<PAGE>


                           GREAT PEE DEE BANCORP, INC.

                               2002 ANNUAL REPORT



<PAGE>

Great Pee Dee Bancorp, Inc. and Subsidiaries
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
TABLE OF CONTENTS
                                                                        Page No.
                                                                        --------
<S>                                                                     <C>

Report to Shareholders ................................................    1

Selected Financial and Other Data .....................................    2

Management's Discussion and Analysis ..................................    3

Independent Auditors' Report ..........................................   14

Consolidated Financial Statements

   Consolidated Statements of Financial Condition .....................   15

   Consolidated Statements of Operations ..............................   16

   Consolidated Statements of Stockholders' Equity ....................   17

   Consolidated Statements of Cash Flows ..............................   18

   Notes to Consolidated Financial Statements .........................   20

General Corporate Information .........................................   42
</TABLE>

<PAGE>
                             REPORT TO SHAREHOLDERS

To Our Shareholders:

On June 30, 2002, Great Pee Dee Bancorp completed a fiscal year marked by strong
growth in all operational areas and continuing development of comprehensive
customer services.

The Corporation has continued to emphasize accessibility, service and efficiency
in all of its operations this year. The 26 employees of the Corporation's bank
subsidiary, First Federal, serve customers through two offices, with a third one
planned next year. The new Florence facility at 452 Second Loop Road became
fully operational in March 2002. During its first quarter of operation, deposits
through the Florence office increased from $29.5 million to $34.5 million, a
gain of 17 percent.

First Federal continues to grow. Total assets now stand at $131.0 million, and
deposits were up $10.5 million, reflecting a 13.5 percent rate of growth. Net
income from all operations increased 42 percent, to $1.2 million, as compared to
$847,000 during the 2000-2001 fiscal year. Loan activity has been extremely
strong, as evidenced by total loans of $109.6 million, reflecting a 12.1 percent
increase from the previous year's level of $97.8 million.

First Federal's secondary loan market operation closed $19.8 million in 2002, up
from $11.0 million the year before. Much of this secondary market growth is
attributable to strong performance by the Florence office. First Federal has
also broadened its loan mix over the past several years, moving from nearly 100
percent real estate loans four years ago to a profile which includes 13 percent
commercial and consumer loans.

First Federal's Cheraw operations are poised for growth, with construction of a
new main office on Highway 9 set to begin this year. The new Cheraw office will
be a key access point in a rapidly growing area of town, with the present Market
Street office serving as a convenient branch location. Completion of the Cheraw
facility is scheduled for Fall 2003. On-line banking will be available to First
Federal customers beginning in late 2002, providing a new dimension of customer
accessibility and convenience.

The Corporation distributed a 10 percent stock dividend in the fall of 2001 and
increased cash dividends for the year to .464 cents per share as adjusted for
the stock dividend. Total stockholders' equity now stands at $25.6 million. The
Board of Directors is actively reviewing means through which shareholder value
can continue to grow, including the strong expansion activity described above,
as well as payment of regular and special dividends and additional repurchases
of common stock.

The Board of Directors, Management and staff of Great Pee Dee Bancorp wish to
thank you for your confidence and loyalty as evidenced by your investment in the
Corporation.

Sincerely,

/s/ Herbert W. Watts

Herbert W. Watts
President and Chief Executive Officer

                                       -1-

<PAGE>

Great Pee Dee Bancorp, Inc. and Subsidiaries
Selected Financial and Other Data
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                          At or for the year ended June 30,
                                                                 --------------------------------------------------
                                                                      2002              2001              2000
                                                                 --------------    --------------    --------------
                                                                               (Dollars in thousands)
<S>                                                              <C>               <C>               <C>
Financial Condition Data:

   Total assets                                                  $      131,034    $      115,997    $      103,842
   Investments /(1)/                                                     12,146            10,154            14,332
   Loans receivable                                                     109,611            97,804            84,758
   Loans held for sale                                                    3,072             3,431               155
   Deposits                                                              88,090            77,624            70,254
   Borrowings                                                            17,000            12,800             7,000
   Stockholders' equity                                                  25,569            25,130            26,266

Operating Data:

   Interest income                                               $        8,637    $        7,905    $        6,020
   Interest expense                                                       3,724             4,477             2,835
                                                                 --------------    --------------    --------------
     Net interest income                                                  4,913             3,428             3,185
   Provision for loan losses                                                500                45               128
                                                                 --------------    --------------    --------------
     Net interest income after provision for
        loan losses                                                       4,413             3,383             3,057
   Non-interest income                                                      826               723               165
   Non-interest expense                                                   3,334             2,771             1,958
                                                                 --------------    --------------    --------------
     Income before income taxes                                           1,905             1,335             1,264
   Income tax expense                                                       703               488               451
                                                                 --------------    --------------    --------------
     Net income                                                  $        1,202    $          847    $          813
                                                                 ==============    ==============    ==============

Per Common Share Data:/(2)/

   Net income, basic                                             $         0.74    $         0.51    $         0.43
   Net income, diluted                                                     0.73              0.51              0.43
   Regular cash dividends                                                 0.464             0.391             0.355
   Dividend payment ratio                                                 62.70%            76.67%            82.56%

Selected Other Data:

   Number of:
     Outstanding loans                                                    3,455             2,944             2,598
     Deposit accounts                                                     6,262             7,061             6,657
     Full-service offices                                                     2                 2                 2
   Return on average assets                                                0.98%             0.78%             0.97%
   Return on average equity                                                4.74%             3.34%             2.94%
   Average equity to average assets                                       20.58%            23.48%            33.10%
   Interest rate spread                                                    3.52%             2.23%             2.43%
   Net yield on average interest-earning assets                            4.18%             3.33%             3.98%
   Average interest-earning assets to average interest-
     bearing liabilities                                                 120.78%           125.41%           143.63%
   Ratio of non-interest expense to average total assets                   2.71%             2.57%             2.34%
   Nonperforming assets to total assets                                    0.86%             0.52%             0.20%
   Allowance for loan losses to nonperforming loans at
     period end                                                           98.79%           100.35%           298.39%
</TABLE>

/(1)/ Includes interest-earning deposits, federal funds sold, Federal Home Loan
      Bank stock and investment securities.

/(2)/ Retroactively reflects the effects of a 10% stock dividend in October
      2001.

                                      -2-

<PAGE>

                  Great Pee Dee Bancorp, Inc. and Subsidiaries
                      Management's Discussion and Analysis
--------------------------------------------------------------------------------

Management's discussion and analysis is intended to assist readers in the
understanding and evaluation of the financial condition and results of
operations of Great Pee Dee Bancorp, Inc. and Subsidiaries. It should be read in
conjunction with the audited consolidated financial statements and accompanying
notes included in this report and the supplemental financial data appearing
throughout this discussion and analysis.

                             Description of Business

Great Pee Dee Bancorp, Inc. ("Great Pee Dee") was incorporated under the laws of
the State of Delaware for the purpose of becoming the savings and loan holding
company of First Federal Savings and Loan Association of Cheraw (the "Bank" or
"First Federal") in connection with First Federal's conversion from a
federally-chartered mutual savings and loan association to a federally-chartered
stock savings and loan association (the "Conversion"). A subscription and
community offering of Great Pee Dee's common stock closed on December 31, 1997,
at which time Great Pee Dee commenced operations and used one half of the net
proceeds received to acquire all of the outstanding common stock of the Bank.

Great Pee Dee has no operations and conducts no business of its own other than
owning its subsidiaries, investing its liquid assets, and lending funds to the
Great Pee Dee Bancorp, Inc. Employee Stock Ownership Plan and Trust (the "ESOP")
which was formed in connection with the Conversion. First Federal's two full
service banking offices are located in Cheraw and Florence, South Carolina. The
principal business of the Bank is accepting deposits from the general public and
using those deposits and other sources of funds to make loans secured by real
estate located in the Bank's primary market area of Chesterfield, Marlboro and
Florence Counties, South Carolina, as well as other types of loans. On June 30,
2002, approximately 87% of the Bank's total loans were composed of real estate
loans.

On March 9, 2000, Great Pee Dee formed a second wholly-owned subsidiary, First
Federal Investment Services, Inc. which, through an unaffiliated broker-dealer,
provides customers of the Bank with securities products and services. Through
this arrangement, First Federal Investment Services, Inc. earns revenues through
commission-sharing with the unaffiliated broker-dealer. First Federal Investment
Services, Inc. employs one licensed securities representative and for the year
ended June 30, 2002 generated net fee income of $124,000 or 1.3% of total
consolidated revenue.

Great Pee Dee's principal sources of revenue are earnings on its investments,
interest earned from the loan to the ESOP, and dividends paid by the Bank to
Great Pee Dee, if any. Revenues of First Federal are derived primarily from
interest on loans. First Federal also receives interest income from its
investment securities and interest-earning deposit balances and various types of
non-interest income. The major expenses of First Federal are interest on
deposits and general and administrative expenses such as personnel costs,
occupancy, and federal deposit insurance premiums. First Federal's deposits are
insured up to applicable limits by the Federal Deposit Insurance Corporation.
Great Pee Dee and its subsidiaries are collectively referred to herein as the
"Company."

                Asset/Liability and Interest Rate Risk Management

The Company's asset/liability management, or interest rate risk management,
program is focused primarily on evaluating and managing the composition of its
assets and liabilities in view of various interest rate scenarios. Factors
beyond the Company's control, such as market interest rates and competition, may
also have an impact on the Company's interest income and interest expense.

In the absence of other factors, the yield or return associated with the
Company's earning assets generally will increase from existing levels when
interest rates rise over an extended period of time, and, conversely, interest
income will decrease when interest rates decrease. In general, interest expense
will increase when interest rates rise over an extended period of time, and,
conversely, interest expense will decrease when interest rates decrease.

                                       -3-

<PAGE>

                  Great Pee Dee Bancorp, Inc. and Subsidiaries
                      Management's Discussion and Analysis
--------------------------------------------------------------------------------

Interest Rate Gap Analysis. As a part of its interest rate risk management
policy, the Company calculates an interest rate "gap." Interest rate "gap"
analysis is a common, though imperfect, measure of interest rate risk, which
measures the relative dollar amounts of interest-earning assets and
interest-bearing liabilities which reprice within a specific time period, either
through maturity or rate adjustment. The "gap" is the difference between the
amounts of such assets and liabilities that are subject to repricing. A
"negative" gap for a given period means that the amount of interest-bearing
liabilities maturing or otherwise repricing within that period exceeds the
amount of interest-earning assets maturing or otherwise repricing within the
same period. Accordingly, in a declining interest rate environment, an
institution with a negative gap would generally be expected, absent the effects
of other factors, to experience a lower decrease in the yield of its assets
relative to the cost of its liabilities and its income should be positively
affected. Conversely, the cost of funds for an institution with a negative gap
would generally be expected to increase more quickly than the yield on its
assets in a rising interest rate environment, and such institution's net
interest income generally would be expected to be adversely affected by rising
interest rates. Changes in interest rates generally have the opposite effect on
an institution with a "positive gap."

<TABLE>
<CAPTION>
                                                                  Terms to Repricing at June 30, 2002
                                             -------------------------------------------------------------------------
                                                              More Than      More Than
                                                1 Year        1 Year to     3 Years to       More Than
                                                or Less        3 Years        5 Years         5 Years         Total
                                             -------------  ------------   ------------   --------------  ------------
                                                                      (Dollars in thousands)
<S>                                          <C>            <C>             <C>            <C>            <C>
INTEREST-EARNING ASSETS:
   Loans receivable:
     Real estate loans:
       Adjustable rate                       $      41,468  $      1,912    $     2,109    $           -  $     45,489
       Fixed rate                                    6,152         1,535          4,966           37,955        50,608
     Other loans                                     3,659         3,235          3,300            3,320        13,514
   Loans held for sale                               3,072             -              -                -         3,072
   Interest-earning balances in other banks          2,487             -              -                -         2,487
   Federal funds sold                                3,330             -              -                -         3,330
   Investment securities available for sale            452             -              -                -           452
   Investment securities held to maturity            1,376           701          2,300              500         4,877
   Stock in FHLB of Atlanta/(1)/                         -             -              -            1,000         1,000
                                             -------------  ------------    -----------    -------------  ------------

       Total interest-earning assets         $      61,996  $      7,383    $    12,675    $      42,775  $    124,829
                                             =============  ============    ===========    =============  ============

INTEREST-BEARING LIABILITIES:
   Deposit accounts:
     Demand                                  $      33,609  $          -    $         -    $           -  $     33,609
     Time over $100,000                             13,581         3,570            700                -        17,851
     Other time                                     26,500         8,729            875              526        36,630
   Borrowings                                        9,000             -              -            8,000        17,000
                                             -------------  ------------    -----------    -------------  ------------

       Total interest-bearing liabilities    $      82,690  $     12,299    $     1,575    $       8,526  $    105,090
                                             =============  ============    ===========    =============  ============

INTEREST SENSITIVITY GAP PER PERIOD          $     (20,694) $     (4,916)   $    11,100    $      34,249  $     19,739

CUMULATIVE INTEREST SENSITIVITY GAP          $     (20,694) $    (25,610)   $   (14,510)   $      19,739  $     19,739

CUMULATIVE GAP AS A PERCENTAGE
   OF TOTAL INTEREST-EARNING ASSETS                 (16.58%)      (20.52%)       (11,62%)          15.81%        15.81%

CUMULATIVE RATIO OF INTEREST-EARNING
   ASSETS TO INTEREST-BEARING LIABILITIES            74.97%        73.04%         84.97%           18.78%       118.78%
</TABLE>

/(1)/Nonmarketable equity security; substantially all required to be maintained
and assumed to mature in periods greater than 10 years.

