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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-KSB



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| ̈ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|- | -------------------------------------------------------------------------------------

For the fiscal year ended June 30, 2007



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
|- | --------------------------------------------------------------------------------------

For the transition period from
 to
.

Commission file number: 0-23521



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Great Pee Dee Bancorp, Inc.

(Name of Small Business Issuer in Its Charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Delaware                                                       |  | 56-2050592                             
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification Number)
|                                                               | 
|901 Chesterfield Highway Cheraw, South Carolina                |  | 29520                                  
|(Address of Principal Executive Offices)                       |  | (Zip Code)                             

(843) 537-7656

(Issuers Telephone Number, Including Area Code)



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Securities registered under Section 12(b) of the Exchange Act:



|                                        |  |                                          
|--------------------------------------- |  | -----------------------------------------
|Title of each class                     |  | Name of each exchange on which registered
|Common stock, par value $0.01 per share |  | NASDAQ Stock Market LLC                  

Securities registered under Section 12(g) of the Exchange Act: None

Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act ̈

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such requirements for the past 90
days.    YES  x    NO ̈

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the
best of Registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.  þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES ̈NO  x

The Issuers revenues for the fiscal year ended June 30, 2007 were $15.7 million.



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The aggregate market value of the voting stock held by nonaffiliated of the Registrant, computed by reference to the
average of the closing bid and ask price of such stock on the NASDAQ National Market on August 31, 2007 was approximately $28.9 million.

The number
of shares outstanding of the Issuers Common Stock, the issuers only class of outstanding capital stock, as of June 30, 2007 was 1,789,981.

Documents Incorporated by Reference

The following documents, in whole or in part, are specifically incorporated by reference in the
indicated Part of this Annual Report on Form 10-KSB:



|I. | Portions of the Great Pee Dee Bancorp, Inc. Proxy Statement for the 2007 Annual Meeting of Shareholders are incorporated by reference into certain items of Part III.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



|II. | Portions of the Great Pee Dee Bancorp, Inc. Annual Report for the 2007 Annual Meeting of Shareholders are incorporated by reference into certain items of Part II.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Transitional Small Business Disclosure Format:     YES ̈NO  x
| | ------------------------------------------------------------

PART I

Item 1. Business

Great Pee Dee Bancorp,
Inc. (the Company) was organized in September, 1997 at the direction of the Board of Directors of Sentry Bank & Trust, formerly First Federal Savings and Loan Association of Cheraw (the Bank), for the purpose of
acquiring all of the capital stock to be issued by the Bank in the conversion of the Bank from the mutual to the stock form of organization (the Conversion). The Company received approval from the Office of Thrift Supervision
(OTS) to become a savings and loan holding company and as such is subject to regulation by the OTS. The Conversion was completed as of December 31, 1997; the Company issued 2,182,125 shares of Common Stock, and received all of the
proceeds of the offering, or $21.8 million ($10.6 million of the proceeds was transferred to the Bank in exchange for the capital stock of the Bank). In connection with the Conversion, the Company loaned approximately $1,745,700 to the Great Pee Dee
Bancorp, Inc. Employee Stock Ownership Plan and Trust (ESOP) to enable the ESOP to purchase 174,570 shares of the Companys Common Stock. The primary business activity of the Company consists of the operations of its wholly-owned
subsidiary, the Bank.

The Company is a savings and loan holding company and the owner of all of the issued and outstanding shares of capital stock of the
Bank. The Bank is a member of the Federal Home Loan Bank (FHLB) of Atlanta. At June 30, 2007, the Company had consolidated total assets of $236.7 million, total deposits of $171.2 million, and stockholders equity of
$27.3 million.

The Bank 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 real estate located in its primary market area. The Bank
also makes commercial loans, consumer loans and loans secured by deposit accounts. The Bank 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.

On July 12, 2007, Great Pee Dee Bancorp, Inc. entered into a merger agreement with First Bancorp. Pursuant to the agreement,
the Company will be merged with and into First Bancorp. Under the terms of the merger agreement, each share of Great Pee Dee common stock issued and outstanding at the effective time of the merger will be converted into and exchanged for the right
to receive 1.15 shares of First Bancorp common stock. The total transaction price is valued at approximately $38.2 million. Closing of the merger, which is expected to occur in the fourth quarter of 2007 or the first quarter of 2008, is subject to
certain conditions, including the approval of the shareholders of the Company, regulatory approvals, and other customary closing conditions. The Banks offices will become branch offices of First Bank, the wholly-owned subsidiary of First
Bancorp.



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Lending Activities

The Bank has historically concentrated lending activities on the origination of loans secured by first mortgage liens for the purchase, construction or refinancing of one- to four-family residential real property. The following table sets
forth the composition of loan portfolio by loan type and security type as of the dates indicated, including a reconciliation of gross loans receivable after consideration of the allowance for loan losses and deferred loan fees.



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|                                 |  |                        |         |         |       |   |        |      |         |  |       |        |  |         |         |  |        |   |         |   |         |        |       |         |  |   |         |  |       |  
|-------------------------------- |  | ---------------------- | ------- | ------- | ----- | - | ------ | ---- | ------- |  | ----- | ------ |  | ------- | ------- |  | ------ | - | ------- | - | ------- | ------ | ----- | ------- |  | - | ------- |  | ----- | -
|                                 |  | At June 30,            |        
|                                 |  | 2007                   |         |         | 2006  |   |        | 2005 |         |  | 2004  |        |  | 2003    |        
|                                 |  | Amount                 |         | Percent |       |   | Amount |      | Percent |  |       | Amount |  | Percent |         |  | Amount |   | Percent |   |         | Amount |       | Percent | 
|                                 |  | (Dollars in Thousands) |        
|Type of loan:                    |  |                        |         |         |       |   |        |      |         |  |       |        |  |         |         |  |        |   |         |   |         |        |       |         |  |   |         |  |       |  
|Real estate loans:               |  |                        |         |         |       |   |        |      |         |  |       |        |  |         |         |  |        |   |         |   |         |        |       |         |  |   |         |  |       |  
|One- to four-family residential  |  | $                      | 66,199  |         | 37.0  | % |        | $    | 65,418  |  | 36.9  | %      |  | $       | 68,488  |  | 43.9   | % |         | $ | 62,720  |        | 54.1  | %       |  | $ | 63,845  |  | 58.3  | %
|Commercial                       |  |                        | 59,020  |         | 33.0  |   |        |      | 61,345  |  | 34.6  |        |  |         | 43,528  |  | 27.9   |   |         |   | 23,898  |        | 20.6  |         |  |   | 20,625  |  | 19.1  |  
|Construction and land            |  |                        | 31,502  |         | 17.6  |   |        |      | 27,570  |  | 15.5  |        |  |         | 20,619  |  | 13.2   |   |         |   | 7,331   |        | 6.3   |         |  |   | 2,318   |  | 2.1   |  
|Home improvement loans           |  |                        | 9,651   |         | 5.4   |   |        |      | 10,098  |  | 5.7   |        |  |         | 8,670   |  | 5.6    |   |         |   | 8,197   |        | 7.1   |         |  |   | 8,236   |  | 7.5   |  
|                                 |  |                        |         |         |       |   |        |      |         |  |       |        |  |         |         |  |        |   |         |   |         |        |       |         |  |   |         |  |       |  
|Total real estate loans          |  |                        | 166,372 |         | 93.0  |   |        |      | 164,431 |  | 92.7  |        |  |         | 141,305 |  | 90.6   |   |         |   | 102,146 |        | 88.1  |         |  |   | 95,024  |  | 86.7  |  
|Other loans:                     |  |                        |         |         |       |   |        |      |         |  |       |        |  |         |         |  |        |   |         |   |         |        |       |         |  |   |         |  |       |  
|Commercial                       |  |                        | 7,820   |         | 4.4   |   |        |      | 7,770   |  | 4.4   |        |  |         | 10,075  |  | 6.5    |   |         |   | 9,167   |        | 7.9   |         |  |   | 6,015   |  | 5.5   |  
|Consumer                         |  |                        | 3,643   |         | 2.0   |   |        |      | 4,670   |  | 2.6   |        |  |         | 4,292   |  | 2.8    |   |         |   | 4,444   |        | 3.8   |         |  |   | 7,659   |  | 7.0   |  
|Loans secured by deposits        |  |                        | 1,052   |         | 0.6   |   |        |      | 553     |  | 0.3   |        |  |         | 232     |  | 0.1    |   |         |   | 238     |        | 0.2   |         |  |   | 873     |  | 0.8   |  
|                                 |  |                        |         |         |       |   |        |      |         |  |       |        |  |         |         |  |        |   |         |   |         |        |       |         |  |   |         |  |       |  
|Total other loans                |  |                        | 12,515  |         | 7.0   |   |        |      | 12,993  |  | 7.3   |        |  |         | 14,599  |  | 9.4    |   |         |   | 13,849  |        | 11.9  |         |  |   | 14,547  |  | 13.3  |  
|Total loans                      |  |                        | 178,887 |         | 100.0 | % |        |      | 177,424 |  | 100.0 | %      |  |         | 155,904 |  | 100.0  | % |         |   | 115,995 |        | 100.0 | %       |  |   | 109,571 |  | 100.0 | %
|                                 |  |                        |         |         |       |   |        |      |         |  |       |        |  |         |         |  |        |   |         |   |         |        |       |         |  |   |         |  |       |  
|Less:                            |  |                        |         |         |       |   |        |      |         |  |       |        |  |         |         |  |        |   |         |   |         |        |       |         |  |   |         |  |       |  
|Allowance for losses             |  |                        | 1,938   |         |       |   |        |      | 1,901   |  |       |        |  |         | 1,593   |  |        |   |         |   | 1,532   |        |       |         |  |   | 1,416   |  |       |  
|Deferred loan fees, net of costs |  |                        | 201     |         |       |   |        |      | 249     |  |       |        |  |         | 180     |  |        |   |         |   | 171     |        |       |         |  |   | 202     |  |       |  
|                                 |  |                        |         |         |       |   |        |      |         |  |       |        |  |         |         |  |        |   |         |   |         |        |       |         |  |   |         |  |       |  
|Total, net                       |  | $                      | 176,748 |         |       |   |        | $    | 175,274 |  |       |        |  | $       | 154,131 |  |        |   |         | $ | 114,292 |        |       |         |  | $ | 107,954 |  |       |  
|                                 |  |                        |         |         |       |   |        |      |         |  |       |        |  |         |         |  |        |   |         |   |         |        |       |         |  |   |         |  |       |  

The following table sets forth certain information at June 30, 2007, regarding the dollar amount of loans
maturing in the loan portfolio based on the earlier of their contractual terms to maturity or their repricing. Demand loans having no stated schedule of repayments and no stated maturity and overdrafts are reported as due in one year or less. This
schedule does not reflect the effects of possible prepayments or enforcement of due-on-sale clauses. The Bank expects that prepayments will cause actual maturities to be shorter.



