carolina or of the United States or of any corporation doing business in North
Carolina whose principal business is to make education loans.

     North Carolina law provides a procedure by which savings institutions may
consolidate or merge, subject to approval of the Administrator.  The approval is
conditioned upon findings by the Administrator that, among other things, such
merger or consolidation will promote the best interests of the members or
stockholders of the merging institutions.  North Carolina law also provides for
simultaneous mergers and conversions and for supervisory mergers conducted by
the Administrator.

     Future Requirements.  Statutes and regulations are regularly introduced
which contain wide-ranging proposals for altering the structures, regulations
and competitive relationships of financial institutions.  It cannot be predicted
whether or what form any proposed statute or regulation will be adopted or the
extent to which the business of the Company and the Bank may be affected by such
statute or regulation.
<PAGE>

     The Gramm-Leach-Bliley Act

     The Gramm-Leach-Bliley Act (the "GLB Act") was signed into law on November
12, 1999 to remove barriers separating banking, securities and insurance firms
and to make other reforms. Certain provisions of the GLB Act were effective
immediately upon signing; other provisions generally take effect between 120
days and 18 months following enactment.

     Financial Affiliations.  Title I of the GLB Act facilitates affiliations
among banks, securities firms and insurance companies.  Financial organizations
may structure new financial affiliations through a holding company structure, or
a financial subsidiary (with limitations on activities and appropriate
safeguards).  A bank holding company may now qualify as a financial holding
company and expand into a wide variety of services that are financial in nature,
provided that its subsidiary depository institutions are well-managed, well-
capitalized and have received a "satisfactory" rating on their last Community
Reinvestment Act ("CRA") examination.  A bank holding company which does not
qualify as a financial holding company under the GLB Act is generally limited in
the types of activities in which it may engage to those that the Federal Reserve
Board had recognized as permissible for a bank holding company prior to the date
of enactment of the GLB Act.

     National banks remain limited in the scope of activities they  may exercise
directly within the bank, but an eligible national bank may have a financial
subsidiary that exercises many of the expanded financial services authorized for
a financial holding company.  A national bank cannot engage in merchant banking
either directly or through a subsidiary, but a financial holding company is
authorized to have an affiliate company that engages in merchant banking.

     State banks may have financial subsidiaries that, upon meeting eligibility
criteria, can engage in activities permitted for financial subsidiaries of
national banks.

     Functional Regulation.  The GLB Act designates the Federal Reserve as the
overall umbrella supervisor of the new financial services holding companies.
The GLB Act adopts a system of functional regulation where the primary regulator
is determined by the nature of activity rather than the type of institution.
Under this principle, securities activities are regulated by the SEC and other
securities regulators, insurance activities by the state insurance authorities,
and banking activities by the appropriate banking regulator.

     Insurance.    The GLB Act reaffirms that states are the regulators for
insurance activities of all persons, including acting as the functional
regulator for the insurance activities of federally-chartered banks.  However,
states may not prevent depository institutions and their affiliates from
conducting insurance activities.

     Privacy.  The GLB Act imposes restrictions on the ability of financial
services firms to share customer information with nonaffiliated third parties.
The GLB Act: 1) requires financial services firms to establish privacy policies
and disclose them annually to customers, explaining how nonpublic personal
information is shared with affiliates and third parties; 2) directs regulatory
agencies to adopt standards for sharing customer information; 3) permits
customers to prohibit ("opt-out") of the disclosure of personal information to
nonaffiliated third parties; 4) prohibits the sharing with marketers of credit
card and other account numbers; and, 5) prohibits "pretext" calling.  The
privacy provisions do allow, however,  a community bank to share information
with third parties that sell financial products, such as insurance companies or
securities firms.

     Other.  (1) The GLB Act reforms the Federal Home Loan Bank System to
provide small banks with greater access to funds for making loans to small
business and small farmers. (2) The GLB Act obligates operators of automated
teller machines ("ATMs") to provide notices to customers regarding surcharge
practices. (3) The GLB Act provides that financial institutions with less than
$250 million in assets will normally be examined for compliance with the CRA
only once every five years if they maintain an "outstanding" rating and once
every four years they if have a "satisfactory" rating. CRA agreements between
financial institutions and community groups must be disclosed and reported to
the public.
<PAGE>

ITEM 2.   DESCRIPTION OF PROPERTIES

     The following table sets forth the location of the Bank's principal office
in Mooresville, North Carolina and its full service branch office in Cornelius
and Huntersville, North Carolina, as well as certain other information relating
to these offices as of December 31, 1999.