                                       -4-

<PAGE>

                  Great Pee Dee Bancorp, Inc. and Subsidiaries
                      Management's Discussion and Analysis
--------------------------------------------------------------------------------

The preceding table sets forth the amounts of interest-earning assets and
interest-bearing liabilities outstanding at June 30, 2002, which are projected
to reprice or mature in each of the future time periods shown. Except as stated
below, the amounts of assets and liabilities shown which reprice or mature
within a particular period were determined in accordance with the contractual
terms of the assets or liabilities. Loans with adjustable rates are shown as
being due at the end of the next upcoming adjustment period. Passbook accounts
and money market deposit accounts are assumed to be subject to immediate
repricing and depositor availability and have been placed in the shortest
period. In making the gap computations, none of the assumptions sometimes made
regarding prepayment rates and deposit decay rates have been used for any other
interest-earning assets or interest-bearing liabilities. In addition, the table
does not reflect scheduled principal payments that will be received throughout
the lives of the loans. The interest rate sensitivity of the Company's assets
and liabilities illustrated in the preceding table would vary substantially if
different assumptions were used or if actual experience differs from that
indicated by such assumptions.

The Company's one-year interest sensitivity gap as a percentage of total
interest-earning assets at June 30, 2002 was a negative 16.58%. At June 30,
2002, the Company's three-year and five-year cumulative interest sensitivity
gaps as a percentage of total interest-earning assets were a negative 20.52% and
a negative 11.62%, respectively.

Net Portfolio Value Analysis. In addition to the interest rate gap analysis
discussed above, management monitors the Bank's interest rate sensitivity
through the use of a model which estimates the change in net portfolio value
("NPV") in response to a range of assumed changes in market interest rates. NPV
is the present value of expected cash flows from assets, liabilities, and
off-balance sheet items. The model estimates the effect on First Federal's NPV
of instantaneous and permanent 100 to 300 basis point changes in market interest
rates.

The following table presents information regarding possible changes in the
Bank's NPV as of June 30, 2002, based on information provided by the Office of
Thrift Supervision's Risk Management Division:

<TABLE>
<CAPTION>
                                                                                 Net portfolio value
                                                                 --------------------------------------------------
         Change in interest rates                                                     Change in        Percentage
         in basis points (rate shock)                                Amount            amount            change
         ---------------------------                             --------------    --------------    --------------
                                                                               (Dollars in thousands)
<S>                                                              <C>               <C>               <C>
         Up 300 basis points                                     $       22,059    $       (5,414)        (20%)

         Up 200 basis points                                             24,036            (3,437)        (13%)

         Up 100 basis points                                             25,895            (1,578)         (6%)

               Static                                                    27,473                 -            -

         Down 100 basis points                                           28,551             1,078           4%
</TABLE>

Computations of prospective effects of hypothetical interest rate changes are
based on numerous assumptions, including relative levels of market interest
rates, loan prepayments and deposit decay, and should not be relied upon as
indicative of actual results. Further, the computations do not reflect any
actions management may undertake in response to changes in interest rates. The
table set forth above indicates that in the event of a 200 basis point increase
in interest rates, First Federal would be expected to experience a 13% decrease
in NPV. Because of the overall low levels of interest rates, the analysis
provided at June 30, 2002 did not include the effects of downward adjustments
exceeding 100 basis points.

                                      -5-

<PAGE>

                  Great Pee Dee Bancorp, Inc. and Subsidiaries
                      Management's Discussion and Analysis
--------------------------------------------------------------------------------

Certain shortcomings are inherent in the NPV method of analysis presented above.
Although certain assets and liabilities may have similar maturities or periods
within which they will reprice, they may react differently to changes in market
interest rates. The interest rates on certain types of assets and liabilities
may fluctuate in advance of changes in market interest rates, while interest
rates on other types may lag behind changes in market rates. Additionally,
adjustable-rate mortgages have interest rate caps which restrict changes in
interest rates on a short-term basis and over the life of the assets. The
proportion of adjustable-rate loans may be reduced during sustained periods of
lower interest rates due to increased refinancing activity. Further, in the
event of a change in interest rates, prepayment and early withdrawal levels
would likely deviate significantly from those assumed in the table above.
Finally, the ability of many borrowers to service adjustable-rate debt may
decrease in the event of a sustained interest rate increase.

                               Net Interest Income

Net interest income represents the difference between income derived from
interest-earning assets and interest expense incurred on interest-bearing
liabilities. Net interest income is affected by both (i) the difference between
the rates of interest earned on interest-earning assets and the rates paid on
interest-bearing liabilities ("interest rate spread") and (ii) the relative
amounts of interest-earning assets and interest-bearing liabilities ("net
earning balance"). The following table sets forth information relating to
average balances of the Company's assets and liabilities for the years ended
June 30, 2002 and 2001. For the periods indicated, the table reflects the
average yield on interest-earning assets and the average cost of
interest-bearing liabilities (derived by dividing income or expense by the
monthly average balance of interest-earning assets or interest-bearing
liabilities, respectively) as well as the net yield on interest-earning assets
(which reflects the impact of the net earning balance). Nonaccruing loans were
included in the computation of average balances.

<TABLE>
<CAPTION>
                                                          Year Ended June 30, 2002             Year Ended June 30, 2001
                                                     ----------------------------------  ----------------------------------
                                                      Average                  Average    Average                  Average
                                                      Balance     Interest      Rate      Balance     Interest      Rate
                                                     ---------   ----------   ---------  ---------   ----------   ---------
                                                                             (Dollars in thousands)
<S>                                                  <C>         <C>          <C>        <C>         <C>          <C>
Interest-earning assets:
  Interest-earning balances                          $   3,051   $       78        2.56% $   4,627   $      281        6.07%
  Investments                                            7,253          409        5.64%     6,370          422        6.62%
  Loans                                                107,382        8,151        7.59%    91,994        7,202        7.83%
                                                     ---------   ----------   ---------  ---------   ----------   ---------

    Total interest-earning assets                      117,686        8,638        7.34%   102,991        7,905        7.68%
                                                                 ----------   ---------              ----------   ---------

Other assets                                             5,502                               4,973
                                                     ---------                           ---------

    Total assets                                     $ 123,188                           $ 107,964
                                                     =========                           =========

Interest-bearing liabilities:
  Deposits                                           $  80,681        3,100        3.84% $  73,053        3,940        5.39%
  Borrowings                                            16,754          624        3.72%     9,069          537        5.92%
                                                     ---------   ----------   ---------  ---------   ----------   ---------

    Total interest-bearing liabilities                  97,435        3,724        3.82%    82,122        4,477        5.45%
                                                                 ----------   ---------              ----------   ---------

Other liabilities                                          404                                 494

Stockholders' equity                                    25,349                              25,348
                                                     ---------                           ---------

    Total liabilities and stockholders' equity       $ 123,188                           $ 107,964
                                                     =========                           =========

Net interest income and interest rate spread                     $    4,914        3.52%             $    3,428        2.23%
                                                                 ==========   =========              ==========   =========

Net yield on average interest-earning assets                                       4.18%                               3.33%
                                                                              =========                           =========

Ratio of average interest-earning assets to
average interest-bearing liabilities                    120.78%                             125.41%
                                                     =========                           =========
</TABLE>

                                       -6-

<PAGE>

                  Great Pee Dee Bancorp, Inc. and Subsidiaries
                      Management's Discussion and Analysis
--------------------------------------------------------------------------------

                              Rate/Volume Analysis

The following table analyzes the dollar amount of changes in interest income and
interest expense for major components of interest-earning assets and
interest-bearing liabilities. The table distinguishes between (i) changes
attributable to volume (changes in volume multiplied by the prior period's
rate), (ii) changes attributable to rate (changes in rate multiplied by the
prior period's volume), and (iii) net change (the sum of the previous columns).
The change attributable to both rate and volume (changes in rate multiplied by
changes in volume) has been allocated equally to both the changes attributable
to volume and the changes attributable to rate.

<TABLE>
<CAPTION>
                                                                       Year Ended June 30, 2002 vs. 2001
                                                             ----------------------------------------------------
                                                                          Increase (Decrease) Due To
                                                             ----------------------------------------------------
                                                                 Volume              Rate               Total
                                                             --------------     --------------     --------------
                                                                            (Dollars in thousands)
        <S>                                                  <C>                <C>                <C>
         Interest income:
            Interest-earning balances                        $          (68)    $         (135)    $         (203)
            Investments                                                  54                (67)               (13)
            Loans                                                     1,187               (238)               949
                                                             --------------     --------------     --------------

                    Total interest income                             1,173               (440)               733
                                                             --------------     --------------     --------------

         Interest expense:
            Deposits                                                    352             (1,192)              (840)
            Borrowings                                                  371               (284)                87
                                                             --------------     --------------     --------------

                    Total interest expense                              723             (1,476)              (753)
                                                             --------------     --------------     --------------

         Net interest income                                 $          450     $        1,036     $        1,486
                                                             ==============     ==============     ==============
</TABLE>


           Comparison of Financial Condition at June 30, 2002 and 2001

The Company's total assets increased by $15.0 million during the year ended June
30, 2002, from $116.0 million at June 30, 2001 to $131.0 million at the year
end. A principal factor driving this increase in total assets was growth in the
net loan portfolio of $11.8 million. Net loans receivable increased by 12.1%,
from $97.8 million to $109.6 million. While real estate loans continue to
comprise the most significant component of the Company's loan portfolio, most of
the growth during the year was in other types of lending. The Company has
continued to diversify the portfolio to include larger concentrations of loans
that yield higher rates and have shorter maturities than do residential mortgage
loans. Real estate loans grew by $3.9 million to $99.4 million, and represented
87.0% of gross loans receivable at June 30, 2002 as compared to 91.5% of gross
loans receivable at the beginning of the year. Three years ago, on June 30,
1999, real estate loans comprised almost 98.8% of the Company's gross loans.
Conversely, other loans, principally commercial and consumer loans, grew by $6.0
million to $14.9 million, and represented 13.0% of gross loans receivable at
June 30, 2002 as compared to 8.5% of gross loans receivable at the beginning of
the year. Three years ago, on June 30, 1999, other loans comprised only 1.2% of
total loans.

Liquid assets have been maintained at a level that provides for the Company's
liquidity needs while enabling a high concentration of interest-earning assets
in loans that yield higher rates of interest than do acceptable debt securities
and overnight investments. Liquid assets, consisting of cash on hand and in
other banks, federal funds sold and investment securities, increased by $2.2

                                       -7-

<PAGE>

                  Great Pee Dee Bancorp, Inc. and Subsidiaries
                      Management's Discussion and Analysis
--------------------------------------------------------------------------------

million from $10.1 million or 8.7% of total assets at the beginning of the year
to $12.3 million or 9.4% of total assets at June 30, 2002.

On March 25, 2002 the Company moved the existing branch office in Florence,
South Carolina to a more visible and assessable location within that city. This
branch relocation resulted in an increase to premises and equipment of $829,000
while significantly contributing to the Company's growth in both loans and
deposits in that market area.

Much of the growth in total assets was funded by the corresponding increase in
customer deposit accounts. Deposits increased by $10.5 million during the year,
comprised of increases in demand accounts of $6.0 million or 21.6% and in
certificate of deposit accounts of $4.5 million or 9.0%. In addition to deposit
growth, other sources of funding generated during the fiscal year ended June 30,
2002 included an increase of $4.2 million in advances from the Federal Home Loan
Bank. The total funds generated by deposits and borrowings of $14.7 million were
used to fund the asset growth discussed above.

During the year ended June 30, 2002, total stockholders' equity increased by
$439,000 to $25.6 million, principally as a result of retention of a portion of
the net income of $1.2 million for the year. Dividends aggregated $764,000 or
$.464 per share for the year, as compared with $655,000 or $.391 per share for
the previous year, as adjusted for the 10% stock dividend distributed in October
2001. The Company's board of directors increased the regular quarterly dividend
to $.125 per share beginning with the second quarter of the current fiscal year.
At June 30, 2002, the Bank continued to significantly exceed all applicable
regulatory capital requirements.

 Comparison of Results of Operations for the Years Ended June 30, 2002 and 2001

Net Income. Net income for the year ended June 30, 2002 was $1.2 million, or
basic net income per share of $.74, as compared with net income of $847,000, or
$.51 per share, for the year ended June 30, 2001, as adjusted for the 10% stock
dividend distributed in October 2001. These results represent increases of
$356,000 or 42.0% in net income and $.23 or 45.1% in net income per share.

Net income continued to be significantly impacted during both fiscal years by
the Company's entry into the Florence, South Carolina market via an acquisition
of a full service branch on March 3, 2000. This market presence was further
enhanced on March 25, 2002 with the relocation of that branch to a more
prominent location within the city of Florence. The Company's ownership and
operation of the Florence branch throughout fiscal 2001 and 2002 contributed to
increases in substantially all elements of operations, including interest
income, non-interest income and non-interest expenses.

Net Interest Income. Net interest income for the year ended June 30, 2002 was
$4.9 million as compared with $3.4 million during the year ended June 30, 2001,
an increase of $1.5 million. The Company's net interest margin increased from
2.23% during the year ended June 30, 2001 to 3.52% for the year ended June 30,
2002, largely as a result of continued loan portfolio diversification into
higher yielding loans while the cost of funds continued to drop due to market
conditions in the general economy. The weighted average yield on
interest-earning assets decreased by 34 basis points while the weighted average
cost of interest-bearing liabilities decreased by 163 basis points. Net interest
income was further affected by a decrease of $618,000 in the average balance of
net interest-earning assets during the current year as compared with the
previous year. This decrease in net interest-earning assets resulted principally
from the purchase of treasury shares and from the investment necessary to
facilitate the Florence branch relocation.