|                                 |  |                  |        |                          |   |                           |  |                 |        |       |   |        |  |   |        
|-------------------------------- |  | ---------------- | ------ | ------------------------ | - | ------------------------- |  | --------------- | ------ | ----- | - | ------ |  | - | -------
|                                 |  | At June 30, 2007
|                                 |  | 1 Year or Less   |        | MoreThan 1Year to 3Years |   | MoreThan 3Years to5 Years |  | MoreThan 5Years |        | Total
|                                 |  | (In Thousands)  
|Real estate loans:               |  |                  |        |                          |   |                           |  |                 |        |       |   |        |  |   |        
|Adjustable                       |  | $                | 23,286 |                          | $ | 5,239                     |  | $               | 4,787  |       | $ | 32,874 |  | $ | 66,186 
|Fixed                            |  |                  | 10,890 |                          |   | 16,696                    |  |                 | 18,707 |       |   | 53,893 |  |   | 100,186
|                                 |  |                  |        |                          |   |                           |  |                 |        |       |   |        |  |   |        
|Total real estate loans          |  |                  | 34,176 |                          |   | 21,935                    |  |                 | 23,494 |       |   | 86,767 |  |   | 166,372
|Other loans                      |  |                  | 5,823  |                          |   | 1,914                     |  |                 | 3,133  |       |   | 1,645  |  |   | 12,515 
|                                 |  |                  |        |                          |   |                           |  |                 |        |       |   |        |  |   |        
|Total loans                      |  | $                | 39,999 |                          | $ | 23,849                    |  | $               | 26,627 |       | $ | 88,412 |  | $ | 178,887
|                                 |  |                  |        |                          |   |                           |  |                 |        |       |   |        |  |   |        
|Less:                            |  |                  |        |                          |   |                           |  |                 |        |       |   |        |  |   |        
|Allowance for loan losses        |  |                  |        |                          |   |                           |  |                 |        |       |   |        |  |   | 1,938  
|                                 |  |                  |        |                          |   |                           |  |                 |        |       |   |        |  |   |        
|Deferred loan fees, net of costs |  |                  |        |                          |   |                           |  |                 |        |       |   |        |  |   | 201    
|                                 |  |                  |        |                          |   |                           |  |                 |        |       |   |        |  |   |        
|Total                            |  |                  |        |                          |   |                           |  |                 |        |       |   |        |  | $ | 176,748
|                                 |  |                  |        |                          |   |                           |  |                 |        |       |   |        |  |   |        



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As of June 30, 2007, the dollar amount of all loans due after one year that have fixed interest rates was $89.3
million and the dollar amount of all loans due after one year that have adjustable interest rates was $42.9 million.

One- to Four-Family Residential
Loans. The Banks primary lending activity consists of the origination of one- to four-family residential mortgage loans secured by property located in the primary market area. The Bank generally originates one- to four-family
residential mortgage loans in amounts up to 95% of the lesser of the appraised value or purchase price, with private mortgage insurance required on loans with a loan-to-value ratio in excess of 80%. The Bank originates and retains fixed rate loans
which provide for the payment of principal and interest for up to an 18-year period.

The Bank also offers adjustable-rate mortgage (ARM)
loans. The interest rate on the Banks ARM loans is indexed to the one-year Treasury bill. A substantial portion of the ARM loans in the portfolio at June 30, 2007 provide for maximum rate adjustments per year and over the life of the loan
of 1% and 5%, respectively. Residential ARMs are amortized for terms up to 30 years.

ARM loans decrease the risk associated with changes in interest rates
by periodically repricing, but involve other risks because as interest rates increase, the underlying payments by the borrower increase, thus increasing the potential for default by the borrower. At the same time, the marketability of the underlying
collateral may be adversely affected by higher interest rates. Upward adjustment of the contractual interest rate is also limited by the maximum periodic and lifetime interest rate adjustment permitted by the loan documents, and, therefore, is
potentially limited in effectiveness during periods of rapidly rising interest rates. At June 30, 2007, approximately 41.6% of one- to four-family residential loans are adjustable-rate mortgages.

All of the one- to four-family residential mortgage loans that the Bank originate includes due-on-sale clauses, which give the Bank the right to declare a
loan immediately due and payable in the event that, among other things, the borrower sells or otherwise disposes of the real property subject to the mortgage and the loan is not repaid. However, the Bank occasionally permits assumptions of existing
residential mortgage loans on a case-by-case basis.

At June 30, 2007, approximately $66.2 million, or 37.0% of the portfolio of loans, consisted of
one- to four-family residential loans. Approximately $1.1 million, or 0.66% of total real estate loans (which were comprised of 13 loans secured by one- to four-family properties), were included in non-performing assets as of that date.

Commercial Real Estate Loans.At June 30, 2007, $59.0 million, or 33.0% of the total loan portfolio, consisted of commercial real estate loans.
Commercial real estate loans are secured by churches, office buildings, and other commercial properties. The Bank generally originates fixed rate commercial real estate loans with maximum terms of 15 years. The Bank also will originate adjustable
rate commercial real estate loans with terms of up to 30 years. The interest rate on adjustable rate commercial real estate loans is indexed to the Wall Street Journal Prime with maximum loan-to-value ratios of 80%. At June 30, 2007, the
largest commercial loan had an outstanding principal balance of $2.8 million and was secured by a commercial development. On June 30, 2007, there were no commercial real estate loans included in nonperforming assets.

Individual loans secured by commercial real estate generally are larger than one- to four-family residential loans and involve a greater degree of risk. Commercial real
estate loans often involve large loan balances to single borrowers or groups of related borrowers. Payments on these loans depend to a large degree on results of operations and management of the properties and may be affected to a greater extent by
adverse conditions in the real estate market or the economy in general. Accordingly, the nature of the loans makes them more difficult for management to monitor and evaluate.

Construction Loans and Land.The Bank offers construction loans with respect to residential and commercial real estate and, in certain cases, to builders or developers constructing such properties on a
speculative basis (i.e., before the builder/developer obtains a commitment from a buyer). Funds are disbursed to borrowers upon the successful completion of particular stages of construction. Typically, loans made to builders who do not have a
commitment for the sale of the property under construction will be for a term of no more than six months. Except for construction loans made on speculative basis, upon the successful completion of construction, the loan can be converted into
permanent financing. At June 30, 2007, $31.5 million, or 17.6% of the total loan portfolio, consisted of construction and land loans. The largest construction loan had an outstanding principal balance of $2.5 million on June 30, 2007 and
was secured by a condominium development. None of our construction loans were included in non-performing assets on that date.



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Construction loans generally match the term of the construction contract and are written with interest calculated on the
amount disbursed under the loan. The maximum loan-to-value ratio for a construction loan is based upon the nature of the construction project. For example, a construction loan for a one- to four-family residence may be written with a maximum
loan-to-value ratio of 95% with mortgage insurance. Inspections are made prior to any disbursement under a construction loan.

While providing the Bank
with a comparable, and in some cases higher yield than a conventional mortgage loan, construction loans involve a higher level of risk. For example, if a project is not completed and the borrower defaults, the Bank may have to hire another
contractor to complete the project at a higher cost. Also, a project may be completed, but may not be salable, resulting in the borrower defaulting and the Bank taking the title to the project.

Home Improvement Loans.At June 30, 2007, home improvement loans totaled $9.7 million, or 5.4% of total loans. Home improvement loans are typically
secured by second mortgages on the secured property. At June 30, 2007, no home improvement loans were included in non-performing assets.

Origination, Purchase and Sale of Loans.The one- to four-family residential loans the Bank originates with the intent to sell on the secondary mortgage market are underwritten to Freddie Mac and Fannie Mae underwriting
standards. Mortgage loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value as determined by aggregate outstanding commitments from investors or current investor yield requirements. Net
unrealized losses are recognized through a valuation allowance by charges to income.

Mortgage loans held for sale are generally sold with servicing rights
released. The carrying value of mortgage loans sold is reduced by loan origination fees net of costs received from the borrower. Gains or losses on sales of mortgage loans are recognized based upon the difference between the selling price (including
investor yield requirements and servicing released premiums) and the carrying value of the related mortgage loans sold.

One- to four-family residential
loan originations to be held in the Banks loan portfolio totaled $27.8 million during the year ended June 30, 2007, compared to $19.4 million during the year ended June 30, 2006. One- to four-family residential loans originated for
sale in the secondary market aggregated $9.3 million and $12.1 million for the years ended June 30, 2007 and 2006, respectively. The Bank began a loan origination relationship with a related party in 2007 and has originated loans held for sale
of $11.7 million at June 30, 2007. The loans originated for the related party are primarily commercial real estate loans with variable interest rates based upon the Wall Street Journal prime rate. The loans are carried at the lower of aggregate
cost of fair value. Total loans held for sale were $12.3 million at June 30, 2007.

There were no purchases of loans during the fiscal years ended
June 30, 2007 or 2006.



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Investments

The
Companys investment portfolio consists of government sponsored enterprise securities, mortgage backed securities, municipal securities, and trust preferred securities. At June 30, 2007, approximately $20.0 million, or 8.3%, of total
assets consisted of such investments.