<TABLE>
<CAPTION>
                                                                              Owned
                                                    Net Book Value              or                   Deposits
                    Address                          of Property              leased              (In Thousands)
-----------------------------------------------  --------------------  --------------------  ------------------------
<S>                                              <C>                   <C>                   <C>
Mooresville:                                          $215,000                 Owned                  $76,963
347 North Main Street
Mooresville, North Carolina 28115
Cornelius:                                            $281,000                 Owned                  $ 7,548
20209 Highway 73 West
Cornelius, North Carolina 28031
Huntersville:                                         $185,000                 Owned                  $ 6,052
401 Gilead Road
Huntersville, North Carolina 28078
                                                      $681,000                                        $90,563
</TABLE>

     In addition, the Bank owns a 1.24 acre lot located at Highway 150 West, 239
West Plaza Drive, Mooresville, North Carolina, purchased in 1988 for future
expansion purposes.  The net book value of this property at December 31, 1999
was $65,000.  The total net book value of the Bank's furniture, fixtures and
equipment on December 31, 1999 was $366,000.  The properties are considered by
the Bank's management to be in good condition and adequately covered by
insurance.

     See Note 4 to the "Notes To Consolidated Financial Statements" to the 1999
Annual Report.

ITEM 3.   LEGAL PROCEEDINGS

     In the opinion of management, neither the Company nor the Bank is involved
in any pending legal proceedings other than routine, non-material proceedings
occurring in the ordinary course of business.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matter was submitted to a vote of the Company's stockholders during the
quarter ended December 31, 1999.


                                    PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     See the information under the section captioned "Common Stock Information"
on page 57 in the Company's 1999 Annual Report, which section is incorporated
herein by reference.  See "Item 1.  BUSINESS-Regulation of the Company --
Dividend and Repurchase Limitations, and -- Regulation of the Bank--Restrictions
on Dividends and Other
<PAGE>

Capital Distributions" above for regulatory restrictions which limit the ability
of the Company to pay dividends to its shareholders and the Bank to pay
dividends to the Company.

ITEM 6.   SELECTED FINANCIAL DATA

     The information required by this Item is set forth in the table captioned
"Selected Consolidated Financial Data" on pages 2 and 3 of the Company's 1999
Annual Report which is incorporated herein by reference.

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATION

     See the information set forth under Item 1 above and the information set
forth under the section captioned "Management's Discussion and Analysis of
Financial Condition and Operating Results" on pages 4 through 17 in the
Company's 1999 Annual Report, which section is incorporated herein by reference.

ITEM 7A   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Pages 6 through 8 of the Company's 1999 Annual Report are herein
incorporated by reference.


ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The consolidated financial statements of the Company and supplementary data
set forth on pages 19 through 55 of the Company's 1999 Annual Report are
incorporated herein by reference.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

     N/A.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information required by this Item regarding directors and executive
officers of the Company is set forth under the sections captioned "Proposal 1 -
Election of Directors - Nominees" on pages 6 through 8 of the Proxy Statement of
the 2000 Annual Meeting of Stockholders (the "Proxy Statement") and "Proposal 1
- Election of Directors - Executive Officers" on pages 9 and 10 of the Proxy
Statement, which sections are incorporated herein by reference.

     The information required by this Item regarding compliance with Section
16(a) of the Securities Exchange Act of 1934 is set forth under the section
captioned "Section 16(a) Beneficial Ownership Reporting Compliance" set forth on
page 6 of the Proxy Statement, which is incorporated herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION

     The information required by this Item is set forth under the sections
captioned "Proposal 1 - Election of Directors - Directors' Compensation" on
pages 8 and 9 and " - Executive Compensation" on pages 10 through 19 of the
Proxy Statement, which sections are incorporated herein by reference.
<PAGE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by this Item is incorporated by reference from the
section captioned "Security Ownership of Certain Beneficial Owners" on pages 3
through 6 of the Proxy Statement.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     See the section captioned "Proposal 1 - Election of Directors - Certain
Indebtedness and Transactions of Management" on page 21 of the Proxy Statement,
which section is incorporated herein by reference.  Also, see Note 13 to the
"Notes of Consolidated Financial Statements" of the 1999 Annual Report.