Provision for Loan Losses. Principally as a result of increased delinquencies
and the general downturn in the economy, both nationally and in the Company's
market area, management has significantly increased the

                                       -8-

<PAGE>

                  Great Pee Dee Bancorp, Inc. and Subsidiaries
                      Management's Discussion and Analysis
--------------------------------------------------------------------------------

allowance for loan losses during the current fiscal year. The provision for loan
losses was $500,000 for the year ended June 30, 2002, as compared with a
provision of $45,000 for the year ended June 30, 2001. The larger provision in
fiscal 2002 was related principally to the diversification of the loan portfolio
from real estate to consumer and commercial loan categories. There were net loan
charge-offs of $4,000 during fiscal 2002 as compared with $30,000 for fiscal
2001. At June 30, 2002, nonaccrual loans, substantially all of which management
considers to be well collateralized, aggregated $1.1 million while the allowance
for loan losses stood at $1.1 million. While management believes that the fair
values of the real properties underlying these loans are adequate to protect the
Company's investment, general economic conditions increase the likelihood that
losses will occur, both on loans in nonaccrual status and on some of the loans
that are currently performing in accordance with the loan terms. As a result,
the Company has significantly increased the unallocated portion of its allowance
for loan losses during the current fiscal year.

Non-Interest Income. Non-interest income increased by $103,000, from $723,000 in
fiscal 2001 to $826,000 in fiscal 2002. Service fees and charges increased by
$80,000 to $410,000 principally as a result of the significant continued growth
from the Florence, South Carolina market expansion as well as increased
non-sufficient funds fees due to economic circumstances in the local market. The
increased level of origination and sale of one-to-four family residential
mortgage loans generated an increase in income from mortgage operations of
$30,000. In contrast, the brokerage subsidiary income decreased by $27,000 from
$152,000 to $125,000 for the years ended June 30, 2001 and 2002, respectively.
The decrease in brokerage income was driven principally by the unfavorable
economic conditions in equity markets in the fiscal year ended June 30, 2002.

Non-Interest Expenses. Non-interest expenses increased to $3.3 million for the
year ended June 30, 2002 as compared with $2.8 million for the year ended June
30, 2001, an increase of $562,000. All components of non-interest expenses, with
the exception of amortization of intangibles, increased in fiscal 2002 because
of the Florence South, Carolina market expansion and relocation and
infrastructure changes necessitated by the Company's overall growth encountered
by the Company. In addition, during the current fiscal year the Company incurred
computer conversion costs of $134,000 resulting from the implementation of a new
data processing system, and non-recurring costs of $80,000 resulting from
relocation of the Florence branch.

Provision for Income Taxes. The provision for income taxes, as a percentage of
income before income taxes, was 36.9% and 36.5% for the years ended June 30,
2002 and 2001, respectively.

                                  Asset Quality

The Company considers asset quality to be of primary importance, and employs a
formal internal loan review process to ensure adherence to the Lending Policy as
approved by the Board of Directors. An ongoing systematic evaluation process
fundamentally drives the function of determining the allowance for loan losses.
This ongoing evaluation process serves as the basis for determining, on a
monthly basis, the allowance for loan losses and any resulting provision to be
charged against earnings. Consideration is given to historical loan loss
experience, the value and adequacy of collateral, economic conditions in the
Company's market area and other factors. For loans determined to be impaired,
the allowance is based on discounted cash flows using the loan's initial
effective interest rate or the fair value of the collateral for certain
collateral dependent loans. This evaluation is inherently subjective as it
requires material estimates, including the amounts and timing of future cash
flows expected to be received on impaired loans that may be susceptible to
significant change. The allowance for loan losses represents Management's
estimate of the appropriate level of reserve to provide for probable losses
inherent in the loan portfolio.

                                      -9-

<PAGE>

                  Great Pee Dee Bancorp, Inc. and Subsidiaries
                      Management's Discussion and Analysis
--------------------------------------------------------------------------------

The Company's policy regarding past due loans normally requires a prompt
charge-off to the allowance for loan losses following timely collection efforts
and a thorough review. Further efforts are then pursued through various means
available. Loans carried in a non-accrual status are generally collateralized
and the possibility of future losses is considered in the determination of the
allowance for loan losses.

Nonperforming Assets

The following table sets forth, at the dates indicated, information with respect
to the Company's nonaccrual loans, restructured loans, total nonperforming loans
(nonaccrual loans plus restructured loans), and total nonperforming assets.

<TABLE>
<CAPTION>
                                                                            June 30, 2002       June 30, 2001
                                                                         -----------------      -------------
                                                                                 (Dollars in thousands)
<S>                                                                      <C>                    <C>
Nonaccrual loans                                                         $           1,079      $             568
Restructured loans                                                                       -                      -
                                                                         -----------------      -----------------
         Total nonperforming loans                                                   1,079                    568

Real estate owned                                                                       50                     37
                                                                         -----------------      -----------------
         Total nonperforming assets                                      $           1,129      $             605
                                                                         =================      =================

Accruing loans past due 90 days or more                                  $               -      $               -
Allowance for loan losses                                                            1,066                    570
Nonperforming loans to period end loans                                                .94%                   .60%
Allowance for loan losses to period end loans                                          .93%                   .60%
Allowance for loan losses to nonperforming loans                                     98.79%                100.35%
Nonperforming assets to total assets                                                   .86%                   .52%
</TABLE>

The Company's financial statements are prepared on the accrual basis of
accounting, including the recognition of interest income on loans, except for
loans accounted for on a nonaccrual basis. Loans are placed on a nonaccrual
basis when there are serious doubts about the collectibility of principal or
interest. Generally, the Company's policy is to place a loan on nonaccrual
status when the loan becomes past due 90 days. Loans are also placed on
nonaccrual status in cases where it is uncertain as to whether the borrower can
satisfy the contractual terms of the loan agreement. Amounts received on
nonaccrual loans generally are applied first to principal and then to interest
only after all past due principal has been collected. Restructured loans are
those for which concessions, including the reduction of interest rates below a
rate otherwise available to that borrower or the deferral of interest or
principal, have been granted due to the borrower's weakened financial condition.
Interest is accrued on restructured loans at the restructured rates when it is
anticipated that no loss of original principal will occur. Real estate owned
consists of foreclosed, repossessed and idled properties.

Analysis of Allowance for Loan Losses

The allowance for loan losses is established through charges to earnings in the
form of a provision for loan losses. The allowance for loan losses is increased
by provisions charged to operations and by recoveries of amounts previously
charged off, and reduced by loans charged off. The Company evaluates the
adequacy of the allowance monthly. In addition, on a monthly basis the board of
directors reviews the loan portfolio, conducts an evaluation of credit quality
and reviews the computation of the loan loss provision, recommending changes as
may be required. In evaluating the adequacy of the allowance, the Company
considers the growth, composition and industry diversification of the portfolio,
historical loan loss experience, current delinquency levels, adverse

                                      -10-

<PAGE>

                  Great Pee Dee Bancorp, Inc. and Subsidiaries
                      Management's Discussion and Analysis
--------------------------------------------------------------------------------

situations that may affect a borrower's ability to repay, estimated value of any
underlying collateral, prevailing economic conditions and other relevant
factors. In addition, regulatory agencies, as an integral part of their
examination process, periodically review the allowance for loan losses and may
require the Company to make additions for estimated losses based upon judgments
different from those of Management.

The Company follows a loan review program designed to evaluate the credit risk
in the loan portfolio. Through this loan review process, the Company maintains
an internally classified watch list that helps Management assess the overall
quality of the loan portfolio and the adequacy of the allowance for loan losses.
In establishing the appropriate classification for specific assets, Management
considers, among other factors, the estimated value of the underlying
collateral, the borrower's ability to repay, the borrower's payment history and
the current delinquent status. As a result of this process, certain loans are
categorized as substandard, doubtful or loss and reserves are allocated based on
Management's judgment and historical experience.

Loans classified as "substandard" are those loans with clear and defined
weaknesses such as unfavorable financial ratios, uncertain repayment sources or
poor financial condition that may jeopardize the liquidation of the debt. They
are characterized by the distinct possibility that the Company will sustain some
losses if the deficiencies are not corrected. A reserve of 15% is generally
allocated to these loans. Loans classified as "doubtful" are those loans that
have characteristics similar to substandard loans but with an increased risk
that collection or liquidation in full is highly questionable and improbable. A
reserve of 50% is generally allocated to loans classified as doubtful. Loans
classified as "loss" are considered uncollectible and of such little value that
their continuance as bankable assets is not warranted. This classification does
not mean that the loan has absolutely no recovery or salvage value but rather it
is not practical or desirable to defer writing off this asset even though
partial recovery may be achieved in the future. As a practical matter, when
loans are identified as loss they are charged off against the allowance for loan
losses. In addition to the above classification categories, we also categorize
loans based upon loan type, assigning an allowance allocation based upon each
category.

The allowance for loan losses represents Management's estimate of the
appropriate level of reserve to provide for probable losses inherent in the loan
portfolio in the normal course of business. The Company makes specific
allowances that are allocated to certain individual loans and pools of loans
based on risk characteristics, as discussed above. In addition to the allocated
portion of the allowance for loan losses, the Company maintains an unallocated
portion that is not assigned to any specific category of loans. This unallocated
portion is intended to reserve for the inherent risk in the portfolio and the
intrinsic inaccuracies associated with the estimation of the allowance for loan
losses and its allocation to specific loan categories. While Management believes
that it uses the best information available to establish the allowance for loan
losses, future adjustments to the allowance may be necessary and results of
operations could be adversely affected if circumstances differ substantially
from the assumptions used in making the determinations. Furthermore, while
Management believe the Company has established the allowance for loan losses in
conformity with generally accepted accounting principles, there can be no
assurance that regulators, in reviewing the portfolio, will not require an
increase in the allowance for loan losses. In addition, because future events
affecting borrowers and collateral cannot be predicted with certainty, there can
be no assurance that the existing allowance for loan losses is adequate or that
increases will not be necessary should the quality of any loans deteriorate as a
result of the factors discussed herein. Any material increase in the allowance
for loan losses may adversely affect the Company's financial condition and
results of operations.

                                      -11-

<PAGE>

                  Great Pee Dee Bancorp, Inc. and Subsidiaries
                      Management's Discussion and Analysis
--------------------------------------------------------------------------------

                         Liquidity and Capital Resources

During the year ended June 30, 2002, Great Pee Dee paid cash dividends of $.464
per share, having increased the regular quarterly dividend to $.125 per share
effective for the second fiscal quarter. Although Great Pee Dee anticipates that
it will continue to declare cash dividends on a regular basis, the Board of
Directors will review its policy on the payment of dividends on an ongoing
basis, and such payment will be subject to future earnings, cash flows, capital
needs, and regulatory restrictions.

Maintaining adequate liquidity while managing interest rate risk is the primary
goal of Great Pee Dee `s asset and liability management strategy. Liquidity is
the ability to fund the needs of the Bank's borrowers and depositors, pay
operating expenses, and meet regulatory liquidity requirements. Maturing
investments, loan and mortgage-backed security principal repayments, deposits
and income from operations are the main sources of liquidity. The Bank's primary
uses of liquidity are to fund loans and to make investments.

As of June 30, 2002, liquid assets (cash, interest-earning deposits, federal
funds sold and marketable investment securities) were approximately $12.3
million, which represents 14.0% of deposits. At that date, outstanding loan
commitments were $7.4 million, the undisbursed portion of construction loans was
$3.4 million and undrawn lines of credit totaled $4.7 million. Funding for these
commitments is expected to be provided from deposits, loan and mortgage-backed
securities principal repayments, maturing investments and income generated from
operations. Supplementing these liquidity sources, the Company has available
lines of credit from various correspondent banks to purchase federal funds on a
short-term basis of approximately $5.0 million. The Company also has the ability
to borrow up to $26.0 million, as of June 30, 2002, from the Federal Home Loan
Bank of Atlanta, with $17.0 million outstanding as of that date.

Under federal capital regulations, First Federal must satisfy certain minimum
leverage ratio requirements and risk-based capital requirements. Failure to meet
such requirements can initiate certain mandatory, and possibly additional
discretionary, actions by regulators that, if undertaken, could have a direct
material effect on First Federal's financial statements. At June 30, 2002 and
2001, First Federal exceeded all such requirements.

The Bank is restricted in its ability to pay dividends and to make
distributions. A significant source of Great Pee Dee's funds are dividends
received from the Bank. In fiscal 2002, the amount of dividends that can be paid
by the Bank without prior approval from regulators is an amount that should be
adequate to cover Great Pee Dee's cash requirements.

                               Regulatory Matters

Management is not aware of any known trends, events, uncertainties or current
recommendations by regulatory authorities that will have, or that are reasonably
likely to have, a material effect on the Company's liquidity, capital resources,
or other operations.

                     Impact of Inflation and Changing Prices

The financial statements and notes thereto presented herein have been prepared
in accordance with generally accepted accounting principles, which require the
measurement of financial position and operating results in terms of historical
dollars without considering the change in the relative purchasing power of money
over time and due to inflation. The impact of inflation is reflected in the
increased cost of the Company's operations. Unlike most industrial companies,
nearly all the Company's assets and liabilities are monetary in nature. As a
result, interest rates have a greater impact on the Company's performance than
do the effects of general levels of inflation. Interest rates do not necessarily
move in the same direction or to the same extent as the price of goods and
services.

                                      -12-

<PAGE>

                  Great Pee Dee Bancorp, Inc. and Subsidiaries
                      Management's Discussion and Analysis
--------------------------------------------------------------------------------

                           Forward-looking Statements

This annual report contains statements which constitute "forward-looking
statements" within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended. These statements can be identified by the use of forward
looking terminology, such as "may," "will," "expect," "anticipate," "estimate,"
or "continue," or the negative other variations of those terms or other
comparable terminology. Such forward-looking statements are not guarantees of
future performance and involve risks and uncertainties, and actual results may
differ materially from those described in the statements. Important factors that
could cause actual results to differ materially from those in the
forward-looking statements include, but are not limited to, significant
fluctuations in interest rates, inflation, economic recession, significant
changes in the federal and state legal and regulatory environment and tax laws,
significant underperformance or loan losses in our portfolio of outstanding
loans, and competition in our markets.