The following table sets forth the carrying value of the Companys investment portfolio at the dates indicated.



|                                           |  |                |        |      |   |        |  |   |       
|------------------------------------------ |  | -------------- | ------ | ---- | - | ------ |  | - | ------
|                                           |  | At June 30,   
|                                           |  | 2007           |        | 2006 |   | 2005  
|                                           |  | (In Thousands)
|Securities available for sale:             |  |                |        |      |   |        |  |   |       
|Trust preferred securities                 |  | $              | 530    |      | $ | 494    |  | $ | 467   
|Government sponsored enterprise securities |  |                | 3,851  |      |   | 5,284  |  |   | 10,201
|Municipal securities                       |  |                | 911    |      |   | 1,007  |  |   | 758   
|Mortgage-backed securities                 |  |                | 14,733 |      |   | 13,702 |  |   | 17,353
|                                           |  |                |        |      |   |        |  |   |       
|Total securities available for sale        |  | $              | 20,025 |      | $ | 20,487 |  | $ | 28,779
|                                           |  |                |        |      |   |        |  |   |       

The following table provides amortized costs, fair values, intervals of maturities or repricings, and weighted
average yields of our investment portfolio at June 30, 2007:



|                                               |  |                |        |           |   |           |  |      |  
|---------------------------------------------- |  | -------------- | ------ | --------- | - | --------- |  | ---- | -
|                                               |  | AmortizedCost  |        | FairValue |   | BookYield | 
|                                               |  | (In Thousands) |       
|Securities available for sale:                 |  |                |        |           |   |           |  |      |  
|Government sponsored enterprise securities     |  |                |        |           |   |           |  |      |  
|Due within one year                            |  | $              | 2,900  |           | $ | 2,861     |  | 3.81 | %
|Due after one but within five years            |  |                | 1,000  |           |   | 990       |  | 4.35 | %
|                                               |  |                |        |           |   |           |  |      |  
|                                               |  |                | 3,900  |           |   | 3,851     |  | 3.95 | %
|                                               |  |                |        |           |   |           |  |      |  
|Trust preferred securities                     |  |                |        |           |   |           |  |      |  
|Due after ten years                            |  |                | 545    |           |   | 530       |  | 6.62 | %
|                                               |  |                |        |           |   |           |  |      |  
|                                               |  |                | 545    |           |   | 530       |  | 6.62 | %
|                                               |  |                |        |           |   |           |  |      |  
|Mortgage-backed securities available for sale: |  |                |        |           |   |           |  |      |  
|Due after one but within five years            |  |                | 1,610  |           |   | 1,521     |  | 3.30 | %
|Due after five but within ten years            |  |                | 4,176  |           |   | 3,980     |  | 3.52 | %
|Due after ten years                            |  |                | 9,650  |           |   | 9,232     |  | 4.59 | %
|                                               |  |                |        |           |   |           |  |      |  
|                                               |  |                | 15,436 |           |   | 14,733    |  | 4.17 | %
|                                               |  |                |        |           |   |           |  |      |  
|Municipal securities                           |  |                |        |           |   |           |  |      |  
|Due within one year                            |  |                | 100    |           |   | 100       |  | 5.68 | %
|Due after one but within five years            |  |                | 472    |           |   | 466       |  | 5.15 | %
|Due after five but within ten years            |  |                | 166    |           |   | 165       |  | 5.39 | %
|Due after ten years                            |  |                | 182    |           |   | 180       |  | 5.48 | %
|                                               |  |                |        |           |   |           |  |      |  
|                                               |  |                | 920    |           |   | 911       |  | 5.32 | %
|                                               |  |                |        |           |   |           |  |      |  
|Total securities available for sale            |  |                |        |           |   |           |  |      |  
|Due within one year                            |  |                | 3,000  |           |   | 2,961     |  | 3.89 | %
|Due after one but within five years            |  |                | 3,082  |           |   | 2,977     |  | 3.92 | %
|Due after five but within ten years            |  |                | 4,342  |           |   | 4,145     |  | 3.59 | %
|Due after ten years                            |  |                | 10,377 |           |   | 9,942     |  | 4.72 | %
|                                               |  |                |        |           |   |           |  |      |  
|Total                                          |  | $              | 20,801 |           | $ | 20,025    |  | 4.25 | %
|                                               |  |                |        |           |   |           |  |      |  

The book yield for tax-exempt securities included in the above table is not presented on tax-equivalent basis. At
June 30, 2007, none of the Companys investment securities were classified as held to maturity.



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Sources of Funds

General.Deposits have traditionally been the primary source of funds for use in lending and investment activities. In addition to deposits, the Bank derives funds from scheduled loan payments, investment maturities, loan
prepayments, retained earnings, income on earning assets and other borrowings. While scheduled loan payments and income on earning assets are relatively stable sources of funds, deposit inflows and outflows can vary widely and are influenced by
prevailing interest rates, market conditions, and levels of competition. Borrowings from the FHLB of Atlanta and federal funds purchased may be used in the short-term to compensate for reductions in deposits or deposit inflows at less than projected
levels.

Deposits.The Bank attracts deposits principally from within Chesterfield, Marlboro, and Florence Counties through the
offering of a selection of deposit instruments, including passbook accounts, checking accounts, money market accounts, fixed term certificates of deposit, individual retirement accounts and savings accounts. The Bank does not actively solicit or
advertise for deposits outside of Chesterfield, Marlboro and Florence Counties, and substantially all of the depositors are residents of these Counties, except that the Bank obtained approximately $35.6 million in brokered certificates of deposits
to augment our local deposits at June 30, 2007. Deposit account terms vary, with the principal differences being the minimum balance required, the amount of time the funds remain on deposit, and the interest rate.

The following table sets forth our time deposits of $100,000 or more as of June 30, 2007.



|                           |  |                  |       
|-------------------------- |  | ---------------- | ------
|                           |  | At June 30, 2007
|                           |  | (In Thousands)  
|Maturity                   |  |                  |       
|Three months or less       |  | $                | 25,953
|Three through six months   |  |                  | 10,872
|Six through twelve months  |  |                  | 16,761
|Greater than twelve months |  |                  | 27,051
|                           |  |                  |       
|Total                      |  | $                | 80,637
|                           |  |                  |       

The Bank establishes the interest rates paid, maturity terms, service fees and withdrawal penalties on a periodic
basis. Determination of rates and terms are predicated on funds acquisition and liquidity requirements, rates paid by competitors, growth goals, and applicable regulations. The Bank relies, in part, on customer service and long-standing
relationships with customers to attract and retain deposits. The Bank also closely prices deposits to the rates offered by competitors.

The flow of
deposits is influenced significantly by general economic conditions, changes in money market and other prevailing interest rates, and competition. The variety of deposit accounts offered has allowed the Bank to be competitive in obtaining funds and
to respond with flexibility to changes in consumer demand. The Bank has become more susceptible to short-term fluctuations in deposit flows as customers have become more interest rate conscious. The Bank manages the pricing of deposits in keeping
with asset/liability management and profitability objectives. Based on experience, the Bank believes that passbook and MMDAs are relatively stable sources of deposits. However, the ability to attract and maintain certificates of deposit, and the
rates paid on these deposits, have been and will continue to be significantly affected by market conditions. At June 30, 2007, 77.1% of deposit accounts were certificate of deposit accounts, of which $92.4 million have maturities of one year or
less.

Total deposits at June 30, 2007 were $171.2 million, compared to $151.3 million at June 30, 2006. The Banks deposit base is somewhat
dependent upon the manufacturing sector of the Banks market area. Although the manufacturing sector in the Banks market area is relatively diversified and not significantly dependent upon any industry, a loss of a material portion of the
manufacturing workforce could adversely affect the ability to attract deposits due to the loss of personal income attributable to the lost manufacturing jobs and the attendant loss in service industry jobs.



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The following table sets forth the deposits of the Company by category at the dates indicated.



|                                    |  |                        |         |                    |        |   |        |      |                    |  |        |        |  |                    |         |  |        |  
|----------------------------------- |  | ---------------------- | ------- | ------------------ | ------ | - | ------ | ---- | ------------------ |  | ------ | ------ |  | ------------------ | ------- |  | ------ | -
|                                    |  | At June 30,            |        
|                                    |  | 2007                   |         |                    | 2006   |   |        | 2005 |                   
|                                    |  | Amount                 |         | Percent ofDeposits |        |   | Amount |      | Percent ofDeposits |  |        | Amount |  | Percent ofDeposits |        
|                                    |  | (Dollars in Thousands) |        
|Non-Interest Bearing Demand Deposit |  | $                      | 8,379   |                    | 4.89   | % |        | $    | 8,841              |  | 5.84   | %      |  | $                  | 7,414   |  | 5.43   | %
|Savings                             |  |                        | 2,583   |                    | 1.51   | % |        |      | 2,865              |  | 1.89   | %      |  |                    | 3,179   |  | 2.33   | %
|Money Market and NOW                |  |                        | 28,233  |                    | 16.49  | % |        |      | 26,638             |  | 17.60  | %      |  |                    | 32,513  |  | 23.81  | %
|Time Less Than $100                 |  |                        | 51,372  |                    | 30.01  | % |        |      | 48,137             |  | 31.81  | %      |  |                    | 39,654  |  | 29.03  | %
|Time More Than $100                 |  |                        | 80,637  |                    | 47.10  | % |        |      | 64,858             |  | 42.86  | %      |  |                    | 53,813  |  | 39.40  | %
|                                    |  |                        |         |                    |        |   |        |      |                    |  |        |        |  |                    |         |  |        |  
|                                    |  | $                      | 171,204 |                    | 100.00 | % |        | $    | 151,339            |  | 100.00 | %      |  | $                  | 136,573 |  | 100.00 | %
|                                    |  |                        |         |                    |        |   |        |      |                    |  |        |        |  |                    |         |  |        |  

The average amounts and average rates paid on deposits held by the Bank for the years indicated are summarized
below:



|                     |  |                              |         |                  |      |   |               |      |                  |  |      |               |  |                  |         |  |      |  
|-------------------- |  | ---------------------------- | ------- | ---------------- | ---- | - | ------------- | ---- | ---------------- |  | ---- | ------------- |  | ---------------- | ------- |  | ---- | -
|                     |  | For the Years Ended June 30, |        
|                     |  | 2007                         |         |                  | 2006 |   |               | 2005 |                 
|                     |  | AverageAmount                |         | AverageRate Paid |      |   | AverageAmount |      | AverageRate Paid |  |      | AverageAmount |  | AverageRate Paid |        
|                     |  | (Dollars in Thousands)       |        
|Demand Deposit       |  | $                            | 9,070   |                  |     |   |               | $    | 7,845            |  |     |               |  | $                | 7,445   |  |     |  
|Savings              |  |                              | 2,534   |                  | 0.75 | % |               |      | 2,878            |  | 0.75 | %             |  |                  | 2,945   |  | 0.56 | %
|Money Market and NOW |  |                              | 25,618  |                  | 3.18 | % |               |      | 29,858           |  | 2.29 | %             |  |                  | 37,085  |  | 1.89 | %
|Time Less Than $100  |  |                              | 52,482  |                  | 4.61 | % |               |      | 43,700           |  | 3.59 | %             |  |                  | 38,245  |  | 2.93 | %
|Time More Than $100  |  |                              | 64,304  |                  | 4.79 | % |               |      | 63,536           |  | 3.88 | %             |  |                  | 37,866  |  | 3.41 | %
|                     |  |                              |         |                  |      |   |               |      |                  |  |      |               |  |                  |         |  |      |  
|                     |  | $                            | 154,008 |                  | 4.08 | % |               | $    | 147,817          |  | 3.22 | %             |  | $                | 123,586 |  | 2.57 | %
|                     |  |                              |         |                  |      |   |               |      |                  |  |      |               |  |                  |         |  |      |  

Borrowings.The Bank had total short-term borrowings of $4,500,000 at June 30, 2007 and
$9,500,000 at June 30, 2006. The borrowings consisted of advances from the Federal Home Loan Bank of Atlanta and federal funds purchased. The borrowings carried a variable rate of 5.65% at June 30, 2007.