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

14(a)1.   Consolidated Financial Statements (contained in the Company's 1999
          Annual Report which is attached hereto as Exhibit (13) and
          incorporated herein by reference) including the following:

          (a)  Independent Auditors' Report;

          (b)  Consolidated Statements of Financial Condition as of December 31,
               1999 and 1998;

          (c)  Consolidated Statements of Income and Comprehensive Income for
               the Years Ended December 31, 1999, 1998 and 1997;

          (d)  Consolidated Statements of Cash Flows for the Years Ended
               December 31, 1999, 1998 and 1997;

          (e)  Consolidated Statements of Stockholder's Equity for the Years
               Ended December 31, 1999, 1998 and 1997;

          (f)  Notes to Consolidated Financial Statements.

14(a)2.   Consolidated Financial Statement Schedules

          All schedules have been omitted as the required information is either
          inapplicable or included in the Notes to Consolidated Financial
          Statements.

14(a)3.   Exhibits
<TABLE>
<S>                         <C>
          Exhibit (3)(i)    Certificate of Incorporation, incorporated herein by
                            reference to Exhibit (3)(i) to the Registration
                            Statement on Form S-1, Registration No.  333-35497,
                            dated September 12, 1997, and amended on November 5 and
                            10, 1997.

          Exhibit (3)(ii)   Bylaws, incorporated herein by reference to Exhibit
                            (3)(ii) to the Registration Statement on Form S-1,
                            Registration No.  333-35497, dated September 12, 1997,
                            and amended on November 5 and 10, 1997.

          Exhibit (4)       Specimen Stock Certificate, incorporated herein by
                            reference to Exhibit (4) to the Registration Statement
                            on Form S-1, Registration No.  333-
</TABLE>
<PAGE>

<TABLE>
<S>                          <C>

                             35497, dated September 12, 1997, and amended on
                             November 5 and 10, 1997.

          Exhibit (10)(a)    Employment Agreement between Mooresville Savings
                             Bank, Inc., S.S.B. and George W. Brawley, Jr. dated
                             December 30, 1997, as amended on December 15, 1998,
                             incorporated herein by reference to Exhibit 10 (a) to
                             the Company's Form 10-K for the year ended December 31,
                             1998.

          Exhibit (10)(b)    Employment Agreement between Mooresville Savings
                             Bank, Inc., S.S.B. and Dale W. Brawley dated December
                             30, 1997, as amended on December 15, 1998, incorporated
                             herein by reference to Exhibit 10 (b) to the Company's
                             Form 10-K for the year ended December 31, 1998.

          Exhibit (10)(c)    Employment Agreement between Mooresville Savings
                             Bank, Inc., S.S.B. and Billy R. Williams dated December
                             30, 1997, as amended on December 15, 1998, incorporated
                             herein by reference to Exhibit 10 (c) to the Company's
                             Form 10-K for the year ended December 31, 1998.

          Exhibit (10)(d)    Employee Stock Ownership Plan and Trust of
                             Mooresville Savings Bank, Inc., S.S.B., incorporated by
                             reference to Exhibit 10(d) to the Company's Form 10-K
                             for the year ended December 31, 1997.

          Exhibit (10)(e)    Mooresville Savings Bank, Inc., S.S.B. Severance
                             Plan, incorporated herein by reference to Exhibit 10(f)
                             to the Registration Statement on Form S-1, Registration
                             No. 333-35497, dated September 12, 1997, and as amended
                             on November 5 and 10, 1997.

          Exhibit (10)(f)    Capital Maintenance Agreement between Coddle Creek
                             Financial Corp. and Mooresville Savings Bank, Inc.,
                             S.S.B., incorporated by reference to Exhibit 10(f) to
                             the Company's Form 10-K for the year ended December 31,
                             1997.

          Exhibit (10)(g)    Management Recognition Plan of Mooresville Savings
                             Bank, Inc., S.S.B., incorporated herein by reference to
                             Exhibit 10(g) to the Company's Form 10-K for the year
                             ended December 31, 1998.

          Exhibit (10)(h)    Stock Option Plan of Coddle Creek Financial Corp.,
                             incorporated herein by reference to Exhibit 10(h) to
                             the Company's Form 10-K for the year ended December 31,
                             1998.

          Exhibit (10)(i)    (i) Amended and Restated Retirement Payment
                             Agreements between Mooresville Savings Bank, Inc.,
                             S.S.B. and each of Donald R. Belk, George W. Brawley
                             and Claude U. Voils, Jr. dated September 3, 1979, as
                             amended and restated September 8, 1997 and as amended
                             on December 16, 1998, incorporated herein by reference
                             to Exhibit 10(i)(i) to the Company's Form 10-K for the
                             year ended December 31, 1998.