                                      -13-

<PAGE>


                                     [LOGO]
                                DIXON ODOM PLLC
                  Certified Public Accountants and Consultants

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
Great Pee Dee Bancorp, Inc.
Cheraw, South Carolina

We have audited the accompanying consolidated statements of financial condition
of Great Pee Dee Bancorp, Inc. and Subsidiaries as of June 30, 2002 and 2001 and
the related consolidated statements of operations, stockholders' equity and cash
flows for the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Great Pee Dee
Bancorp, Inc. and Subsidiaries as of June 30, 2002 and 2001, and the results of
their operations and their cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States of America.

/s/ Dixon Odom PLLC
Sanford, North Carolina
July 19, 2002

                                      -14-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, 2002 and 2001
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
ASSETS                                                                          2002           2001
                                                                            ------------   ------------
<S>                                                                         <C>            <C>
Cash on hand and in banks                                                   $  1,154,959   $    660,777
Interest-earning balances in other banks                                       2,487,021      2,045,422
Federal funds sold                                                             3,329,708        647,809
Investment securities available for sale,
   at fair value (Note B)                                                        452,200        471,800
Investment securities held to maturity,
   at amortized cost (Note B)                                                  4,877,256      6,264,399
Loans receivable, net (Note C)                                               109,610,613     97,804,261
Loans held for sale                                                            3,071,542      3,430,665
Accrued interest receivable                                                      882,518        736,391
Premises and equipment, net (Note D)                                           2,026,829      1,061,612
Real estate acquired in settlement of loans                                       49,676         36,750
Stock in the Federal Home Loan Bank, at cost                                   1,000,000        725,000
Other assets                                                                   2,091,507      2,112,275
                                                                            ------------   ------------

                                                             TOTAL ASSETS   $131,033,829   $115,997,161
                                                                            ============   ============

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
   Deposit accounts (Note F)                                                $ 88,089,651   $ 77,624,333
   Advances from Federal Home Loan Bank (Note G)                              17,000,000     12,800,000
   Accrued interest payable                                                       91,169         52,281
   Advance payments by borrowers for property taxes
      and insurance                                                               90,521        121,636
   Accrued expenses and other liabilities                                        193,954        269,078
                                                                            ------------   ------------

                                                        TOTAL LIABILITIES    105,465,295     90,867,328
                                                                            ------------   ------------

COMMITMENTS AND CONTINGENCIES (Notes C and L)

STOCKHOLDERS' EQUITY (Notes H, I and K)
   Preferred stock, no par value, 400,000 shares
      authorized, no shares issued and outstanding                                     -              -
   Common stock, $.01 par value, 3,600,000 shares
      authorized; 2,224,617 shares issued                                         22,246         22,246
   Additional paid-in capital                                                 21,965,524     21,561,318
   Unearned compensation (Note H)                                             (1,211,761)    (1,369,127)
   Retained earnings, substantially restricted                                10,417,256     12,324,763
   Accumulated other comprehensive loss                                          (30,100)       (17,700)
   Common stock in treasury, at cost (459,005 and
      606,372 shares, respectively)                                           (5,594,631)    (7,391,667)
                                                                            ------------   ------------

                                               TOTAL STOCKHOLDERS' EQUITY     25,568,534     25,129,833
                                                                            ------------   ------------

                               TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $131,033,829   $115,997,161
                                                                            ============   ============
</TABLE>

See accompanying notes.

                                      -15-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended June 30, 2002 and 2001
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                               2002         2001
                                                                            ----------   ----------
<S>                                                                         <C>          <C>
INTEREST INCOME
   Loans                                                                    $8,149,884   $7,201,973
   Investments                                                                 409,714      422,714
   Deposits in other banks and federal funds sold                               77,764      280,729
                                                                            ----------   ----------

                                                    TOTAL INTEREST INCOME    8,637,362    7,905,416
                                                                            ----------   ----------

INTEREST EXPENSE
   Deposits (Note F)                                                         3,100,317    3,939,761
   Borrowed funds                                                              623,537      537,758
                                                                            ----------   ----------

                                                   TOTAL INTEREST EXPENSE    3,723,854    4,477,519
                                                                            ----------   ----------

                                                      NET INTEREST INCOME    4,913,508    3,427,897

PROVISION FOR LOAN LOSSES (Note C)                                             500,000       45,000
                                                                            ----------   ----------

                                                NET INTEREST INCOME AFTER
                                                PROVISION FOR LOAN LOSSES    4,413,508    3,382,897
                                                                            ----------   ----------

NON-INTEREST INCOME
   Service fees and charges                                                    410,252      330,002
   Mortgage operations                                                         233,767      204,307
   Brokerage operations                                                        124,491      151,702
   Other                                                                        57,111       37,306
                                                                            ----------   ----------

                                                TOTAL NON-INTEREST INCOME      825,621      723,317
                                                                            ----------   ----------

NON-INTEREST EXPENSES
   Personnel costs                                                           1,409,737    1,342,636
   Occupancy                                                                   437,648      302,361
   Data processing                                                             203,368      166,709
   Amortization of intangibles                                                 268,380      268,380
   Other                                                                     1,014,873      691,420
                                                                            ----------   ----------

                                              TOTAL NON-INTEREST EXPENSES    3,334,006    2,771,506
                                                                            ----------   ----------

                                               INCOME BEFORE INCOME TAXES    1,905,123    1,334,708

INCOME TAXES (Note J)                                                          702,535      487,800
                                                                            ----------   ----------

                                                               NET INCOME   $1,202,588   $  846,908
                                                                            ==========   ==========

EARNINGS PER COMMON SHARE (Note A)
   Basic                                                                    $     0.74   $     0.51
                                                                            ==========   ==========
   Diluted                                                                  $     0.73   $     0.51
                                                                            ==========   ==========
</TABLE>

See accompanying notes.

                                      -16-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended June 30, 2002 and 2001
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                 Par value of   Additional
                                     Shares of common stock        of common    paid-in          Unearned       Retained
                                   -----------------------------
                                      Issued       In treasury       stock        capital      compensation     earnings
                                   ------------   -------------- ------------   ------------  -------------   ------------
<S>                                   <C>              <C>       <C>            <C>           <C>             <C>
Balance at June 30, 2000              2,224,617        454,506   $     22,246   $ 21,548,318  $  (1,570,812)  $ 12,133,288

Comprehensive income:
   Net income                                 -              -              -              -              -        846,908
   Unrealized gain on securities
     available for sale, net of
     income taxes of $25,200                  -              -              -              -              -              -

       Total comprehensive income

Purchase of treasury stock                    -        157,101              -              -              -              -
Issuance of RRP shares                        -         (4,000)             -              -        (42,000)             -
Issuance of non-qualified
   compensation plan shares                   -         (1,235)             -              -              -              -
RRP shares earned                             -              -              -              -        110,840              -
Release of ESOP shares                        -              -              -         13,000        132,845              -
Cash dividends paid ($.391
   per share)                                 -              -              -              -              -       (655,433)
                                   ------------   ------------   ------------   ------------  -------------   ------------

Balance at June 30, 2001              2,224,617        606,372         22,246     21,561,318     (1,369,127)    12,324,763

Comprehensive income:
   Net income                                 -              -              -              -              -      1,202,588
   Unrealized loss on securities
     available for sale, net of
     income taxes of ($7,200)                 -              -              -              -              -              -

       Total comprehensive income

Purchase of treasury stock                    -         15,377              -              -              -              -
Issuance of non-qualified
   compensation plan shares                   -         (1,274)             -              -              -              -
RRP shares earned                             -              -              -              -         40,670              -
Release of ESOP shares                        -              -              -         26,000        116,696              -
Cash dividends paid ($.464
   per share)                                 -              -              -              -              -       (764,212)
10% stock dividend                            -       (161,470)             -        378,206              -     (2,345,883)
                                   ------------   ------------   ------------   ------------  -------------   ------------
Balance at June 30, 2002              2,224,617        459,005   $     22,246   $ 21,965,524  $  (1,211,761)  $ 10,417,256
                                   ============   ============   ============   ============  =============   ============

<CAPTION>
                                     Accumulated
                                       other                         Total
                                    comprehensive    Treasury    stockholders'

                                        loss          stock          equity
                                   --------------  ------------  -------------
<S>                                <C>             <C>             <C>
Balance at June 30, 2000           $      (59,796) $ (5,807,495)   $26,265,749

Comprehensive income:
   Net income                                   -             -        846,908
   Unrealized gain on securities
     available for sale, net of
     income taxes of $25,200               42,096             -         42,096
                                                                 -------------
       Total comprehensive income                                      889,004
                                                                  ------------
Purchase of treasury stock                      -    (1,638,522)    (1,638,522)
Issuance of RRP shares                          -        42,000              -
Issuance of non-qualified
   compensation plan shares                     -        12,350         12,350
RRP shares earned                               -             -        110,840
Release of ESOP shares                          -             -        145,845
Cash dividends paid ($.391
   per share)                                   -             -       (655,433)
                                   --------------  ------------  -------------

Balance at June 30, 2001                  (17,700)   (7,391,667)    25,129,833

Comprehensive income:
   Net income                                   -             -      1,202,588
   Unrealized loss on securities
     available for sale, net of
     income taxes of ($7,200)             (12,400)            -        (12,400)
                                                                 -------------
       Total comprehensive income                                    1,190,188
                                                                 -------------
Purchase of treasury stock                      -      (183,381)      (183,381)
Issuance of non-qualified
   compensation plan shares                     -        12,740         12,740
RRP shares earned                               -             -         40,670
Release of ESOP shares                          -             -        142,696
Cash dividends paid ($.464
   per share)                                   -             -       (764,212)
10% stock dividend                              -     1,967,677              -
                                   --------------  ------------  -------------
Balance at June 30, 2002           $      (30,100) $ (5,594,631) $  25,568,534
                                   ==============  ============  =============
</TABLE>

See accompanying notes
                                      -17-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended June 30, 2002 and 2001
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                   2002                 2001
                                                             ----------------    -----------------
<S>                                                          <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                                $      1,202,588    $         846,908
   Adjustments to reconcile net income to net cash
      provided (used) by operating activities:
        Depreciation                                                  252,164              147,209
        Amortization                                                  360,457              314,524
        Provision for loan losses                                     500,000               45,000
        (Gain) loss on sale of foreclosed real estate                 (34,031)              10,900
        Deferred income taxes                                        (180,000)             (33,800)
        Deferred compensation                                          12,740               12,350
        ESOP contribution expense                                     142,696              145,845
        Vesting of deferred recognition and retention plan             40,670              110,840
        Change in assets and liabilities:
           Increase in accrued interest receivable                   (146,127)            (187,734)
           (Increase) decrease in loans held for sale                 359,123           (3,275,665)
           (Increase) decrease in other assets                        (60,412)              62,469
           Increase (decrease) in accrued interest payable             38,888             (119,907)
           Increase (decrease) in accrued expenses and
             other liabilities                                        (75,124)             210,014
                                                             ----------------    -----------------

                            NET CASH PROVIDED (USED)
                             BY OPERATING ACTIVITIES                2,413,632           (1,711,047)
                                                             ----------------    -----------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of held to maturity investment securities             (3,300,000)          (5,227,244)
   Proceeds from maturities and calls of
      held to maturity investment securities                        4,687,143            3,675,115
   Purchase of Federal Home Loan Bank stock                          (275,000)            (151,900)
   Net increase in loans                                          (12,457,341)         (13,169,295)
   Purchase of premises and equipment                              (1,217,381)            (106,251)
   Proceeds from sale of real estate acquired in
      settlement of loans                                              80,017                6,200
                                                             ----------------    -----------------

                                  NET CASH USED BY
                              INVESTING ACTIVITIES                (12,482,562)         (14,973,375)
                                                             ----------------    -----------------
</TABLE>

See accompanying notes.

                                      -18-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended June 30, 2002 and 2001
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                   2002                 2001
                                                             ----------------    -----------------
<S>                                                          <C>                 <C>
CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase in demand accounts                           $      5,970,147    $       5,156,309
   Net increase in certificates of deposit                          4,495,171            2,214,354
   Increase (decrease) in advance payments by borrowers
      for taxes and insurance                                         (31,115)              30,678
   Net increase in advances from Federal
      Home Loan Bank                                                4,200,000            5,800,000
   Purchase of treasury stock                                        (183,381)          (1,638,522)
   Cash dividends paid                                               (764,212)            (655,433)
                                                             ----------------    -----------------

                                   NET CASH PROVIDED
                             BY FINANCING ACTIVITIES               13,686,610           10,907,386
                                                             ----------------    -----------------

                           NET INCREASE (DECREASE) IN
                            CASH AND CASH EQUIVALENTS               3,617,680           (5,777,036)

CASH AND CASH EQUIVALENTS, BEGINNING                                3,354,008            9,131,043
                                                             ----------------    -----------------

                                     CASH AND CASH
                               EQUIVALENTS, ENDING           $      6,971,688    $       3,354,008
                                                             ================    =================

SUPPLEMENTAL DISCLOSURES OF CASH
   FLOW INFORMATION
      Cash paid during the year for:
      Interest                                               $      3,684,966    $       4,597,426
                                                             ================    =================

      Income taxes                                           $        894,330    $         413,000
                                                             ================    =================

SUPPLEMENTAL SCHEDULE OF NONCASH
   INVESTING AND FINANCING ACTIVITIES

      Loans receivable transferred to real estate acquired
        in settlement of loans                               $        247,345    $          31,450
                                                             ================    =================

      Loans receivable originated in the financing of
        reclosed real estate sold                            $        188,433    $               -
                                                             ================    =================

      Net unrealized gain (loss) on investment securities
        available for sale, net of deferred income taxes     $        (12,400)   $          42,096
                                                             ================    =================

      Award of shares under the
        Recognition and Retention Plan                       $              -    $          42,000
                                                             ================    =================
</TABLE>

See accompanying notes.