The following table sets forth the maximum month-end balance, average balances and average interest rates for the Banks borrowings for the fiscal years indicated.



|                                      |  |                            |           |   |      |   |           |      |  |   |           |  
|------------------------------------- |  | -------------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                      |  | Fiscal Year Ended June 30, |          
|                                      |  | 2007                       |           |   | 2006 |   |           | 2005 | 
|Maximum Outstanding at any month end: |  |                            |           |   |      |   |           |      |  |   |           |  
|FHLB advances                         |  | $                          | 9,500,000 |   |      | $ | 9,500,000 |      |  | $ | 5,000,000 |  
|Federal Funds purchased               |  |                            | 3,987,000 |   |      |   | 2,667,000 |      |  |   | 3,448,000 |  
|Average Amount Outstanding:           |  |                            |           |   |      |   |           |      |  |   |           |  
|FHLB advances                         |  | $                          | 8,250,000 |   |      | $ | 3,708,333 |      |  | $ | 4,500,000 |  
|Federal Funds purchased               |  |                            | 697,449   |   |      |   | 419,227   |      |  |   | 196,242   |  
|Average interest rates:               |  |                            |           |   |      |   |           |      |  |   |           |  
|FHLB advances                         |  |                            | 5.66      | % |      |   | 4.25      | %    |  |   | 2.48      | %
|Federal Funds purchased               |  |                            | 5.76      | % |      |   | 4.70      | %    |  |   | 2.08      | %



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Additional Risk Factors

In addition to factors discussed in the description of the business of the Company and Bank and elsewhere in this report, the following are factors that could adversely affect future results of operations and the financial condition of the
Company.

The Impact of Changes in Interest Rates

The
Banks ability to make a profit, like that of most financial institutions, substantially depends upon net interest income, which is the difference between the interest income earned on interest earning assets (such as mortgage loans) and the
interest expense paid on interest-bearing liabilities (such as deposits). Approximately 60% of our real estate loans have rates of interest which are fixed for the term of the loan (fixed rate), while deposit accounts have significantly
shorter terms to maturity than real estate loans. Because interest-earning assets generally have fixed rates of interest and have longer effective maturities than interest-bearing liabilities, the yield on the Banks interest earning assets
generally will adjust more slowly to changes in interest rates than the cost of its interest-bearing liabilities. The slower adjustment of interest earning assets as compared to interest-bearing liabilities results in the Bank having a
negative gap. At June 30, 2007, our one year interest rate gap was negative 31.8%. As a result, our net interest income will be adversely affected by material and prolonged increases in short-term interest rates. In addition, rising
interest rates may adversely affect our earnings because there might be a lack of customer demand for loans. Changes in interest rates also can affect the average life of loans and mortgage-backed securities.

Reliance on Certificate of Deposit Accounts

A significant percentage
of our deposit accounts are certificates of deposit rather than passbook or money market accounts. At June 30, 2007, $132 million, or 77.1% of our total deposits were certificate of deposit accounts and $92.4 million of our certificates of
deposit mature within one year. Certificates of deposit can be a more interest rate sensitive source of funds than passbook or money market accounts. In the event that interest rates significantly increase, or if we do not offer competitive rates of
interest on its certificates of deposit, the Bank may experience a significant decrease in its deposit accounts.

Competition

The Bank experiences strong competition in its local market area in originating loans, primarily from mortgage brokers. There is also significant competition in
attracting deposits, primarily from commercial banks, thrifts and money center banks. Such competition may limit our growth in the future.

Geographic
Concentration of our Loans

Substantially all of the Banks real estate mortgage loans are secured by properties located in South Carolina, mostly
in Chesterfield, Marlboro and Florence Counties. A weakening in the local real estate market or in the local or national economy, or a reduction in the workforce at the manufacturing facilities in the area could result in an increase in the number
of borrowers who default on their loans and a reduction in the value of the collateral securing the loans, which would reduce our earnings.

Financial
Institution Regulation and Future of the Thrift Industry

The Bank and the Company are subject to extensive regulation, supervision, and examination by
the Office of Thrift Supervision (OTS) and the Federal Deposit Insurance Corporation (the FDIC). Such regulation and supervision govern the activities in which an institution can engage and are intended primarily for the
protection of the insurance fund and depositors. Regulatory authorities have been granted extensive discretion in connection with their supervisory and enforcement activities which are intended to strengthen the financial condition of the banking
and thrift industries, including the imposition of restrictions on the operation of an institution, the classification of assets by an institution and the adequacy of an institutions allowance for loan losses. Any change in such regulation and
oversight, whether by the OTS, the FDIC or Congress, could have a material impact on the Company, the Bank and their respective operations.

REGULATION

The Bank is examined and supervised extensively by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation. The Bank is a member
of and owns stock in the Federal Home Loan Bank of



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Atlanta, which is one of the twelve regional banks in the Federal Home Loan Bank System. This regulation and supervision establishes a comprehensive
framework of activities in which an institution can engage and is intended primarily for the protection of the insurance fund and depositors. The Bank also is regulated by the Board of Governors of the Federal Reserve System, governing reserves to
be maintained against deposits and other matters. The Office of Thrift Supervision examines the Bank and prepares reports for the consideration of the Banks Board of Directors on any deficiencies that they may find in the Banks
operations. The Banks relationship with its depositors and borrowers also is regulated to a great extent by both federal and state laws, especially in matters concerning the ownership of savings accounts and the form and content of the
Banks mortgage documents. Any change in this regulation, whether by the Federal Deposit Insurance Corporation, Office of Thrift Supervision, or Congress, could have a material adverse impact on the Company and the Bank and their operations.

Federal Regulation of Savings Institutions

Business Activities.The activities of federal savings banks are subject to extensive regulation including restrictions or requirements with respect to loans to one borrower, the percentage of non-mortgage loans or
investments to total assets, capital distributions, permissible investments and lending activities, liquidity, transactions with affiliates and community reinvestment. The description of statutory provisions and regulations applicable to savings
banks set forth in this annual report does not purport to be a complete description of these statutes and regulations and their effect on the Bank.

Loans to One Borrower. Federal savings banks generally may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of unimpaired capital and surplus on an unsecured basis. An
additional amount may be lent, equal to 10% of unimpaired capital and surplus, if the loan is secured by readily marketable collateral, which is defined to include certain securities and bullion, but generally does not include real estate. As of
June 30, 2007, the Bank was in compliance with its loans-to-one-borrower limitations.

Capital Distributions. Office of Thrift
Supervision regulations govern capital distributions by savings institutions, which include cash dividends, stock repurchases and other transactions charged to the capital account of a savings institution to make capital distributions. A savings
institution must file an application for Office of Thrift Supervision approval of the capital distribution if either (1) the total capital distributions for the applicable calendar year exceed the sum of the institutions net income for
that year to date plus the institutions retained net income for the preceding two years, (2) the institution would not be at least adequately capitalized following the distribution, (3) the distribution would violate any applicable
statute, regulation, agreement or Office of Thrift Supervision-imposed condition, or (4) the institution is not eligible for expedited treatment of its filings. If an application is not required to be filed, savings institutions which are a
subsidiary of a holding company, as well as certain other institutions, must still file a notice with the Office of Thrift Supervision at least 30 days before the board of directors declares a dividend or approves a capital distribution.

Any additional capital distributions would require prior regulatory approval. In the event the Banks capital fell below its fully phased-in requirement or the
Office of Thrift Supervision notified it that it was in need of more than normal supervision, the Banks ability to make capital distributions could be restricted. In addition, the Office of Thrift Supervision could prohibit a proposed capital
distribution by any institution, which would otherwise be permitted by the regulation, if the Office of Thrift Supervision determines that the distribution would constitute an unsafe or unsound practice.

Community Reinvestment Act and Fair Lending Laws. Savings banks have a responsibility under the Community Reinvestment Act and related regulations
of the Office of Thrift Supervision to help meet the credit needs of their communities, including low- and moderate-income neighborhoods. In addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in
their lending practices on the basis of characteristics specified in those statutes. An institutions failure to comply with the provisions of the Community Reinvestment Act could, at a minimum, result in regulatory restrictions on its
activities, and failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions by the Office of Thrift Supervision, as well as other federal regulatory agencies and the Department of Justice. The
Bank received a satisfactory Community Reinvestment Act rating under the current Community Reinvestment Act regulations in its most recent federal examination by the Office of Thrift Supervision.

Transactions with Related Parties. The Banks authority to engage in transactions with related parties or affiliates or to make
loans to specified insiders, is limited by Sections 23A and 23B of the Federal Reserve Act. The term affiliates for these purposes generally means any company that controls or is under common control with an institution, including the
Company and its non-savings institution subsidiaries. Section 23A limits the aggregate amount of certain covered transactions with any individual affiliate to 10% of the capital and surplus of the



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savings institution and also limits the aggregate amount of covered transactions with all affiliates to 20% of the savings institutions capital and
surplus. Covered transactions with affiliates are required to be secured by collateral in an amount and of a type described in Section 23A and the purchase of low quality assets from affiliates is generally prohibited. Section 23B provides
that covered transactions with affiliates, including loans and asset purchases, must be on terms and under circumstances, including credit standards, that are substantially the same or at least as favorable to the institution as those prevailing at
the time for comparable transactions with non-affiliated companies. In addition, savings institutions are prohibited from lending to any affiliate that is engaged in activities that are not permissible for bank holding companies and no savings
institution may purchase the securities of any affiliate other than a subsidiary.

The Banks authority to extend credit to executive officers,
directors and 10% stockholders, as well as entities controlled by these persons, is currently governed by Sections 22(g) and 22(h) of the Federal Reserve Act, and also by Regulation O. Among other things, these regulations generally
require these loans to be made on terms substantially the same as those offered to unaffiliated individuals and do not involve more than the normal risk of repayment. However, regulations permit executive officers and directors to receive the same
terms through benefit or compensation plans that are widely available to other employees, as long as the director or executive officer is not given preferential treatment compared to other participating employees. Regulation O also places
individual and aggregate limits on the amount of loans the Bank may make to these persons based, in part, on the Banks capital position, and requires approval procedures to be followed. At June 30, 2007, the Bank was in compliance with
these regulations.

Enforcement. The Office of Thrift Supervision has primary enforcement responsibility over savings institutions and
has the authority to bring enforcement action against all institution-related parties, including stockholders, and attorneys, appraisers and accountants who knowingly or recklessly participate in wrongful action likely to have an adverse
effect on an insured institution. Formal enforcement action may range from the issuance of a capital directive or cease and desist order to removal of officers and/or directors of the institutions, receivership, conservatorship or the termination of
deposit insurance. Civil penalties cover a wide range of violations and actions, and range up to $25,000 per day, unless a finding of reckless disregard is made, in which case penalties may be as high as $1 million per day. The Federal Deposit
Insurance Corporation also has the authority to recommend to the Director of the Office of Thrift Supervision that enforcement action be taken with respect to a particular savings institution. If action is not taken by the Director, the Federal
Deposit Insurance Corporation has authority to take action under specified circumstances.