                             (ii) Retirement Payment Agreement between Mooresville
                             Savings Bank, Inc., S.S.B. and Calvin E. Tyner dated
                             September 3, 1979, as amended on September 8, 1997,
                             incorporated herein by reference to Exhibit 10(i)(ii)
                             to the Company's Form 10-K for the year ended December
                             31, 1998.
</TABLE>
<PAGE>

<TABLE>
<S>                      <C>
                         (iii) Amended and Restated Director's Deferred
                         Compensation Agreements between Mooresville Savings
                         Bank, Inc., S.S.B. and each of Donald R. Belk, George
                         W. Brawley, Jr., and Claude U. Voils, Jr. dated January
                         1, 1985, as amended and restated on March 31, 1988 and
                         September 8, 1997 and as amended for Messrs. Belk,
                         Brawley, and Voils on December 16, 1998, incorporated
                         herein by reference to Exhibit 10(i)(iii) to the
                         Company's Form 10-K for the year ended December 31,
                         1998.

                         (iv) Amended and Restated Director's Deferred
                         Compensation Agreements between Mooresville Savings
                         Bank, Inc., S.S.B. and each of Donald R. Belk, George
                         W. Brawley, Jr.., Calvin E. Tyner, and Claude U. Voils,
                         Jr. dated December 1, 1985, as amended and restated on
                         September 8, 1997 and as amended for Messrs. Belk,
                         Brawley and Voils on December 16, 1998, incorporated
                         herein by reference to Exhibit 10(i)(iv) to the
                         Company's Form 10-K for the year ended December 31,
                         1998.

                         (v) Amended and Restated Retirement Plan Agreements
                         between Mooresville Savings Bank, Inc., S.S.B. and each
                         of George W. Brawley, Jr., Donald R. Belk, Claude U.
                         Voils, Jr. and Calvin E. Tyner dated November 1, 1993,
                         as amended and restated on September 15, 1997, and as
                         amended for Messrs. Brawley, Belk, and Voils on
                         December 16, 1998, incorporated herein by reference to
                         Exhibit 10(i)(v) to the Company's Form 10-K for the
                         year ended December 31, 1998.

                         (vi) Amended and Restated Retirement Payment Agreements
                         between Mooresville Savings Bank, S.S.B. and George W.
                         Brawley, Jr. dated December 1, 1990, as amended and
                         restated on September 8, 1997 and as amended on
                         December 16, 1998, incorporated herein by reference to
                         Exhibit 10(i)(vi) to the Company's Form 10-K for the
                         year ended December 31, 1998.

                         (vii) Amended and Restated Retirement Payment Agreement
                         between Mooresville Savings Bank, S.S.B. and Dale W.
                         Brawley dated November 1, 1990, amended and restated on
                         October 21, 1993, as amended and restated on September
                         8, 1997, incorporated herein by reference to Exhibit
                         10(i)(vii) to the Company's Form 10-K for the year
                         ended December 31, 1998.

                         (viii) Amended and Restated Retirement Payment
                         Agreements between (a) Mooresville Savings Bank, Inc.,
                         S.S.B. and each of Donald R. Belk, George W. Brawley,
                         Jr., and Claude U. Voils, Jr. dated March 1, 1993, as
                         amended and restated on September 8, 1997 and as
                         amended for each of them on December 16, 1998 and (b)
                         Mooresville Savings Bank, Inc., S.S.B. and Dale W.
                         Brawley dated February 11, 1993, as amended and
                         restated on October 21, 1993 and September 8, 1997,
                         incorporated herein by reference to Exhibit 10(i)(viii)
                         to the Company's Form 10-K for the year ended December
                         31, 1998.

                         (ix) Amended and Restated Retirement Payment Agreements
                         between Mooresville Savings Bank, Inc., S.S.B. and each
                         of Dale W. Brawley and George W. Brawley, Jr. dated
                         August 1, 1993, amended and restated on October 23,
                         1993 for Dale W. Brawley, as amended and restated on

</TABLE>
<PAGE>

<TABLE>
<S>                      <C>
                         September 8, 1997, and as amended for George W. Brawley
                         on December 16, 1998, incorporated herein by reference
                         to Exhibit 10(i)(ix) to the Company's Form 10-K for the
                         year ended December 31, 1998.