                                      -19-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

NOTE A - SIGNIFICANT ACCOUNTING POLICIES

Organization and Operations

On December 31, 1997, pursuant to a Plan of Conversion which was approved by its
members and regulators, First Federal Savings and Loan Association of Cheraw
("First Federal" or the "Bank") converted from a federally chartered mutual
savings and loan association to a federally-chartered stock savings association
(the "Conversion") and became a wholly-owned subsidiary of Great Pee Dee
Bancorp, Inc. ("Great Pee Dee" or "Parent"). Great Pee Dee was formed to acquire
all of the common stock of First Federal upon its conversion to stock form. On
March 9, 2000, Great Pee Dee formed a second wholly-owned subsidiary, First
Federal Investment Services, Inc. Great Pee Dee has no operations and conducts
no business on its own other than owning its subsidiaries, investing in liquid
assets and lending funds to the Employee Stock Ownership Plan (the "ESOP") which
was formed in connection with the Conversion.

Nature of Business

First Federal maintains offices in Cheraw and Florence, South Carolina. The Bank
conducts its primary business in Chesterfield, Marlboro and Florence Counties,
South Carolina. The Bank is primarily engaged in the business of attracting
deposits from the general public and using such deposits to make mortgage loans
secured by one-to-four family residential real estate located in its primary
market area. The Bank also makes home improvement loans, multi-family
residential loans, construction loans, commercial loans, automobile loans and
loans secured by deposit accounts. First Federal has been and intends to
continue to be a community-oriented financial institution offering a variety of
financial services to meet the needs of the communities it serves. First Federal
Investment Services, Inc. engages in the brokerage of a variety of investment
products through an unaffiliated broker-dealer.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of the
Parent and its subsidiaries, together referred to as the "Company." All
significant intercompany transactions and balances are eliminated in
consolidation.

Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, cash and cash
equivalents include cash on hand and in banks, interest-earning balances in
other banks, and federal funds sold.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Material estimates that are particularly sensitive to significant change relate
to the determination of the allowance for losses on loans and the valuation of
real estate acquired in connection with foreclosures or in satisfaction of
loans. In connection with the determination of the allowances for losses on
loans and foreclosed real estate, management obtains independent appraisals for
significant properties.

                                      -20-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Use of Estimates (Continued)

A majority of the Bank's loan portfolio consists of single-family residential
loans in its market area. The regional economy is currently stable and consists
of various types of industry. Real estate prices in this market are also stable;
however, the ultimate collectibility of a substantial portion of the Bank's loan
portfolio is susceptible to changes in local market conditions.

While management uses available information to recognize losses on loans and
foreclosed real estate, future additions to the allowances may be necessary
based on changes in local economic conditions. In addition, regulatory agencies,
as an integral part of their examination process, periodically review the Bank's
allowances for losses on loans and foreclosed real estate. Such agencies may
require the Bank to recognize additions to the allowances based on their
judgments about information available to them at the time of their examination.
Because of these factors, it is reasonably possible that the allowances for
losses on loans and foreclosed real estate may change materially in the near
term.

Investment Securities

Available-for-sale securities are reported at fair value and consist of bonds
and notes not classified as trading securities nor as held-to-maturity
securities. Unrealized holding gains and losses on available-for-sale securities
are reported as a net amount in other comprehensive income. Gains and losses on
the sale of available-for-sale securities are determined using the
specific-identification method. Declines in the fair value of individual
held-to-maturity and available-for-sale securities below their cost that are
other than temporary would result in write-downs of the individual securities to
their fair value. Such write-downs would be included in earnings as realized
losses. Premiums and discounts are recognized in interest income using the
interest method over the period to maturity.

Loans Held for Sale

Mortgage loans originated and intended for sale in the secondary market are
carried at the lower of cost or estimated market value in the aggregate. Net
unrealized losses are recognized through a valuation allowance by charges to
income.

Loans Receivable

Loans receivable are stated at unpaid balances, less the allowance for loan
losses and net deferred loan fees.

Loan origination and commitment fees, as well as certain direct origination
costs, are deferred and amortized as a yield adjustment over the contractual
lives of the related loans using the interest method. Amortization of deferred
loan fees is discontinued when a loan is placed on nonaccrual status.

Loans are placed on nonaccrual when a loan is specifically determined to be
impaired or when principal or interest is delinquent for 90 days or more.
Interest income generally is not recognized on specific impaired loans unless
the likelihood of further loss is remote. Interest payments received on such
loans are applied as a reduction of the loan principal balance. Interest income
on other nonaccrual loans is recognized only to the extent of interest payments
received.

                                      -21-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loans Receivable (Continued)

The Bank accounts for impaired loans in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 114, Accounting by Creditors for Impairment of
a Loan, amended for SFAS No. 118, Accounting by Creditors for Impairment of a
Loan - Income Recognition and Disclosure. A loan is impaired when, based on
current information and events, it is probable that all amounts due according to
the contractual terms of the loan agreement will not be collected. Impaired
loans are measured based on the present value of expected future cash flows
discounted at the loan's effective interest rate, the loan's observable market
price, or the fair value of the collateral of the loan if the loan is collateral
dependent. Interest income from impaired loans is recognized using the cash
basis method of accounting during the time within that period in which the loans
were impaired.

Allowance for Loan Losses

The Bank provides for loan losses on the allowance method. Accordingly, all loan
losses are charged to the related allowance and all recoveries are credited to
it. Additions to the allowance for loan losses are provided by charges to
operations based on various factors which, in management's judgment, deserve
current recognition in estimating possible losses. Such factors considered by
management include the market value of the underlying collateral, growth and
composition of the loan portfolio, the relationship of the allowance for loan
losses to outstanding loans, delinquency trends, and economic conditions.
Management evaluates the carrying value of loans periodically and the allowance
is adjusted accordingly. While management uses the best information available to
make evaluations, future adjustments to the allowance may be necessary if
conditions differ substantially from the assumptions used in making the
evaluations.

In addition, various regulatory agencies, as an integral part of their
examination process, periodically review the Bank's allowance for loan losses.
Such agencies may require the Bank to recognize additions to the allowance based
on their judgments of information available to them at the time of their
examination.

Premises and Equipment

Bank premises and equipment are stated at cost less accumulated depreciation.
Depreciation of premises and equipment is recorded on a straight-line basis over
the estimated useful lives of the related assets.

Expenditures for maintenance and repairs are charged to expense as incurred,
while those for improvements are capitalized. The costs and accumulated
depreciation relating to premises and equipment retired or otherwise disposed of
are eliminated from the accounts, and any resulting gains or losses are credited
or charged to earnings.

Investment in Federal Home Loan Bank Stock

As a requirement for membership, the Bank invests in stock of the Federal Home
Loan Bank of Atlanta ("FHLB"). This investment is carried at cost.

                                      -22-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Real Estate Acquired In Settlement of Loans

Real estate acquired in settlement of loans is carried at the lower of cost or
fair value less estimated costs to dispose. Generally accepted accounting
principles define fair value as the amount that is expected to be received in a
current sale between a willing buyer and seller other than in a forced or
liquidation sale. Fair values at foreclosure are based on appraisals. Losses
arising from the acquisition of foreclosed properties are charged against the
allowance for loan losses. Subsequent writedowns are provided by a charge to
operations through the allowance for losses on other real estate in the period
in which the need arises.

Income Taxes

Deferred tax assets and liabilities are recorded for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Future tax
benefits are recognized to the extent that realization of such benefits is more
likely than not. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which the assets
and liabilities are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income tax
expense in the period that includes the enactment date.

In the event the future tax consequences of differences between the financial
reporting bases and the tax bases of the Bank's assets and liabilities result in
deferred tax assets, applicable accounting standards require an evaluation of
the probability of being able to realize the future benefits indicated by such
assets. A valuation allowance is provided when it is more likely than not that
some portion or all of the deferred tax assets will not be realized. In
assessing the realizability of the deferred tax assets, management considers the
scheduled reversals of deferred tax liabilities, projected future taxable
income, and tax planning strategies.

A deferred tax liability is not recognized for portions of the allowance for
loan losses for income tax purposes in excess of the financial statement
balance, as described in Note J. Such a deferred tax liability will only be
recognized when it becomes apparent that those temporary differences will
reverse in the foreseeable future.

Stock Compensation Plans

Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for
Stock-Based Compensation, encourages all entities to adopt a fair value based
method of accounting for employee stock compensation plans, whereby compensation
cost is measured at the grant date based on the value of the award and is
recognized over the service period, which is usually the vesting period.
However, it also allows an entity to continue to measure compensation cost for
those plans using the intrinsic value based method of accounting prescribed by
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, whereby compensation cost is the excess, if any, of the quoted market
price of the stock at the grant date (or other measurement date) over the amount
an employee must pay to acquire the stock. Stock options issued under the
Company's stock option plan have no intrinsic value at the grant date, and,
under Opinion No. 25, no compensation cost is recognized for them. The Company
has elected to continue with the accounting methodology in Opinion No. 25 and,
as a result, has provided pro forma disclosures of net income and earnings per
share and other disclosures, as if the fair value based method of accounting had
been applied.

                                      -23-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings Per Common Share

Basic earnings per share represent income available to common shareholders
divided by the weighted-average number of common shares outstanding during the
period. Diluted earnings per share reflect additional common shares that would
have been outstanding if dilutive potential common shares had been issued, as
well as any adjustment to income that would result from the assumed issuance.
Potential common shares that may be issued by the Company relate to outstanding
stock options and are determined using the treasury stock method.

On October 30, 2001, the Company distributed a 10% stock dividend. All
references to net income per share, weighted average shares outstanding and
dividends per share have been adjusted to give effect to this stock dividend.

Earnings per common share have been computed based on the following:

<TABLE>
<CAPTION>
                                                                                         Years Ended June 30,
                                                                                    -------------------------------
                                                                                          2002            2001
                                                                                    --------------   --------------
         <S>                                                                        <C>              <C>
         Average number of common shares outstanding
           used to calculate basic earnings per common share                             1,628,503        1,656,578


         Effect of dilutive options                                                         28,380              182
                                                                                    --------------   --------------

         Average number of common shares outstanding
           used to calculate diluted earnings per common share                           1,656,883        1,656,760
                                                                                    ==============   ==============
</TABLE>

Comprehensive Income

Accounting principles generally require that recognized revenue, expenses, gains
and losses be included in net income. Although certain changes in assets and
liabilities, such as unrealized gains and losses on available-for-sale
securities, are reported as a separate component of the equity section of the
balance sheet, such items, along with net income, are components of
comprehensive income.

The components of other comprehensive income and related tax effects are as
follows:

<TABLE>
<CAPTION>
                                                                                    2002                 2001
                                                                              ----------------     ----------------
   <S>                                                                        <C>                  <C>
   Unrealized holding gains (losses) on available-for-sale
      securities                                                              $        (19,600)    $         67,296

   Reclassification adjustment for (gains) losses
      realized in income                                                                     -                    -
                                                                              ----------------     ----------------

   Net unrealized gains (losses)                                                       (19,600)              67,296

   Tax effect                                                                            7,200              (25,200)
                                                                              ----------------     ----------------

   Net of tax amount                                                          $        (12,400)    $         42,096
                                                                              ================     ================
</TABLE>

                                      -24-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Intangible Assets

In June 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standard (SFAS) No. 141, Business Combinations, and SFAS
No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that all
business combinations entered into after June 30, 2001 be accounted for under
the purchase method. SFAS No. 142 requires that goodwill and all intangible
assets of indefinite life be periodically (at least annually) evaluated for
impairment, with any resulting impairment loss being charged against earnings.
Also, under SFAS No. 142, goodwill resulting from any business combination
accounted for in accordance with SFAS No. 141 will not be amortized, and the
amortization of goodwill related to business combinations entered into prior to
July 1, 2001 will be discontinued. Substantially all of the Company's intangible
assets were recorded in connection with its purchase in March of 2000 of a
branch office in Florence, South Carolina, and must be accounted for in
accordance with SFAS No. 72, Accounting for Certain Acquisitions of Banking or
Thrift Institutions. As a result, none of those intangible assets constitutes
goodwill that must cease to be amortized under the provisions of SFAS 142.
Accordingly, the Company's adoption of SFAS 142 on July 1, 2001 has not
significantly affected its consolidated financial statements.

In connection with the March, 2000 acquisition of a branch office in Florence,
South Carolina, the Company purchased for $250,000 a non-compete agreement and
recorded intangible assets of $1,850,000. The non-compete agreement is being
amortized using the straight-line method over that agreement's three-year term.
The intangible assets are being amortized using the straight-line method over
ten years.

All intangible assets arising from the Florence branch acquisition are included
in other assets in the accompanying consolidated statements of financial
condition.

NOTE B - INVESTMENT SECURITIES

The following is a summary of the securities portfolios by major classification:

<TABLE>
<CAPTION>
                                                                            June 30, 2002
                                              ---------------------------------------------------------------------
                                                                      Gross             Gross
                                                   Amortized       unrealized        unrealized           Fair
                                                     cost             gains            losses             value
                                              ---------------    ---------------    ------------     --------------
<S>                                           <C>                <C>                <C>              <C>

Securities available for sale:
   Marketable equity securities               $       500,000    $             -    $     47,800     $      452,200
                                              ===============    ===============    ============     ==============

Securities held to maturity:
   U. S. government securities and
     obligations of U. S. government
     agencies                                 $     4,868,972    $        65,531    $          -     $    4,934,503
   FHLMC mortgage-backed securities                     8,284                 68               -              8,352
                                              ---------------    ---------------    ------------     --------------

                                              $     4,877,256    $        65,599    $          -     $    4,942,855
                                              ===============    ===============    ============     ==============
</TABLE>

                                      -25-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

NOTE B - INVESTMENT SECURITIES (Continued)

<TABLE>
<CAPTION>
                                                                            June 30, 2001
                                              ---------------------------------------------------------------------
                                                                      Gross             Gross
                                                 Amortized          unrealized        unrealized         Fair
                                                   cost               gains             losses           value
                                              ---------------    ---------------    ------------     --------------
<S>                                           <C>                <C>                <C>              <C>
Securities available for sale:
   Marketable equity securities               $       500,000    $             -    $     28,200     $      471,800
                                              ===============    ===============    ============     ==============

Securities held to maturity:
   U. S. government securities and
     obligations of U. S. government
     agencies                                 $     6,244,000    $        28,595    $      8,416     $    6,264,179
   FHLMC mortgage-backed securities                    20,399                  -             166             20,233
                                              ---------------    ---------------    ------------     --------------

                                              $     6,264,399    $        28,595    $      8,582     $    6,284,412
                                              ===============    ===============    ============     ==============
</TABLE>

The amortized cost and fair values of securities held to maturity at June 30,
2002 by contractual maturity are shown below. Available-for-sale securities are
not included in this table because they consist solely of equity securities.
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties.