Standards for Safety and Soundness. Federal
law requires each federal banking agency to prescribe for all insured depository institutions standards relating to, among other things, internal controls, information systems and audit systems, loan documentation, credit underwriting, interest rate
risk exposure, asset growth, compensation, and other operational and managerial standards as the agency deems appropriate. The federal banking agencies adopted Interagency Guidelines Prescribing Standards for Safety and Soundness to implement the
safety and soundness standards required under the Federal law. The guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital
becomes impaired. The guidelines address internal controls and information systems; internal audit systems; credit underwriting; loan documentation; interest rate risk exposure; asset growth; and compensation, fees and benefits. If the appropriate
federal banking agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with the standard. If an
institution fails to meet these standards, the appropriate federal banking agency may require the institution to submit a compliance plan.

Capital
Requirements.Office of Thrift Supervision capital regulations require savings institutions to meet three minimum capital standards: a 1.5% tangible capital ratio, a 4% leverage ratio (3% for institutions receiving the highest rating on the
CAMELS rating system) and an 8% risk-based capital ratio. In addition, the prompt corrective action standards discussed below also establish, in effect, a minimum 2% tangible capital standard, a 4% leverage ratio (3% for institutions receiving the
highest rating on the CAMELS financial institution rating system), and, together with the risk-based capital standard itself, a 4% Tier 1 risk-based capital standard. Office of Thrift Supervision regulations also require that, in meeting the
tangible, leverage and risk-based capital standards, institutions must generally deduct investments in and loans to subsidiaries engaged in activities as principal that are not permissible for a national bank.

The risk-based capital standard for savings institutions requires the maintenance of Tier 1 (core) and total capital (which is defined as core capital and supplementary
capital) to risk-weighted assets of at least 4% and 8%, respectively. In determining the amount of risk-weighted assets, all assets, including certain off-balance sheet assets, are multiplied by a risk-weight factor of 0% to 100%, assigned by the
Office of Thrift Supervision capital regulation



- 12 -



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based on the risks believed inherent in the type of asset. Core (Tier 1) capital is defined as common stockholders equity (including retained
earnings), certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries less intangibles other than certain mortgage servicing rights and credit card relationships. The
components of supplementary capital currently include cumulative preferred stock, long-term perpetual preferred stock, mandatory convertible securities, subordinated debt and intermediate preferred stock, the allowance for loan and lease losses
limited to a maximum of 1.25% of risk-weighted assets and up to 45% of unrealized gains on available-for-sale equity securities with readily determinable fair market values. Overall, the amount of supplementary capital included as part of total
capital cannot exceed 100% of core capital.

The capital regulations also incorporate an interest rate risk component. Savings institutions with
above normal interest rate risk exposure are subject to a deduction from total capital for purposes of calculating their risk-based capital requirements. For the present time, the Office of Thrift Supervision has deferred implementation
of the interest rate risk capital charge. At June 30, 2007, the Bank met each of its capital requirements.

Prompt Corrective Regulatory Action

Under the Office of Thrift Supervision Prompt Corrective Action regulations, the Office of Thrift Supervision is required to take supervisory actions
against undercapitalized institutions, the severity of which depends upon the institutions level of capital. Generally, a savings institution that has total risk-based capital of less than 8.0% or a leverage ratio or a Tier 1 core capital
ratio that is less than 4.0% is considered to be undercapitalized. A savings institution that has total risk-based capital less than 6.0%, a Tier 1 core risk-based capital ratio of less than 3.0% or a leverage ratio that is less than 3.0% is
considered to be significantly undercapitalized and a savings institution that has a tangible capital to assets ratio equal to or less than 2.0% is deemed to be critically undercapitalized. Generally, the banking regulator is
required to appoint a receiver or conservator for an institution that is critically undercapitalized. The regulation also provides that a capital restoration plan must be filed with the Office of Thrift Supervision within 45 days of the
date an institution receives notice that it is undercapitalized, significantly undercapitalized or critically undercapitalized. In addition, numerous mandatory supervisory actions become immediately applicable to
the institution, including, but not limited to, restrictions on growth, investment activities, capital distributions, and affiliate transactions. The Office of Thrift Supervision could also take any one of a number of discretionary supervisory
actions against undercapitalized institutions, including the issuance of a capital directive and the replacement of senior executive officers and directors.

Insurance of Deposit Accounts

On February 15, 2006, federal legislation to reform federal deposit insurance was enacted. This new
legislation, among other things, increased the amount of federal deposit insurance coverage for self-directed retirement accounts. The Act also requires the reserve ratio to be modified to provide for a range between 1.15% and 1.50% of estimated
insured deposits.

On November 2, 2006, the Federal Deposit Insurance Corporation adopted final regulations that assess insurance premiums based on
risk. As a result, the new regulation will enable the Federal Deposit Insurance Corporation to more closely tie each financial institutions deposit insurance premiums to the risk it poses to the deposit insurance fund. Under the new risk-based
assessment system, the Federal Deposit Insurance Corporation will evaluate the risk of each financial institution based on its supervisory rating, its financial ratios, and its long-term debt issuer rating. The new rates for nearly all of the
financial institutions industry vary between five and seven cents for every $100 of domestic deposits. At the same time, the Federal Deposit Insurance Corporation also adopted final regulations designating the reserve ratio for the deposit insurance
fund during 2007 at 1.25% of estimated insured deposits.

Effective March 31, 2006, the Federal Deposit Insurance Corporation merged the Bank
Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF) into a single fund called the Deposit Insurance Fund. As a result of the merger, the BIF and the SAIF were abolished. The merger of the BIF and the SAIF
into the Deposit Insurance Fund does not affect the authority of the Financing Corporation (FICO) to impose and collect, with the approval of the Federal Deposit Insurance Corporation, assessments for anticipated payments, issuance costs
and custodial fees on bonds issued by the FICO in the 1980s to recapitalize the Federal Savings and Loan Insurance Corporation. The bonds issued by the FICO are due to mature in 2017 through 2019.



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Federal Home Loan Bank System

The Bank is a member of the Federal Home Loan Bank System, which consists of 12 regional Federal Home Loan Banks. The Federal Home Loan Bank System provides a central credit facility primarily for member institutions. The Bank, as a member
of the Federal Home Loan Bank of Atlanta, is required to acquire and hold shares of capital stock in that Federal Home Loan Bank in an amount at least equal to 1% of the aggregate principal amount of its unpaid residential mortgage loans and similar
obligations at the beginning of each year, or 1/20 of its borrowings from the Federal Home Loan Bank, whichever is greater. As of June 30, 2007, the Bank was in compliance with this requirement. The Federal Home Loan Banks are required to
provide funds for the resolution of insolvent thrifts and to contribute funds for affordable housing programs. These requirements could reduce the amount of dividends that the Federal Home Loan Banks pay to their members and could also result in the
Federal Home Loan Banks imposing a higher rate of interest on advances to their members.

Other Regulations

Interest and other charges collected or contracted for by the Bank are subject to state usury laws and federal laws concerning interest rates. The Banks operations
are also subject to federal laws applicable to credit transactions, such as the:



| |  |  | Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;
| | - |  | ----------------------------------------------------------------------------------



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



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



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



| |  |  | Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.
| | - |  | ------------------------------------------------------------------------------------------------------------------------

The Banks operations also are subject to the:



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



| |  |  | Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers
rights and liabilities arising from the use of automated teller machines and other electronic banking services;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Check Clearing for the 21stCentury Act (also known as Check 21), which gives substitute checks, such as digital check images and copies made from that image, the same legal standing as the original paper check;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Title III of The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (referred to as the
USA PATRIOT Act), which significantly expanded the responsibilities of financial institutions, including savings and loan associations, in preventing the use of the U.S. financial system to fund terrorist activities. Among other
provisions, the USA PATRIOT Act and the related regulations of the Office of Thrift Supervision require savings associations operating in the United States to develop new anti-money laundering compliance programs, due diligence policies and controls
to ensure the detection and reporting of money laundering. Such required compliance programs are intended to supplement existing compliance requirements, also applicable to financial institutions, under the Bank Secrecy Act and the Office of Foreign
Assets Control Regulations; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



- 14 -



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| |  |  | The Gramm-Leach-Bliley Act, which placed limitations on the sharing of consumer financial information by financial institutions with unaffiliated third parties.
Specifically, the Gramm-Leach-Bliley Act requires all financial institutions offering financial products or services to retail customers to provide such customers with the financial institutions privacy policy and provide such customers the
opportunity to opt out of the sharing of certain personal financial information with unaffiliated third parties.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Holding
Company Regulation

The Company is a nondiversified unitary savings and loan holding company within the meaning of federal law. A unitary savings and
loan holding company, such as the Company, is not generally restricted as to the types of business activities in which it may engage, provided that the Bank continued to be a qualified thrift lender. A savings and loan holding company is prohibited
from, directly or indirectly, acquiring more than 5% of the voting stock of another savings institution or savings and loan holding company without prior written approval of the Office of Thrift Supervision and from acquiring or retaining control of
a depository institution that is not insured by the Federal Deposit Insurance Corporation. In evaluating applications by holding companies to acquire savings institutions, the Office of Thrift Supervision considers the financial and managerial
resources and future prospects of the holding company and institution involved, the effect of the acquisition on the risk to the deposit insurance funds, the convenience and needs of the community and competitive factors.

The Office of Thrift Supervision may not approve any acquisition that would result in a multiple savings and loan holding company controlling savings institutions in
more than one state, subject to two exceptions: (1) the approval of interstate supervisory acquisitions by savings and loan holding companies and (2) the acquisition of a savings institution in another state if the laws of the state of the
target savings institution specifically permit the acquisitions. The states vary in the extent to which they permit interstate savings and loan holding company acquisitions.

Although savings and loan holding companies are not subject to specific capital requirements or specific restrictions on the payment of dividends or other capital distributions, federal regulations do prescribe
restrictions on subsidiary savings institutions as described below. The Bank must notify the Office of Thrift Supervision 30 days before declaring any dividend to the Company. In addition, the financial impact of a holding company on its subsidiary
institution is a matter that is evaluated by the Office of Thrift Supervision and the agency has authority to order cessation of activities or divestiture of subsidiaries deemed to pose a threat to the safety and soundness of the institution.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of
2002 addresses, among other issues, corporate governance, auditing and accounting, executive compensation, and enhanced and timely disclosure of corporate information. As directed by the Sarbanes-Oxley Act of 2002, our Chief Executive Officer and
Chief Financial Officer each will be required to certify that our quarterly and annual reports do not contain any untrue statement of a material fact. The rules adopted by the Securities and Exchange Commission under the Sarbanes-Oxley Act of 2002
have several requirements, including having these officers certify that: they are responsible for establishing, maintaining and regularly evaluating the effectiveness of our internal controls; they have made certain disclosures to our auditors and
the audit committee of the board of directors about our internal controls; and they have included information in our quarterly and annual reports about their evaluation and whether there have been significant changes in our internal controls or in
other factors that could significantly affect internal controls.