                         (x) Amended and Restated Retirement Payment Agreement
                         between Mooresville Savings Bank, Inc., S.S.B. and Jack
                         G. Lawler dated June 1, 1994, as amended and restated
                         on September 8, 1997, incorporated herein by reference
                         to Exhibit 10(i)(x) to the Company's Form 10-K for the
                         year ended December 31, 1998.

                         (xi) Amended and Restated Salary Continuation
                         Agreements between Mooresville Savings Bank, Inc.,
                         S.S.B. and each of Dale W. Brawley, George W. Brawley,
                         Jr., Patricia B. Clontz, and Richard E. Woods dated
                         September 1, 1984, as amended and restated on September
                         17, 1997, and as amended for George W. Brawley on
                         December 16, 1998, incorporated herein by reference to
                         Exhibit 10(i)(x) to the Company's Form 10-K for the
                         year ended December 31, 1998.

                         (xii) Amended and Restated Supplemental Income
                         Agreements between Mooresville Savings Bank, Inc.,
                         S.S.B. and each of Dale W. Brawley, George W. Brawley,
                         Jr., Billy R. Williams, Donald G. Jones and Richard E.
                         Woods dated November 1, 1993, as amended and restated
                         on September 17, 1997, and as amended for George W.
                         Brawley on December 16, 1998, incorporated herein by
                         reference to Exhibit 10(i)(xii) to the Company's Form
                         10-K for the year ended December 31, 1998.

                         (xiii) Amended and Restated Salary Continuation
                         Agreements between Mooresville Savings Bank, S.S.B. and
                         each of Lucille Doster, Marie Hedrick, Carol Huffman,
                         Brenda Johnson, D. Glenn Jones, and Nancy Lee Petrea
                         dated February 1, 1988, as amended and restated on
                         September 17, 1997, incorporated herein by reference to
                         Exhibit 10(i)(xiii) to the Company's Form 10-K for the
                         year ended December 31, 1998.

      Exhibit (10)(j)    Mooresville Savings Bank, Inc., S.S.B. Non-
                         Qualified Excess Savings Plan, incorporated herein by
                         reference to Exhibit 10(i) to the Registration
                         Statement on Form S-1, Registration No. 333-35497,
                         dated September 12, 1997, as amended on November 5 and
                         10, 1997.

          Exhibit (11)   Statement regarding computation of per share earnings.

          Exhibit (12)   Statement regarding computation of ratios.

          Exhibit (13)   1999 Annual Report to Security Holders.

          Exhibit (21)   See Item 1.  "Business" for discussion of subsidiaries.

          Exhibit (23)   Consent of Independent Certified Public Accountants.

          Exhibit (27)   Financial Data Schedule.

14(b)     The Company filed no reports on Form 8-K during the last quarter of
          the fiscal year ended December 31, 1999.

</TABLE>
<PAGE>


                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

          CODDLE CREEK FINANCIAL CORP.


Date:  March 24, 2000                 By:  /s/ George W. Brawley, Jr.
                                           --------------------------
                                           George W. Brawley, Jr.
                                           President and Chief Executive Officer


     Pursuant to the requirements of the Securities Exchange Act of 1934, 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/ George W. Brawley, Jr.    President, Chief Executive  March 24, 2000
----------------------------  Officer and Director
George W. Brawley, Jr.


/s/ Dale W. Brawley           Executive Vice President,   March 24, 2000
----------------------------  Treasurer and Director
Dale W. Brawley


/s/ Billy R. Williams         Chief Financial Officer,    March 24, 2000
----------------------------  Chief Accounting Officer,
Billy R. Williams             Controller and Secretary


/s/ Donald R. Belk            Director                    March 24, 2000
----------------------------
Donald R. Belk


                              Director                    March 24, 2000
----------------------------
Jack G. Lawler


/s/ Claude U. Voils, Jr.      Director                    March 24, 2000
----------------------------
Claude U. Voils, Jr.


/s/ Don E. Mills, Jr.         Director                    March 24, 2000
----------------------------
Don E. Mills, Jr.
</TABLE>
<PAGE>

                               INDEX TO EXHIBITS


Exhibit No.    Description
-----------    -----------

Exhibit (11)   Statement regarding computation of per share earnings.

Exhibit (12)   Statement regarding computation of ratios.

Exhibit (13)   1999 Annual Report to Security Holders.

Exhibit (23)   Consent of Independent Certified Public Accountants.

Exhibit (27)   Financial Data Schedule.