<TABLE>
<CAPTION>
                                                                                     Securities Held to Maturity
                                                                                  ---------------------------------
                                                                                    Amortized            Fair
                                                                                      cost               value
                                                                                  --------------     --------------
<S>                                                                               <C>                <C>
         Due within one year                                                      $    1,376,017     $    1,385,673
         Due after one year through five years                                         3,001,239          3,057,182
         Due after five years through ten years                                          500,000            500,000
         Due after ten years                                                                   -                  -
                                                                                  --------------     --------------

                                                                                  $    4,877,256     $    4,942,855
                                                                                  ==============     ==============
</TABLE>

Proceeds from maturities and calls of investment securities held to maturity
during the years ended June 30, 2002 and 2001 were $4,687,143 and $3,675,115,
respectively. No gains or losses were realized on those maturities and calls.
There were no sales of available-for-sale securities during the years ended June
30, 2002 or 2001.

Securities with a carrying value of $700,000 and $735,116 and a fair value of
$714,594 and $709,283 at June 30, 2002 and 2001, respectively, were pledged to
secure public monies on deposit as required by law.

                                      -26-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

NOTE B - INVESTMENT SECURITIES (Continued)

The following table sets forth certain information regarding the carrying
values, weighted average yields and contractual maturities of the Company's
investment portfolio and other interest-earning assets at June 30, 2002.
Marketable equity securities which have no stated maturities, and are readily
available, are assumed to mature in less than one year, while FHLB common stock,
a nonmarketable equity security, substantially all of which is required to be
maintained, is assumed to mature in periods greater than ten years.

<TABLE>
<CAPTION>
                                                  After one       After five
                                 One year       year through     years through       After ten
                                  or less        five years        ten years           years             Total
                              --------------    ---------------  --------------     ------------     --------------
                                                            (Dollars in thousands)
<S>                           <C>               <C>              <C>                <C>              <C>
Securities available for sale:
   Marketable equity
     securities               $          452    $            -   $             -    $          -     $          452
                                        7.46%                -                 -               -               7.46%
Securities held to maturity:
   U. S. government and
     agency securities                 1,369             3,000               500               -              4,869
                                        4.89%             5.26%             4.00%              -               5.03%
   Mortgage-backed
     securities                            7                 1                 -               -                  8
                                        8.68%             8.25%                -               -               8.61%
Other:
   Interest-earning balances
     in other banks                    2,487                 -                 -               -              2,487
                                        1.70%                -                 -               -               1.70%

   Federal funds sold                  3,330                 -                 -               -              3,330
                                        1.80%                -                 -               -               1.80%

   Federal Home Loan
     Bank Stock                            -                 -                 -           1,000              1,000
                                           -                 -                 -            5.25%              5.25%
                              --------------    --------------   ---------------    ------------     --------------

Total                         $        7,645    $        3,001   $           500    $      1,000     $       12,146
                              ==============    ==============   ===============    ============     ==============
</TABLE>

                                      -27-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

NOTE C - LOANS RECEIVABLE

Loans receivable consist of the following:

<TABLE>
<CAPTION>
                                                             2002                               2001
                                              ----------------------------------   -------------------------------
                                                                   Percentage                          Percentage
                                                    Amount        of net loans         Amount         of net loans
                                              ----------------   ---------------   ---------------    ------------
<S>                                           <C>                <C>               <C>               <C>
         Type of loan:
           Real estate loans:
             One-to-four family
                residential                   $     68,296,300            62.31%   $    66,768,260           68.27%
             Commercial                             10,923,892             9.97%        11,643,624           11.90%
             Construction                           12,140,008            11.07%        10,959,325           11.21%
             Home improvement loans                  8,082,781             7.37%         6,135,026            6.27%
                                              ----------------   --------------    ---------------   -------------

             Total real estate loans                99,442,981            90.72%        95,506,235           97.65%
                                              ----------------   --------------    ---------------   -------------

           Other loans:
             Commercial                              6,549,894             5.98%         4,351,689            4.45%
             Consumer                                8,029,523             7.33%         4,236,032            4.33%
             Loans secured by deposits                 334,629             0.30%           295,491            0.30%
                                              ----------------   --------------    ---------------   -------------

             Total other loans                      14,914,046            13.61%         8,883,212            9.08%
                                              ----------------   --------------    ---------------   -------------

             Total loans                           114,357,027           104.33%       104,389,447          106.73%
                                                                 --------------                      -------------

         Less:
           Construction loans in process             3,437,974            (3.14%)        5,775,975           (5.91%)
           Allowance for loan losses                 1,066,143            (0.97%)          570,312           (0.58%)
           Deferred loan origination fees,
             net of costs                              242,297            (0.22%)          238,899           (0.24%)
                                              ----------------   --------------    ---------------   -------------

             Net loans                        $    109,610,613           100.00%   $    97,804,261          100.00%
                                              ================   ==============    ===============   =============

The allowance for loan losses is summarized as follows:

                                                                                        2002               2001
                                                                                   ---------------   --------------

         Balance at beginning of year                                              $       570,312   $     554,987
         Provision for loan losses                                                         500,000          45,000
         Charge-offs                                                                        (4,169)        (29,675)
         Recoveries                                                                              -               -
                                                                                   ---------------   -------------

         Balance at end of year                                                    $     1,066,143   $     570,312
                                                                                   ===============   =============
</TABLE>

                                      -28-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

NOTE C - LOANS RECEIVABLE (Continued)

The following table shows the allocation of the allowance for loan losses at the
dates indicated. The allocation is based on an evaluation of defined loan
problems, historical ratios of loan losses and other factors that may affect
future loan losses in the categories of loans shown.

<TABLE>
<CAPTION>
                                                 2002                                       2001
                              -----------------------------------------  ------------------------------------------
                                              Percent of      Percent                    Percent of      Percent
                                               allowance     of loans                     allowance      of loans
                                Amount of      to total      to gross      Amount of      to total       to gross
                                allowance      allowance       loans       allowance      allowance        loans
                              ------------  -------------  ------------  -------------  -------------  ------------
<S>                           <C>           <C>            <C>           <C>            <C>            <C>
Real estate loans:
   One-to-four family
     residential              $    396,000         37.11%        59.72%  $      259,000        45.41%        63.96%
   Commercial                      126,000         11.81%         9.55%         175,000        30.68%        11.15%
   Construction                          -             -%        10.62%          13,000         2.28%        10.50%
   Home improvement loans           42,000          3.96%         7.07%          31,000         5.44%         5.88%
                              ------------  -------------  ------------  -------------- -------------  ------------

   Total real estate loans         564,000         52.88%        86.96%         478,000        83.81%        91.49%
                              ------------  -------------  ------------  -------------- -------------  ------------

Other loans:
   Commercial                      230,000         21.54%         5.73%          45,000         7.89%         4.17%
   Consumer                        140,000         13.11%         7.02%          33,000         5.79%         4.06%
   Loans secured by deposits             -             -%         0.29%               -            -%         0.28%
                              ------------  -------------  ------------  -------------- -------------  ------------

   Total other loans               370,000         34.65%        13.04%          78,000        13.68%         8.51%
                              ------------  -------------  ------------  -------------- -------------  ------------

Unallocated                        132,143         12.47%             -          14,312         2.51%             -
                              ------------  -------------  ------------  -------------- -------------  ------------

Total allowance for loan
   losses                     $  1,066,143        100.00%       100.00%  $      570,312       100.00%       100.00%
                              ============  =============  ============  ============== =============  ============
</TABLE>

At June 30, 2002 and 2001, the Bank had loans totaling $1,079,167 and $568,387,
respectively, which were in a nonaccrual status. Interest income that was
foregone on nonaccrual loans for the years ended June 30, 2002, and 2001
amounted to approximately $48,000 and $21,000, respectively.

At June 30, 2002, the Bank had loan commitments outstanding of $7,369,393,
including loans of $6,160,393 to be originated at fixed interest rates ranging
from 6.5% to 10.5%. In management's opinion, these commitments, and undisbursed
proceeds on construction loans in process reflected above, represent no more
than normal lending risk to the Bank and will be funded from normal sources of
liquidity.

The Bank has had loan transactions with its directors and executive officers.
Such loans were made in the ordinary course of business and also on
substantially the same terms and collateral as those comparable transactions
prevailing at the time and did not involve more than the normal risk of
collectibility or present other unfavorable features. A summary of related party
loan transactions is as follows:

<TABLE>
<CAPTION>
                                                                         2002               2001
                                                                    --------------     --------------
<S>                                                                 <C>                <C>
         Balance at beginning of year                               $      623,154     $      398,388
         Net (repayments) borrowings during the year                       (39,646)           224,766
                                                                    --------------     --------------
         Balance at end of year                                     $      583,508     $      623,154
                                                                    ==============     ==============
</TABLE>

                                       -29-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

NOTE D - PREMISES AND EQUIPMENT

Premises and equipment for the years ended on June 30 consist of the following:

                                                   2002               2001
                                              --------------     --------------

         Land                                 $      485,687     $      420,687
         Building and improvements                 1,384,914            470,453
         Furniture and equipment                     984,133            756,112
                                              --------------     --------------

                                                   2,854,734          1,647,252
         Accumulated depreciation                   (827,905)          (585,640)
                                              --------------     --------------

                                              $    2,026,829     $    1,061,612
                                              ==============     ==============

Depreciation expense for the years ended June 30, 2002 and 2001 amounted to
$252,164 and $147,209, respectively.

NOTE E - FEDERAL INSURANCE OF DEPOSITS

Eligible deposit accounts are insured up to $100,000 by the Federal Deposit
Insurance Corporation.

NOTE F - DEPOSIT ACCOUNTS

A comparative summary of deposit accounts at June 30, 2002 and 2001 follows:

<TABLE>
<CAPTION>
                                                             2002                               2001
                                                --------------------------------   --------------------------------
                                                                    Weighted                            Weighted
                                                    Balance         avg. rate          Balance          avg. rate
                                                --------------   --------------    --------------    --------------
<S>                                             <C>              <C>               <C>               <C>
         Demand accounts:
           Non-interest bearing                 $    4,223,006             -%      $    2,392,549                -%
           Savings                                   2,471,936          1.90%           2,161,708             2.99%
           Money market and NOW                     26,913,782          2.15%          23,084,320             4.57%
                                                --------------                     --------------
             Total demand accounts                  33,608,724          1.86%          27,638,577             4.05%

         Certificates of deposit                    54,480,927          3.71%          49,985,756             6.05%
                                                --------------                     --------------

             Total deposit accounts             $   88,089,651          3.00%      $   77,624,333             5.34%
                                                ==============                     ==============
</TABLE>

A summary of certificate accounts by maturity as of June 30, 2002 follows:

<TABLE>
<CAPTION>
                                                         Less than         $100,000
                                                         $100,000           or more            Total
                                                      --------------    --------------    --------------
<S>                                                   <C>               <C>               <C>
         One year or less                             $   26,501,076    $   13,581,102    $   40,082,178
         More than one year to three years                 8,728,849         3,569,544        12,298,393
         More than three years to five years                 874,723           700,000         1,574,723
         More than five years                                525,633                 -           525,633
                                                      --------------    --------------    --------------
</TABLE>

                                      -30-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                                   <C>               <C>               <C>
         Total certificate accounts                   $   36,630,281    $   17,850,646    $   54,480,927
                                                      ==============    ==============    ==============
</TABLE>

NOTE F - DEPOSIT ACCOUNTS (Continued)

Interest expense on deposits for the years ended June 30 is summarized as
follows:

                                                   2002               2001
                                              --------------     --------------

         Checking accounts                    $       48,374     $       41,579
         Passbook savings accounts                    55,711             62,902
         Money market savings accounts               704,116            747,890
         Certificates of deposit                   2,292,992          3,093,634
                                              --------------     --------------
                                                   3,101,193          3,946,005
         Penalties for early withdrawal                 (876)            (6,244)
                                              --------------     --------------

                                              $    3,100,317     $    3,939,761
                                              ==============     ==============

NOTE G - ADVANCES FROM FEDERAL HOME LOAN BANK

Advances from the Federal Home Loan Bank of Atlanta, with weighted average
interest rates, are as follows:

                                                         At June 30,
                                              ---------------------------------
                                                   2002               2001
                                              ---------------    --------------

         4.86% due on July 19, 2001           $             -    $    1,200,000
         4.69% due on March 22, 2002                        -         2,500,000
         4.20% due on May 30, 2002                          -         4,100,000
         4.31% due on April 6, 2011                 5,000,000         5,000,000
         3.41% due on August 1, 2011                3,000,000                 -
         1.91% due on October 7, 2002               6,500,000                 -
         2.02% due on May 5, 2003                   2,500,000                 -
                                              ---------------    --------------

                                              $    17,000,000    $   12,800,000
                                              ===============    ==============

At June 30, 2002, the Bank also had $9,000,000 available on a line of credit
from the Federal Home Loan Bank. All advances are secured by a blanket-floating
lien on the Bank's one-to-four family residential mortgage loans.