Managements attestation under Section of 404 of the Sarbanes-Oxley Act is required
for the Company for the fiscal year ending June 30, 2008.

Federal Securities Laws

The Companys common stock is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934. The Company is subject to the
information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934.



- 15 -



---

Item 2. Properties

(a) The Company currently conducts its business through three full-service banking offices. The following table sets forth the Companys offices as of June 30, 2007:



|                                                      |  |                              |  |                               |  |                                                 
|----------------------------------------------------- |  | ---------------------------- |  | ----------------------------- |  | ------------------------------------------------
|Location                                              |  | Leased or Owned              |  | OriginalYearLeased orAcquired |  | Date of LeaseExpiration                         
|2170 West Evans Street Florence, South Carolina 29505 |  | Owned(site of future office) |  | 2005                          |  |                                                
|                                                      |  |                              | 
|901 Chesterfield Highway Cheraw, South Carolina 29520 |  | Owned                        |  | 2004                          |  |                                                
|                                                      |  |                              | 
|515 Market Street Cheraw, South Carolina 29520        |  | Owned                        |  | 1981                          |  |                                                
|                                                      |  |                              | 
|452 Second Loop Road                                  |  | Building Owned               |  | 2002                          |  |                                                
|Florence, South Carolina 29504                        |  | Land Leased                  |  | 2002                          |  | September 2017with extensionoptions through2041.

Item 3. Legal Proceedings

None.

Item 4. Submission of Matters to a Vote of
Security Holders

Not applicable.

PART II

Item 5. Market for Common Equity, Related Stockholder Matters and Small Business Issuer
Purchases of Equity Securities



| | (a) | None.
| | --- | -----



| | (b) | Not applicable.
| | --- | ---------------



| | (c) | Repurchases of registered common stock by the Company:
| | --- | ------------------------------------------------------



|           |  |                                 |  |                             |   |                                                                               |   |                                                                             |       
|---------- |  | ------------------------------- |  | --------------------------- | - | ----------------------------------------------------------------------------- | - | --------------------------------------------------------------------------- | ------
|Period     |  | Total Number ofShares Purchased |  | Average PricePaid Per Share |   | Total Number ofShares Purchased as PartOf Publicly AnnouncedPlans or Programs |   | Maximum Number ofShares that May Yet BePurchased
Underthe Plans or Programs
|April 2007 |  |                                |  | $                           |  |                                                                               |  |                                                                             | 37,853
|May 2007   |  |                                |  | $                           |  |                                                                               |  |                                                                             | 37,853
|June 2007  |  |                                |  | $                           |  |                                                                               |  |                                                                             | 37,853

---

|(1) | The existing stock
repurchase plan was announced on August 15, 2000 and approved the repurchase of up to 10% shares of outstanding common stock at that time (168,000 shares of common stock). Subsequently, this plan was adjusted by the 10% stock dividend in
November 2001. The program does not contain an expiration date. The Company does not intend to discontinue stock repurchases under this plan.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



- 16 -



---

Item 6. Managements Discussion and Analysis of Financial Condition and Results of Operations



|                                                                        |  |                                   |         |   |                                              |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|----------------------------------------------------------------------- |  | --------------------------------- | ------- | - | -------------------------------------------- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                                                        |  | At or for the year ended June 30, |        
|                                                                        |  | 2007                              |         |   | 2006                                         |   |         | 2005 |  |   | 2004    |   |  | 2003 |        
|                                                                        |  |                                   |         |   | (Dollars in thousands except per share data) |   |         |      | 
|Financial Condition Data:                                               |  |                                   |         |   |                                              |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Total assets                                                            |  | $                                 | 236,747 |   |                                              | $ | 212,706 |      |  | $ | 195,746 |   |  | $    | 156,355 |   |  | $ | 143,326 |  
|Investments (1)                                                         |  |                                   | 34,866  |   |                                              |   | 23,831  |      |  |   | 30,892  |   |  |      | 31,633  |   |  |   | 26,602  |  
|Loans receivable, net                                                   |  |                                   | 176,749 |   |                                              |   | 175,275 |      |  |   | 154,131 |   |  |      | 114,292 |   |  |   | 107,954 |  
|Loans held for sale                                                     |  |                                   | 12,318  |   |                                              |   | 958     |      |  |   | 1,116   |   |  |      | 1,310   |   |  |   | 2,056   |  
|Deposits                                                                |  |                                   | 171,204 |   |                                              |   | 151,339 |      |  |   | 136,573 |   |  |      | 108,945 |   |  |   | 108,812 |  
|Borrowings                                                              |  |                                   | 36,400  |   |                                              |   | 33,100  |      |  |   | 31,448  |   |  |      | 21,000  |   |  |   | 8,000   |  
|Stockholders equity                                                    |  |                                   | 27,315  |   |                                              |   | 26,540  |      |  |   | 26,256  |   |  |      | 26,051  |   |  |   | 26,043  |  
|Operating Data:                                                         |  |                                   |         |   |                                              |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Interest income                                                         |  | $                                 | 14,516  |   |                                              | $ | 12,754  |      |  | $ | 9,746   |   |  | $    | 8,312   |   |  | $ | 8,426   |  
|Interest expense                                                        |  |                                   | 7,963   |   |                                              |   | 6,038   |      |  |   | 3,954   |   |  |      | 3,131   |   |  |   | 3,367   |  
|                                                                        |  |                                   |         |   |                                              |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net interest income                                                     |  |                                   | 6,553   |   |                                              |   | 6,716   |      |  |   | 5,792   |   |  |      | 5,181   |   |  |   | 5,059   |  
|Provision for loan losses                                               |  |                                   | 168     |   |                                              |   | 363     |      |  |   | 192     |   |  |      | 375     |   |  |   | 400     |  
|                                                                        |  |                                   |         |   |                                              |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net interest income after provision for loan losses                     |  |                                   | 6,385   |   |                                              |   | 6,353   |      |  |   | 5,600   |   |  |      | 4,806   |   |  |   | 4,659   |  
|Non-interest income                                                     |  |                                   | 1,142   |   |                                              |   | 773     |      |  |   | 941     |   |  |      | 1,274   |   |  |   | 1,080   |  
|Non-interest expense                                                    |  |                                   | 5,029   |   |                                              |   | 4,584   |      |  |   | 4,723   |   |  |      | 4,105   |   |  |   | 3,496   |  
|                                                                        |  |                                   |         |   |                                              |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Income before income taxes                                              |  |                                   | 2,498   |   |                                              |   | 2,542   |      |  |   | 1,818   |   |  |      | 1,975   |   |  |   | 2,243   |  
|Income tax expense                                                      |  |                                   | 955     |   |                                              |   | 943     |      |  |   | 654     |   |  |      | 727     |   |  |   | 833     |  
|                                                                        |  |                                   |         |   |                                              |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net income                                                              |  | $                                 | 1,543   |   |                                              | $ | 1,599   |      |  | $ | 1,164   |   |  | $    | 1,248   |   |  | $ | 1,410   |  
|                                                                        |  |                                   |         |   |                                              |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Per Common Share Data:                                                  |  |                                   |         |   |                                              |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net income, basic                                                       |  | $                                 | 0.90    |   |                                              | $ | 0.93    |      |  | $ | 0.68    |   |  | $    | 0.74    |   |  | $ | 0.87    |  
|Net income, diluted                                                     |  |                                   | 0.89    |   |                                              |   | 0.92    |      |  |   | 0.68    |   |  |      | 0.73    |   |  |   | 0.85    |  
|Regular cash dividends                                                  |  |                                   | 0.640   |   |                                              |   | 0.640   |      |  |   | 0.635   |   |  |      | 0.605   |   |  |   | 0.545   |  
|Dividend payment ratio                                                  |  |                                   | 71.11   | % |                                              |   | 68.82   | %    |  |   | 93.38   | % |  |      | 81.76   | % |  |   | 62.64   | %
|Selected Other Data:                                                    |  |                                   |         |   |                                              |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Number of:                                                              |  |                                   |         |   |                                              |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Outstanding loans                                                       |  |                                   | 2,942   |   |                                              |   | 3,030   |      |  |   | 3,095   |   |  |      | 3,152   |   |  |   | 3,435   |  
|Deposit accounts                                                        |  |                                   | 7,023   |   |                                              |   | 6,725   |      |  |   | 6,582   |   |  |      | 6,180   |   |  |   | 5,793   |  
|Full-service offices                                                    |  |                                   | 3       |   |                                              |   | 3       |      |  |   | 3       |   |  |      | 3       |   |  |   | 2       |  
|Return on average assets                                                |  |                                   | 0.71    | % |                                              |   | 0.76    | %    |  |   | 0.66    | % |  |      | 0.81    | % |  |   | 1.01    | %
|Return on average equity                                                |  |                                   | 5.87    | % |                                              |   | 6.05    | %    |  |   | 4.52    | % |  |      | 4.80    | % |  |   | 5.49    | %
|Average equity to average assets                                        |  |                                   | 12.10   | % |                                              |   | 12.57   | %    |  |   | 14.60   | % |  |      | 16.94   | % |  |   | 18.32   | %
|Interest rate spread                                                    |  |                                   | 2.66    | % |                                              |   | 2.95    | %    |  |   | 3.08    | % |  |      | 3.11    | % |  |   | 3.24    | %
|Net yield on average interest-earning assets                            |  |                                   | 3.21    | % |                                              |   | 3.38    | %    |  |   | 3.50    | % |  |      | 3.55    | % |  |   | 3.79    | %
|Average interest-earning assets to average interest-bearing liabilities |  |                                   | 114.12  | % |                                              |   | 114.39  | %    |  |   | 117.69  | % |  |      | 120.57  | % |  |   | 121.96  | %
|Ratio of non-interest expense to average total assets                   |  |                                   | 2.32    | % |                                              |   | 2.18    | %    |  |   | 2.67    | % |  |      | 2.67    | % |  |   | 2.49    | %
|Non-performing assets to total assets                                   |  |                                   | 0.56    | % |                                              |   | 0.31    | %    |  |   | 0.66    | % |  |      | 1.70    | % |  |   | 1.60    | %
|Allowance for loan losses to non-performing loans at period end         |  |                                   | 155.29  | % |                                              |   | 342.52  | %    |  |   | 144.03  | % |  |      | 71.09   | % |  |   | 62.88   | %

---

|(1) | Includes interest-earning
balances, federal funds sold, restricted stock and investment securities.
|--- | ---------------------------------------------------------------------------------------------------



- 17 -



---

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 Subsidiary. 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.

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.

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 re-price 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 re-pricing. A negative gap for a given
period means that the amount of interest-bearing liabilities maturing or otherwise re-pricing within that period exceeds the amount of interest-earning assets maturing or otherwise re-pricing 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 net interest
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.



|                                                                            |  |                                      |             |    |                           |   |             |                            |  |   |                  |    |  |       |             |   |  |   |             |  
|--------------------------------------------------------------------------- |  | ------------------------------------ | ----------- | -- | ------------------------- | - | ----------- | -------------------------- |  | - | ---------------- | -- |  | ----- | ----------- | - |  | - | ----------- | -
|                                                                            |  | Terms to Re-pricing at June 30, 2007 |            
|                                                                            |  | 1 Yearor Less                        |             |    | More Than 1Year to 3Years |   |             | More Than 3Years to 5Years |  |   | More Than 5Years |    |  | Total |            
|INTEREST-EARNING ASSETS:                                                    |  |                                      |             |    |                           |   |             |                            |  |   |                  |    |  |       |             |   |  |   |             |  
|Loans receivable:                                                           |  |                                      |             |    |                           |   |             |                            |  |   |                  |    |  |       |             |   |  |   |             |  
|Real estate loans: (2)                                                      |  |                                      |             |    |                           |   |             |                            |  |   |                  |    |  |       |             |   |  |   |             |  
|Adjustable rate                                                             |  | $                                    | 23,286,078  |    |                           | $ | 5,239,236   |                            |  | $ | 4,787,281        |    |  | $     | 32,873,615  |   |  | $ | 66,186,210  |  
|Fixed rate                                                                  |  |                                      | 10,889,757  |    |                           |   | 16,696,099  |                            |  |   | 18,706,799       |    |  |       | 53,892,975  |   |  |   | 100,185,630 |  
|Other loans                                                                 |  |                                      | 5,823,282   |    |                           |   | 1,913,588   |                            |  |   | 3,132,964        |    |  |       | 1,645,541   |   |  |   | 12,515,375  |  
|Loans held for sale                                                         |  |                                      | 12,318,262  |    |                           |   |            |                            |  |   |                 |    |  |       |            |   |  |   | 12,318,262  |  
|Interest-earning balances in other banks                                    |  |                                      | 368,511     |    |                           |   |            |                            |  |   |                 |    |  |       |            |   |  |   | 368,511     |  
|Federal funds sold                                                          |  |                                      | 12,220,000  |    |                           |   |            |                            |  |   |                 |    |  |       |            |   |  |   | 12,220,000  |  
|Investment securities available for sale                                    |  |                                      | 2,960,850   |    |                           |   | 2,978,378   |                            |  |   | 4,144,128        |    |  |       | 9,941,885   |   |  |   | 20,025,241  |  
|Restricted stock(1)                                                         |  |                                      |            |    |                           |   |            |                            |  |   |                 |    |  |       | 2,252,700   |   |  |   | 2,252,700   |  
|                                                                            |  |                                      |             |    |                           |   |             |                            |  |   |                  |    |  |       |             |   |  |   |             |  
|Total interest-earning assets                                               |  | $                                    | 67,866,740  |    |                           | $ | 26,827,301  |                            |  | $ | 30,771,172       |    |  | $     | 100,606,716 |   |  | $ | 226,071,929 |  
|                                                                            |  |                                      |             |    |                           |   |             |                            |  |   |                  |    |  |       |             |   |  |   |             |  
|INTEREST-BEARING LIABILITIES:                                               |  |                                      |             |    |                           |   |             |                            |  |   |                  |    |  |       |             |   |  |   |             |  
|Deposit accounts:                                                           |  |                                      |             |    |                           |   |             |                            |  |   |                  |    |  |       |             |   |  |   |             |  
|Demand                                                                      |  | $                                    | 30,815,410  |    |                           | $ |            |                            |  | $ |                 |    |  | $     |            |   |  | $ | 30,815,410  |  
|Time over $100,000                                                          |  |                                      | 53,585,962  |    |                           |   | 24,941,778  |                            |  |   | 2,108,847        |    |  |       |            |   |  |   | 80,636,587  |  
|Other time                                                                  |  |                                      | 38,853,839  |    |                           |   | 12,038,086  |                            |  |   | 464,785          |    |  |       | 15,398      |   |  |   | 51,372,108  |  
|Borrowings:                                                                 |  |                                      |             |    |                           |   |             |                            |  |   |                  |    |  |       |             |   |  |   |             |  
|Short-term                                                                  |  |                                      | 4,500,000   |    |                           |   |            |                            |  |   |                 |    |  |       |            |   |  |   | 4,500,000   |  
|Long-term                                                                   |  |                                      | 12,000,000  |    |                           |   | 2,000,000   |                            |  |   | 12,300,000       |    |  |       | 5,600,000   |   |  |   | 31,900,000  |  
|                                                                            |  |                                      |             |    |                           |   |             |                            |  |   |                  |    |  |       |             |   |  |   |             |  
|Total interest-bearing liabilities                                          |  | $                                    | 139,755,211 |    |                           | $ | 38,979,864  |                            |  | $ | 14,873,632       |    |  | $     | 5,615,398   |   |  | $ | 199,224,105 |  
|                                                                            |  |                                      |             |    |                           |   |             |                            |  |   |                  |    |  |       |             |   |  |   |             |  
|INTEREST SENSITIVITY GAP PER PERIOD                                         |  | $                                    | (71,888,471 | )  |                           | $ | (12,152,563 | )                          |  | $ | 15,897,540       |    |  | $     | 94,991,318  |   |  | $ | 26,847,824  |  
|CUMULATIVE INTEREST SENSITIVITY GAP                                         |  | $                                    | (71,888,471 | )  |                           | $ | (84,041,034 | )                          |  | $ | (68,143,494      | )  |  | $     | 26,847,824  |   |  | $ | 26,847,824  |  
|CUMULATIVE GAP AS A PERCENTAGE OF TOTAL INTEREST-EARNING ASSETS             |  |                                      | (31.80      | %) |                           |   | (37.17      | %)                         |  |   | (30.14           | %) |  |       | 11.88       | % |  |   | 11.88       | %
|CUMULATIVE RATIO OF INTEREST-EARNING ASSETS TO INTEREST-BEARING LIABILITIES |  |                                      | 48.56       | %  |                           |   | 52.98       | %                          |  |   | 64.80            | %  |  |       | 113.48      | % |  |   | 113.48      | %

---

|(1) | Non-marketable equity
securities, primarily of the Federal Home Loan Bank of Atlanta; substantially all required to be maintained and assumed to mature in periods greater than 10 years.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Includes deferred loan
fees.
|--- | ----------------------------



- 18 -



---

The preceding table sets forth the amounts of interest-earning assets and interest-bearing liabilities outstanding at
June 30, 2007 which are projected to re-price or mature in each of the future time periods shown. Except for the restricted stock, the amounts of assets and liabilities shown which re-price 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. Interest-bearing liabilities with no contractual maturity, such as savings
deposits and interest-bearing transaction accounts, are reflected in the earliest re-pricing period due to the contractual arrangements that give us the opportunity to vary the rates paid on these deposits within a thirty-day or shorter period.
Overnight federal funds are reflected at the earliest pricing interval due to the immediately available nature of the instruments. In making the gap computations, no assumptions are made regarding interest-earning asset prepayment rates and
interest-bearing liability reduction rates and the table does not reflect scheduled principal payments that will be received throughout the lives of the loans. As a result 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.

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 Sentrys
NPV of instantaneous and permanent 100 to 300 basis point increases in market interest rates and 100 and 200 basis point decreases in market interest rates.

The following table presents information regarding possible changes in the Sentrys NPV as of June 30, 2007, based on information provided by the Office of Thrift Supervisions Risk Management Division:



|                                                         |  |                     |        |                        |   |         |                  |  |     |   
|-------------------------------------------------------- |  | ------------------- | ------ | ---------------------- | - | ------- | ---------------- |  | --- | --
|                                                         |  | Net portfolio value |       
|Change in interest rates in basis points (rate shock)    |  | Amount              |        | Change inAmount        |   |         | PercentageChange | 
|                                                         |  |                     |        | (Dollars in thousands) |   |         |                  | 
|Up 300 basis points                                      |  | $                   | 18,503 |                        | $ | (10,496 | )                |  | (36 | %)
|Up 200 basis points                                      |  |                     | 22,099 |                        |   | (6,900  | )                |  | (24 | %)
|Up 100 basis points                                      |  |                     | 25,607 |                        |   | (3,392  | )                |  | (12 | %)
|Static (Includes certain unrecorded deposit intangibles) |  |                     | 28,999 |                        |   |        |                  |  |    | % 
|Down 100 basis points                                    |  |                     | 32,293 |                        |   | 3,295   |                  |  | 11  | % 
|Down 200 basis points                                    |  |                     | 35,565 |                        |   | 6,567   |                  |  | 23  | % 

Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions,
including relative levels of market interest rates, loan prepayments and interest-bearing liability reductions, 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, Sentry would be expected to experience a 24% decrease in NPV.

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 re-price, 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).



- 19 -



---

The following table sets forth information relating to average balances of the Companys assets and liabilities for
the years ended June 30, 2007, 2006 and 2005. For the years 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 annual
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). Non-accruing loans were included in the computation
of average balances.