NOTE H - EMPLOYEE AND DIRECTOR BENEFIT PLANS

Recognition and Retention Plan

At the Company's first annual meeting of stockholders held on January 7, 1999,
the Company's stockholders approved the 1998 Recognition and Retention Plan (the
"RRP"). Under the RRP, 88,085 shares of common stock were reserved for issuance
to key officers and directors. Upon approval of the RRP at the annual meeting,
76,192 shares of common stock were granted at a value of $12.00 per share at the
date of grant. The Company funded the grants with 53,700 shares of previously
purchased treasury stock and 22,492 shares of newly issued common stock. An
additional 4,000 shares were granted on January 22, 2001. This grant was funded
with 4,000 shares of previously purchased treasury stock at a value of $10.50
per share on the date of grant. The Company will recognize compensation costs
over the vesting period of the RRP shares granted and is including such
compensation costs in operations as rapidly as is permissible, resulting in the
recognition of costs of $106,000 and $241,000 during the years ended June 30,
2002 and 2001, respectively.

                                      -31-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

NOTE H - EMPLOYEE AND DIRECTOR BENEFIT PLANS (Continued)

Stock Option Plan

At the Company's annual meeting, held on January 7, 1999, the stockholders
approved the Great Pee Dee Bancorp, Inc. Stock Option Plan (the "SOP"). The SOP
provides for the issuance to directors, officers and employees of the Bank
options to purchase up to 242,233 shares of the Company's common stock through
June 30, 2001. Options granted to directors were fully vested on the date of
grant, while options granted to executive officers and employees have vested
one-third on the date of grant and one-third annually thereafter. All options
will expire if not exercised within ten years from the date of grant.

A summary of activity under the SOP, adjusted for the 10% stock dividend issued
on October 30, 2001, is as follows:

<TABLE>
<CAPTION>
                                                       Outstanding Options              Exercisable Options
                                                  -----------------------------     ---------------------------
                                  Shares                             Weighted                        Weighted
                               available for                          Average                         Average
                                  Future             Number          Exercise          Number        Exercise
                                  Grants          Outstanding         Price         Outstanding       Price
                               -------------      -----------      ------------     -----------    ------------
     <S>                       <C>                <C>              <C>              <C>            <C>
     At June 30, 2000                 33,022          209,210      $      10.86         167,070    $      10.61

     Options granted                 (10,000)          10,000             10.50               -               -
     Options vested                        -                -                 -          44,806           11.89
     Options forfeited                13,212          (13,212)            10.91         (13,212)          10.91
                               -------------      -----------      ------------     -----------    ------------

     At June 30, 2001                 36,234          205,998      $      10.84         198,664    $      10.88

     Options granted                 (29,000)          29,000             12.25               -               -

     Options vested                        -                -                 -           3,666            9.55
                               -------------      -----------      ------------     -----------    ------------

     At June 30, 2002                  7,234          234,998      $      11.01         202,330    $      10.85
                               =============      ===========      ============     ===========    ============
</TABLE>

As permitted by SFAS No. 123, the Company has applied APB Opinion No. 25 for
measurement of stock-based compensation in the accompanying financial
statements. If the Company had used the fair value based method of accounting
for stock-based compensation, operating results for the year ended June 30, 2002
and 2001 would have been affected as set forth below:

<TABLE>
<CAPTION>
                                                                                   As Reported      Pro Forma
                                                                                  -------------   -------------
       <S>                                                                       <C>             <C>
       2002 net income                                                            $   1,202,588   $   1,193,618
       2002 net income per share:
         Basic                                                                    $        0.74   $        0.73
         Diluted                                                                  $        0.73   $        0.72

       2001 net income                                                            $     846,908   $     785,820
       2001 net income per share, basic and diluted                               $        0.51   $        0.47
</TABLE>

                                      -32-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

NOTE H - EMPLOYEE AND DIRECTOR BENEFIT PLANS (Continued)

In determining the pro forma disclosures above, the fair value of options
granted during the year ended June 30, 2002 was estimated as of the grant date
under the Black-Scholes Option Pricing Model using the following assumptions: a
risk-free interest rate of 5.0%, a dividend yield of 3.8%, an expected life of 8
years, and a volatility ratio of 22%. The effects of applying SFAS No. 123 in
the above pro forma disclosure are not indicative of future amounts.

Employee Stock Ownership Plan

In the mutual to stock conversion, the First Federal Savings and Loan
Association Employee Stock Ownership Plan (the "ESOP") purchased 174,570 shares
of the common stock of Great Pee Dee Bancorp, Inc. sold in the public offering
at a total cost of $1,745,700. The ESOP executed a note payable to Great Pee Dee
Bancorp, Inc. for the full price of the shares purchased. The note is to be
repaid over ten years in quarterly installments of principal and interest.
Interest is based upon the prime rate and will be adjusted annually. Dividends,
if any, paid on shares held by the ESOP may be used to reduce the loan.
Dividends paid on unallocated shares held by the ESOP are not reported as
dividends in the financial statements. The note may be prepaid without penalty.
The unallocated shares of stock held by the ESOP are pledged as collateral for
the note. The ESOP is funded by contributions made by the Bank in amounts
sufficient to retire the debt. At June 30, 2002, the outstanding balance of the
note is $1,185,511 and is included in unearned compensation as a reduction of
stockholders' equity.

Shares released as the debt is repaid and earnings from the common stock held by
the ESOP are allocated among active participants on the basis of compensation in
the year of allocation. Benefits become 100% vested after five years of credited
service. Forfeitures of nonvested benefits will be reallocated among remaining
participating employees in the same proportion as contributions.

Expense of $142,696 and $145,845 has been incurred in connection with the ESOP
during the years ended June 30, 2002 and 2001, respectively. The expense
includes, in addition to the cash contribution necessary to fund the ESOP,
$13,376 and $13,000 which represents the difference between the fair market
value of the shares which have been released or committed to be released to
participants and the cost of these shares to the ESOP for the years ended June
30, 2002 and 2001, respectively. The Bank has credited this amount to additional
paid-in capital.

At June 30, 2002, 54,683 shares held by the ESOP have been released or committed
to be released to the plan's participants for purposes of computing earnings per
share. The fair value of the unallocated shares amounted to approximately $1.7
million at June 30, 2002.

Employee Deferred Compensation Plan

The Bank has a deferred compensation plan for certain officers whereby the
executive officers can make elective deferrals in lieu of receiving a portion of
the salary to which they otherwise would be entitled. This plan is not entitled
to favorable tax treatment under current law. Related deferred income tax
benefits are included in the accompanying financial statements. Expenses for
this plan for the years ended June 30, 2002 and 2001 were $12,740 and $19,850,
respectively.

                                      -33-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

NOTE H - EMPLOYEE AND DIRECTOR BENEFIT PLANS (Continued)

Director's Deferred Compensation Plan

On March 25, 2002 the board approved a deferred compensation plan for directors
whereby members of the board may make elective deferrals in lieu of receiving a
portion of the compensation to which they otherwise would be entitled. This plan
is not entitled to favorable tax treatment under current law. Related deferred
income tax benefits are included in the accompanying financial statements. There
were no expenses for this plan for the year ended June 30, 2002.

401(k) Retirement Plan

The Bank maintains for the benefit of its eligible employees a 401(k) plan.
Under the plan, the Bank fully matches a participant's elective contributions up
to three percent of base compensation, and then matches fifty percent of a
participant's elective contributions in excess of three percent of base
compensation up to five percent of base compensation. The only eligibility
requirement is completion of one year's full-time service. At June 30, 2002 and
2001, substantially all full-time employees are eligible and are covered by the
plan. 401(k) contributions are funded when accrued. The total 401(k) retirement
plan expense was $14,525 and $6,579 for the years ended June 30, 2002 and 2001,
respectively.

NOTE I - STOCK REPURCHASES

The Company's Board of Directors has adopted stock repurchase plans under which
the Company is authorized to repurchase shares of its outstanding common stock
in the open market or in privately negotiated transactions at times deemed
appropriate. Under such plans, the Company has repurchased a total of 680,684
shares of its common stock at an aggregate cost of $8.3 million of which 57,700
shares were reissued as grants under the RRP, 2,509 shares were issued under the
deferred compensation plan, 161,470 shares were issued in the form of a 10%
stock dividend on October 30, 2001 and 459,005 shares are held as treasury stock
at June 30, 2002.

NOTE J - INCOME TAXES

The components of income tax expense are as follows for the years ended June 30,
2002 and 2001:

<TABLE>
<CAPTION>
                                                                            2002               2001
                                                                      --------------     --------------
         <S>                                                          <C>                <C>

         Current tax expense                                          $      882,535     $      521,600
         Deferred tax expense (benefit)                                     (180,000)           (33,800)
                                                                      --------------     --------------

         Provision for income taxes                                   $      702,535     $      487,800
                                                                      ==============     ==============
</TABLE>

                                      -34-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

NOTE J - INCOME TAXES (Continued)

The differences between the provision for income taxes and the amount computed
by applying the statutory federal income tax rate of 34% to income before income
taxes were as follows for the years ended June 30, 2002 and 2001:

                                                          2002          2001
                                                       ----------    ----------

     Income tax at federal statutory rate              $  647,879    $  453,801
     State income tax, net of federal tax benefit          54,210        28,303
     ESOP expense differences                               9,880         4,940
     Other                                                 (9,434)          756
                                                       ----------    ----------

     Provision for income taxes                        $  702,535    $  487,800
                                                       ==========    ==========

Deferred tax assets and liabilities arising from temporary differences at June
30, 2002 and 2001 are summarized as follows:

                                                          2002          2001
                                                       ----------    ----------
     Deferred tax assets relating to:
        Deferred compensation                          $   87,924     $ 143,395
        Allowance for loan losses                         400,632       215,217
        Unrealized securities losses                       17,700        10,500
        Amortization of intangibles                       108,392        64,973
                                                       ----------    ----------

        Total deferred tax assets                         614,648       434,085
                                                       ----------    ----------

     Deferred tax liabilities relating to:
        Premises and equipment                            (40,815)      (52,576)
        FHLB stock dividends                              (77,438)      (72,314)
                                                       ----------    ----------

        Total deferred tax liabilities                   (118,253)     (124,890)
                                                       ----------    ----------

        Net deferred tax asset                         $  496,395    $  309,195
                                                       ==========    ==========

Retained earnings at June 30, 2002 includes approximately $1.7 million for which
no deferred income tax liability has been recognized. This amount represents an
allocation of income to bad debt deductions for income tax purposes only.
Reductions of the amount so allocated for purposes other than tax bad debt
losses or adjustments arising from carryback of net operating losses would
create income for tax purposes only, which would be subject to the then current
corporate income tax rate.

NOTE K - REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory and possibly additional discretionary actions by
regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Bank's assets,
liabilities, and certain off-balance sheet items as calculated under regulatory
accounting practices. The Bank's capital
amounts and classifications are also subject to qualitative judgments by the
regulators about components, risk weightings, and other factors.

                                      -35-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

NOTE K - REGULATORY MATTERS (Continued)

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios of total and Tier 1
capital (as defined) to risk-weighted assets (as defined), and of Tier 1 capital
(as defined) to adjusted assets (as defined) and of tangible capital to adjusted
assets. Management believes, as of June 30, 2002, that the Bank meets all
capital adequacy requirements to which it is subject.

As of June 30, 2002, the most recent notification from the Office of Thrift
Supervision categorized the Bank as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well capitalized,
the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1
leverage ratios as set forth in the following table. There are no conditions or
events since that notification that management believes have changed the
institution's category. The Company's and the Bank's actual capital amounts and
ratios as of June 30, 2002 and 2001 are presented in the following table.

<TABLE>
<CAPTION>
                                                                                            Minimum To Be Well
                                                                    Minimum                 Capitalized Under
                                                                  For Capital                Prompt Corrective
                                      Actual                      Requirement                Action Provisions
                           ---------------------------   ---------------------------   ----------------------------
                              Amount          Ratio         Amount          Ratio          Amount          Ratio
                           ------------   ------------   ------------   ------------   -------------   ------------
                                                            (Dollars in Thousands)
<S>                             <C>          <C>               <C>          <C>             <C>          <C>
June 30, 2002:
Total Capital to Risk
   Weighted Assets:
     Consolidated           $   25,161       28.81%        $   6,987        8.00%       $     N/A             N/A
     First Federal              23,509       26.92%            6,987        8.00%           8,734           10.00%

Tier 1 Capital to Risk
   Weighted Assets:
     Consolidated               24,095       27.59%            3,494        4.00%             N/A             N/A
     First Federal              22,443       25.69%            3,494        4.00%           5,241            6.00%

Tier 1 Capital to
  Average Assets:
     Consolidated               24,095       19.56%            4,928        4.00%             N/A             N/A
     First Federal              22,443       18.22%            4,928        4.00%           6,159            5.00%

June 30, 2001:
Total Capital to Risk
   Weighted Assets:
     Consolidated           $   23,958       32.36%        $   5,923        8.00%       $     N/A       $     N/A
     First Federal              22,451       30.32%            5,923        8.00%           7,404           10.00%

Tier 1 Capital to Risk
   Weighted Assets:
     Consolidated               23,388       31.59%            2,962        4.00%             N/A             N/A
     First Federal              21,880       29.55%            2,962        4.00%           4,443            6.00%

Tier 1 Capital to
   Average Assets:
     Consolidated               23,388       21.66%            4,318        4.00%             N/A             N/A
     First Federal              21,880       20.27%            4,318        4.00%           5,398            5.00%
</TABLE>

                                      -36-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

NOTE L - CONCENTRATION OF CREDIT RISK AND OFF-BALANCE SHEET RISK

The Bank generally originates single-family residential loans within its primary
lending area of Chesterfield County, Marlboro County, Florence County and
surrounding counties. The Bank's underwriting policies require such loans to be
made at no greater than 80% loan-to-value based upon appraised values unless
private mortgage insurance is obtained. These loans are secured by the
underlying properties.

The Bank is a party to financial instruments with off-balance sheet risk in the
normal course of business to meet the financing needs of its customers. These
financial instruments consist of commitments to extend credit and lines of
credit. Those instruments involve, to varying degrees, elements of credit and
interest rate risk in excess of the amount recognized in the statements of
financial condition. The contract or notional amounts of those instruments
reflect the extent of involvement the Bank has in particular classes of
financial instruments.

A summary of the approximate contract amount of the Bank's exposure to
off-balance sheet risk as of June 30, 2002 is as follows:

<TABLE>
         <S>                                                                                  <C>
         Financial instruments whose contract amounts represent credit risk:
           Commitments to extend credit                                                       $    7,369,393
           Undisbursed construction loans in process                                               3,437,974
           Lines of credit                                                                         4,734,308
</TABLE>

NOTE M - DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS

The Bank has implemented Statement of Financial Accounting Standards No. 107,
Disclosures About Fair Value of Financial Instruments ("SFAS 107"), which
requires disclosure of the estimated fair values of the Bank's financial
instruments whether or not recognized in the balance sheet, where it is
practical to estimate that value. Such instruments include cash,
interest-earning balances, federal funds sold, investment securities, loans,
stock in the Federal Home Loan Bank of Atlanta, deposit accounts, advances from
Federal Home Loan Bank, and commitments. Fair value estimates are made at a
specific point in time, based on relevant market information and information
about the financial instrument. These estimates do not reflect any premium or
discount that could result from offering for sale at one time the Bank's entire
holdings of a particular financial instrument. Because no active market readily
exists for a portion of the Bank's financial instruments, fair value estimates
are based on judgments regarding future expected loss experience, current
economic conditions, risk characteristics of various financial instruments, and
other factors. These estimates are subjective in nature and involve
uncertainties and matters of significant judgment and, therefore, cannot be
determined with precision. Changes in assumptions could significantly affect the
estimates.

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:

         Cash on hand and in banks, interest-earning balances in other banks,
          and federal funds sold

           The carrying amounts for these approximate fair value because of the
           short maturities of those instruments.

                                      -37-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

NOTE M - DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)

         Investment Securities

           Fair value for investment securities equals quoted market price if
           such information is available. If a quoted market price is not
           available, fair value is estimated using quoted market prices for
           similar securities.

         Loans

           For certain homogenous categories of loans, such as residential
           mortgages, fair value is estimated using the quoted market prices for
           securities backed by similar loans, adjusted for differences in loan
           characteristics. The fair value of other types of loans is estimated
           by discounting the future cash flows using the current rates at which
           similar loans would be made to borrowers with similar credit ratings
           and for the same remaining maturities.

         Loans Held for Sale

           Fair value for loans held for sale is determined by available market
           prices.

         Stock in Federal Home Loan Bank of Atlanta

           The fair value for FHLB stock is its carrying value, since this is
           the amount for which it could be redeemed. There is no active market
           for this stock and the Bank is required to maintain a minimum balance
           based on the unpaid principal of home mortgage loans.

         Deposit Liabilities

           The fair value of savings deposits is the amount payable on demand at
           the reporting date. The fair value of certificates of deposit is
           estimated using rates currently offered for deposits of similar
           remaining maturities.

         Advances from Federal Home Loan Bank

           The fair value of these advances is based upon the discounted value
           using current rates at which borrowings of similar maturity could be
           obtained.

         Financial Instruments with Off-Balance Sheet Risk

           With regard to financial instruments with off-balance sheet risk
           discussed in Note L, it is not practicable to estimate the fair value
           of future financing commitments.

                                      -38-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

NOTE M - DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)

The carrying amounts and estimated fair values of the Bank's financial
instruments, none of which are held for trading purposes, are as follows at June
30, 2002 and 2001:


<TABLE>
<CAPTION>
                                                           2002                             2001
                                              ------------------------------   ------------------------------
                                                 Carrying        Estimated        Carrying        Estimated
                                                  amount        fair value         amount        fair value
                                              --------------  --------------   --------------  --------------
   <S>                                        <C>             <C>              <C>             <C>
   Financial assets:
     Cash, interest-earning balances,
        federal funds sold                    $   6,971,688   $    6,971,688   $    3,354,008  $    3,354,008
     Investment securities                        5,329,456        5,395,055        6,736,199       6,756,212
     Loans receivable                           109,610,613      111,911,000       97,804,261      99,322,000
     Loans held for sale                          3,071,542        3,071,542        3,430,665       3,430,665
     Stock in Federal Home Loan Bank
        of Atlanta                                1,000,000        1,000,000          725,000         725,000
   Financial liabilities:
     Deposits                                    88,089,651       88,621,000       77,624,333      78,200,000
     Advances from Federal Home
        Loan Bank                                17,000,000       16,634,000       12,800,000      12,847,000
</TABLE>


NOTE N - PLAN OF CONVERSION

On July 14, 1997, the Board of Directors of the Bank adopted a Plan of Holding
Company Conversion whereby the Bank converted from a federally-charted mutual
savings and loan association to a federally-chartered stock savings association
(the "Bank") and became a wholly-owned subsidiary of Great Pee Dee Bancorp, Inc.
(the "Company" or "Holding Company"), a holding company formed in connection
with the conversion. On December 31, 1997, First Federal completed its
conversion from a federally-chartered mutual savings and loan association to a
federally-chartered stock savings association. The conversion occurred through
the sale of 2,182,125 shares of common stock ($.01 par value) of Great Pee Dee
Bancorp, Inc. Total proceeds of $21,821,250 were reduced by conversion expenses
of $746,869. Great Pee Dee Bancorp, Inc. paid $10,550,000 to First Federal in
exchange for the common stock of First Federal issued in the conversion, and
retained the balance of the net conversion proceeds. The transaction was
recorded as an "as-if" pooling with assets and liabilities recorded at
historical cost.

At the time of conversion, the Bank established a liquidation account in an
amount equal to its net worth as reflected in its latest statement of financial
condition used in its final conversion prospectus. The liquidation account will
be maintained for the benefit of eligible deposit account holders who continue
to maintain their deposit accounts in the Bank after conversion. Only in the
event of a complete liquidation will each eligible deposit account holder be
entitled to receive a subaccount balance for deposit accounts then held before
any liquidation distribution may be made with respect to common stock. The Bank
may not declare or pay a cash dividend on or repurchase any of its common stock
if its net worth would thereby be reduced below either the aggregate amount then
required for the liquidation account or the minimum regulatory capital
requirements imposed by federal and state regulations.

                                      -39-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

NOTE O - PARENT COMPANY FINANCIAL DATA

Following are condensed financial statements of Great Pee Dee Bancorp, Inc. as
of and for the years ended June 30, 2002 and 2001:


                   Condensed Statements of Financial Condition

<TABLE>
<CAPTION>
                                                                   2002               2001
                                                              --------------     --------------
<S>                                                           <C>                <C>
         Assets:
           Cash on hand and in banks                          $      183,182     $       17,267
           Investment securities, available for sale                 452,200            471,800
           Note receivable from First Federal                        875,191            931,741
           Investment in First Federal                            23,916,689         23,622,478
           Accrued interest receivable                                48,099              9,060
           Other assets                                              121,727             77,487
                                                              --------------     --------------

                                                              $   25,597,088     $   25,129,833
                                                              ==============     ==============

         Liabilities:
           Other Liabilities                                  $       28,553     $            -
                                                              --------------     --------------

         Stockholders' equity:
           Common stock                                               22,246             22,246
           Additional paid-in capital                             21,965,524         21,561,318
           ESOP loan receivable and unearned compensation         (1,211,761)        (1,369,127)
           Retained earnings                                      10,417,256         12,324,763
           Accumulated other comprehensive loss                      (30,100)           (17,700)
           Treasury stock                                         (5,594,630)        (7,391,667)
                                                              --------------     --------------

           Total Stockholders' equity                             25,568,535         25,129,833
                                                              --------------     --------------

           Total Liabilities and Stockholders' equity         $   25,597,088     $   25,129,833
                                                              ==============     ==============
<CAPTION>

                       Condensed Statements of Operations
                       Years Ended June 30, 2002 and 2001

                                                                    2002               2001
                                                              --------------     --------------
<S>                                                           <C>                <C>

         Equity in earnings of subsidiaries                   $    1,195,035     $      776,334
         Interest and other income                                   269,083            346,085
         Operating expenses                                         (257,130)          (219,511)
         Income taxes                                                 (4,400)           (56,000)
                                                              --------------     --------------

         Net income                                           $    1,202,588     $      846,908
                                                              ==============     ==============
</TABLE>

                                      -40-

<PAGE>

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and 2001
--------------------------------------------------------------------------------

NOTE O - PARENT COMPANY FINANCIAL DATA (Continued)

                        Condensed Statement of Cash Flows
                       Years Ended June 30, 2002 and 2001

<TABLE>
<CAPTION>
                                                                   2002               2001
                                                              --------------     --------------
<S>                                                           <C>                <C>
Cash flows from operating activities:
    Net income                                                $    1,202,588     $      846,908
    Adjustments to reconcile net income to net cash
       provided by operating activities:
         Equity in income of subsidiary                           (1,195,035)          (776,334)
         Other                                                        (8,785)            39,031
                                                              --------------     --------------

Net cash provided by operating activities                             (1,232)           109,605
                                                              --------------     --------------

Cash flows from investing activities:
    Decrease in note receivable from subsidiary                       56,550          1,256,755
    ESOP loan receipt                                                116,696            132,846
    Increase in investment in subsidiary                             (58,506)           (61,350)
    Cash dividends received from subsidiary                        1,000,000            725,000
                                                              --------------     --------------

Net cash provided by investing activities                          1,114,740          2,053,251
                                                              --------------     --------------

Cash flows from financing activities:
    Purchase of treasury stock                                      (183,381)        (1,638,522)
    Cash dividends paid                                             (764,212)          (655,433)
                                                              --------------     --------------

Net cash used by financing activities                               (947,593)        (2,293,955)
                                                              --------------     --------------

Net increase (decrease) in cash and cash equivalents                 165,915           (131,099)

Cash and cash equivalents, beginning                                  17,267            148,366
                                                              --------------     --------------

Cash and cash equivalents, ending                             $      183,182     $       17,267
                                                              ==============     ==============
</TABLE>

                                      -41-

<PAGE>

                          GREAT PEE DEE BANCORP, INC.
                         GENERAL CORPORATE INFORMATION
--------------------------------------------------------------------------------

<TABLE>
<S>                                  <C>                        <C>
                                     Executive Officers

                                      Herbert W. Watts
                                      President and CEO

          John S. Long               Michael O. Blakeley                      Johnnie L. Craft
     Vice President and COO            Vice President                        Secretary and CFO

                                          Directors

     Robert M. Bennett, Jr.           William R. Butler              James C. Crawford, III - Chairman
         Vice President             Owner, P & H Pharmacy       President and COO, B.C. Moore & Sons, Inc.
        Bennett Motor Co.

       Henry P. Duvall, IV             H. Malloy Evans                         John S. Long
   Retired Corporate Executive          President/CEO                     Vice President and COO
                                      Cheraw Yarn Mills                 Great Pee Dee Bancorp, Inc.

        Herbert W. Watts                                                    Cornelius B. Young
        President and CEO                                               Retired Corporate Executive
   Great Pee Dee Bancorp, Inc.
</TABLE>

                                      -42-

<PAGE>

                          GREAT PEE DEE BANCORP, INC.
                         GENERAL CORPORATE INFORMATION
--------------------------------------------------------------------------------

                             Market for Common Stock

The Company's stock began trading on December 31, 1997. There are 1,765,612
shares of commons stock outstanding which were held by approximately 367
stockholders of record (excluding shares held in street name) on June 30, 2002.
The Company's commons stock is quoted on the NASDAQ National market under the
symbol "PEDE". The following table reflects the stock trading and dividend
payment frequency of the Company of the years ended June 30, 2002 and 2001,
giving effect to the 10% stock dividend in October 2001.


--------------------------------------------------------------------------------
                                                   Stock Price     Dividends
                                                -----------------
                                                 High       Low    per share
                                                -------    ------  ---------

For the year ended
  June 30, 2002:
     First quarter ...........................  $10.30     $ 9.63    $.100
     Second quarter ..........................   12.61       9.78     .114
     Third quarter ...........................   12.25      11.54     .125
     Fourth quarter ..........................   13.02      12.11     .125

For the year ended
  June 30, 2001:
     First quarter ...........................  $10.00     $ 8.86    $.091
     Second quarter ..........................   10.23       9.44     .100
     Third quarter ...........................   10.35       9.32     .100
     Fourth quarter ..........................   10.50       9.61     .100

--------------------------------------------------------------------------------

                                   Form 10-KSB

A copy of Form 10-KSB as filed with the Securities and Exchange Commission will
be furnished without charge to the Company's stockholders for the Company's most
recent fiscal year upon written request to Herbert W. Watts, President, Great
Pee Dee Bancorp, Inc., 515 Market Street, Cheraw, SC 29520.

                              Stock Transfer Agent

                         Registrar and Transfer Company
                                10 Commerce Drive
                           Cranford, New Jersey 07016

                              Special Legal Counsel

                          Luse Gorman Pomerenk & Schick
                       5335 Wisconsin Ave. N.W., Suite 400
                              Washington, DC 20015

                              Independent Auditors

                                 Dixon Odom PLLC
                                408 Summit Drive
                                Sanford, NC 27330

                                Office Locations

                                   Main Office
                                515 Market Street
                                Cheraw, SC 29520

                                  Branch Office
                              452 Second Loop Road
                               Florence, SC 29505

                                 Annual Meeting

The annual meeting of stockholders of Great Pee Dee Bancorp, Inc. will be held
at 2:00 pm. on October 16, 2002 at the Matheson Memorial Library, Huger Street,
Cheraw, SC.

This annual report has not been reviewed or confirmed for accuracy or relevance
by the Federal Deposit Insurance Corporation.

                                      -43-