|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                        |  |   |          |   |             |   |        |                |      |   |          |   |             |   |  |   |       |  |      |  
|-------------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ------------------------ | - | ----------- | ------------------------ | ---- | ---------------------- |  | - | -------- | - | ----------- | - | ------ | -------------- | ---- | - | -------- | - | ----------- | - |  | - | ----- |  | ---- | -
|                                                                                 |  | Year Ended June 30, 2007 |         |   | Year Ended June 30, 2006 |   |             | Year Ended June 30, 2005 |     
|                                                                                 |  | AverageBalance           |         |   | Interest                 |   | AverageRate |                          |      | AverageBalance         |  |   | Interest |   | AverageRate |   |        | AverageBalance |      |   | Interest |   | AverageRate |  
|                                                                                 |  |                          |         |   |                          |   |             |                          |      | (Dollars in thousands) |  |   |          |   |             |   |        |                |     
|Interest-earning assets:                                                         |  |                          |         |   |                          |   |             |                          |      |                        |  |   |          |   |             |   |        |                |      |   |          |   |             |   |  |   |       |  |      |  
|Interest-earning balances                                                        |  | $                        | 2,314   |   |                          | $ | 127         |                          | 5.49 | %                      |  | $ | 1,948    |   |             | $ | 85     |                | 4.36 | % |          | $ | 3,621       |   |  | $ | 86    |  | 2.38 | %
|Investments (1)                                                                  |  |                          | 19,031  |   |                          |   | 880         |                          | 4.62 | %                      |  |   | 26,466   |   |             |   | 1,093  |                | 4.13 | % |          |   | 27,864      |   |  |   | 1,081 |  | 3.88 | %
|Loans (2)                                                                        |  |                          | 182,866 |   |                          |   | 13,509      |                          | 7.39 | %                      |  |   | 170,017  |   |             |   | 11,575 |                | 6.81 | % |          |   | 134,018     |   |  |   | 8,579 |  | 6.40 | %
|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                        |  |   |          |   |             |   |        |                |      |   |          |   |             |   |  |   |       |  |      |  
|Total interest-earning assets                                                    |  |                          | 204,211 |   |                          |   | 14,516      |                          | 7.11 | %                      |  |   | 198,431  |   |             |   | 12,753 |                | 6.43 | % |          |   | 165,503     |   |  |   | 9,746 |  | 5.89 | %
|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                        |  |   |          |   |             |   |        |                |      |   |          |   |             |   |  |   |       |  |      |  
|Other assets                                                                     |  |                          | 12,837  |   |                          |   |             |                          |      |                        |  |   | 11,910   |   |             |   |        |                |      |   |          |   | 11,070      |   |  |   |       |  |      |  
|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                        |  |   |          |   |             |   |        |                |      |   |          |   |             |   |  |   |       |  |      |  
|Total assets                                                                     |  | $                        | 217,048 |   |                          |   |             |                          |      |                        |  | $ | 210,341  |   |             |   |        |                |      |   |          | $ | 176,573     |   |  |   |       |  |      |  
|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                        |  |   |          |   |             |   |        |                |      |   |          |   |             |   |  |   |       |  |      |  
|Interest-bearing liabilities:                                                    |  |                          |         |   |                          |   |             |                          |      |                        |  |   |          |   |             |   |        |                |      |   |          |   |             |   |  |   |       |  |      |  
|Deposits                                                                         |  | $                        | 144,938 |   |                          |   | 6,288       |                          | 4.34 | %                      |  | $ | 139,972  |   |             |   | 4,756  |                | 3.40 | % |          | $ | 116,141     |   |  |   | 3,170 |  | 2.73 | %
|Borrowings                                                                       |  |                          | 34,009  |   |                          |   | 1,675       |                          | 4.92 | %                      |  |   | 33,500   |   |             |   | 1,282  |                | 3.83 | % |          |   | 24,482      |   |  |   | 784   |  | 3.20 | %
|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                        |  |   |          |   |             |   |        |                |      |   |          |   |             |   |  |   |       |  |      |  
|Total interest-bearing liabilities                                               |  |                          | 178,947 |   |                          |   | 7,963       |                          | 4.45 | %                      |  |   | 173,472  |   |             |   | 6,038  |                | 3.48 | % |          |   | 140,623     |   |  |   | 3,954 |  | 2.81 | %
|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                        |  |   |          |   |             |   |        |                |      |   |          |   |             |   |  |   |       |  |      |  
|Non-interest bearing deposits                                                    |  |                          | 9,070   |   |                          |   |             |                          |      |                        |  |   | 7,845    |   |             |   |        |                |      |   |          |   | 7,445       |   |  |   |       |  |      |  
|Other liabilities                                                                |  |                          | 2,759   |   |                          |   |             |                          |      |                        |  |   | 2,588    |   |             |   |        |                |      |   |          |   | 2,733       |   |  |   |       |  |      |  
|Stockholders equity                                                             |  |                          | 26,272  |   |                          |   |             |                          |      |                        |  |   | 26,436   |   |             |   |        |                |      |   |          |   | 25,772      |   |  |   |       |  |      |  
|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                        |  |   |          |   |             |   |        |                |      |   |          |   |             |   |  |   |       |  |      |  
|Total liabilities and stockholders equity                                       |  | $                        | 217,048 |   |                          |   |             |                          |      |                        |  | $ | 210,341  |   |             |   |        |                |      |   |          | $ | 176,573     |   |  |   |       |  |      |  
|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                        |  |   |          |   |             |   |        |                |      |   |          |   |             |   |  |   |       |  |      |  
|Net interest income and interest rate spread                                     |  |                          |         |   |                          | $ | 6,553       |                          | 2.66 | %                      |  |   |          |   |             | $ | 6,715  |                | 2.95 | % |          |   |             |   |  | $ | 5,792 |  | 3.08 | %
|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                        |  |   |          |   |             |   |        |                |      |   |          |   |             |   |  |   |       |  |      |  
|Net yield on average interest-earning assets                                     |  |                          |         |   |                          |   |             |                          | 3.21 | %                      |  |   |          |   |             |   |        |                | 3.38 | % |          |   |             |   |  |   |       |  | 3.50 | %
|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                        |  |   |          |   |             |   |        |                |      |   |          |   |             |   |  |   |       |  |      |  
|Ratio of average interest-earning assets to average interest-bearing liabilities |  |                          | 114.12  | % |                          |   |             |                          |      |                        |  |   | 114.39   | % |             |   |        |                |      |   |          |   | 117.69      | % |  |   |       |  |      |  
|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                        |  |   |          |   |             |   |        |                |      |   |          |   |             |   |  |   |       |  |      |  

---

|(1) | Tax-exempt income included
in the above table is not presented on a tax-equivalent basis.
|--- | -----------------------------------------------------------------------------------------



|(2) | Loan fees included in
interest income were immaterial.
|--- | ------------------------------------------------------



|(2) | Loans include warehouse
loans held for sale.
|--- | --------------------------------------------



- 20 -



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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) total 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.



|                              |  |                                                             |      |   |                                                             |   |       |                        |  |   |        |   |  |      |       |   |       |   |       |   |  |   |       |  
|----------------------------- |  | ----------------------------------------------------------- | ---- | - | ----------------------------------------------------------- | - | ----- | ---------------------- |  | - | ------ | - |  | ---- | ----- | - | ----- | - | ----- | - |  | - | ----- | -
|                              |  | Year Ended June 30, 2007 vs. 2006Increase (Decrease) Due To |      |   | Year Ended June 30, 2006 vs. 2005Increase (Decrease) Due To |  
|                              |  | Volume                                                      |      |   | Rate                                                        |   |       | Total                  |  |   | Volume |   |  | Rate |       |   | Total |  
|                              |  |                                                             |      |   |                                                             |   |       | (Dollars in thousands) |  |   |        |   |  |      |      
|Interest income:              |  |                                                             |      |   |                                                             |   |       |                        |  |   |        |   |  |      |       |   |       |   |       |   |  |   |       |  
|Interest-earning balances     |  | $                                                           | 18   |   |                                                             | $ | 24    |                        |  | $ | 42     |   |  | $    | (56   | ) |       | $ | 55    |   |  | $ | (1    | )
|Investments                   |  |                                                             | (325 | ) |                                                             |   | 112   |                        |  |   | (213   | ) |  |      | (56   | ) |       |   | 68    |   |  |   | 12    |  
|Loans                         |  |                                                             | 912  |   |                                                             |   | 1,022 |                        |  |   | 1,934  |   |  |      | 2,378 |   |       |   | 618   |   |  |   | 2,996 |  
|                              |  |                                                             |      |   |                                                             |   |       |                        |  |   |        |   |  |      |       |   |       |   |       |   |  |   |       |  
|Total interest income         |  |                                                             | 605  |   |                                                             |   | 1,158 |                        |  |   | 1,763  |   |  |      | 2,265 |   |       |   | 742   |   |  |   | 3,007 |  
|                              |  |                                                             |      |   |                                                             |   |       |                        |  |   |        |   |  |      |       |   |       |   |       |   |  |   |       |  
|Interest expense:             |  |                                                             |      |   |                                                             |   |       |                        |  |   |        |   |  |      |       |   |       |   |       |   |  |   |       |  
|Deposits                      |  |                                                             | 192  |   |                                                             |   | 1,340 |                        |  |   | 1,532  |   |  |      | 730   |   |       |   | 856   |   |  |   | 1,586 |  
|Borrowings                    |  |                                                             | 22   |   |                                                             |   | 371   |                        |  |   | 393    |   |  |      | 317   |   |       |   | 181   |   |  |   | 498   |  
|                              |  |                                                             |      |   |                                                             |   |       |                        |  |   |        |   |  |      |       |   |       |   |       |   |  |   |       |  
|Total interest expense        |  |                                                             | 214  |   |                                                             |   | 1,711 |                        |  |   | 1,925  |   |  |      | 1,047 |   |       |   | 1,037 |   |  |   | 2,084 |  
|                              |  |                                                             |      |   |                                                             |   |       |                        |  |   |        |   |  |      |       |   |       |   |       |   |  |   |       |  
|Net interest income (expense) |  | $                                                           | 391  |   |                                                             | $ | (553  | )                      |  | $ | (162   | ) |  | $    | 1,218 |   |       | $ | (295  | ) |  | $ | 923   |  
|                              |  |                                                             |      |   |                                                             |   |       |                        |  |   |        |   |  |      |       |   |       |   |       |   |  |   |       |  

Comparison of Financial Condition at June 30, 2007 and 2006

The Companys total assets increased by $24.0 million during the year ended June 30, 2007 from $212.7 million at June 30, 2006 to $236.7 million at
June 30, 2007. Funding for this growth was provided principally by an increase in brokered certificates of deposits and borrowings from the Federal Home Loan Bank of Atlanta.

The increase in total assets was principally due to an increase in cash and loans held for sale. Loans increased $1.5 million from $177.2 million at June 30, 2006 to $178.7 million at June 30, 2007. The loan
portfolio is still predominately comprised of real estate loans. Loans held for sale increased $11.4 million from $958,000 at June 30, 2006 to $12.3 million at June 30, 2007 because the Bank entered into a loan origination agreement with a
related party. Funding for growth in loans held for sale was provided by a combination of FHLB borrowings and brokered certificates of deposit.

Total
deposits increased by $19.9 million, with the majority of funds contributed by brokered certificates of deposit.

During the year ended June 30, 2007,
total stockholders equity did not change significantly, as approximately $1.1 million of the $1.5 million in net income for 2007 was paid out in dividends. This represents $0.64 per share for both fiscal years. At June 30, 2007 the Bank
continued to exceed all applicable regulatory capital requirements.

Comparison of Results of Operations for the Years Ended
June 30, 2007 and 2006

Net Income. Net income for the year ended June 30, 2007, was $1.5 million, or diluted net income per share
of $0.89, as compared with net income of $1.6 million, or $0.92 per diluted share, for the year ended June 30, 2006.

Net Interest Income. Net
interest income for the year ended June 30, 2007 was $6.6 million as compared with $6.7 million during the year ended June 30, 2006, a decrease of $163,000. Average total interest earning assets were $217.0 million in 2007 compared with
$210.0 million during 2006 while the weighted average yield on those assets increased 68 basis points from 6.43% to 7.11% as a result of a sustained trend of higher interest rates during the 2007 fiscal year. This upward trend in rates resulted in a
0.58% basis points increase in our loan portfolio yields. The Companys interest rate spread decreased from 2.95% for the year ended June 30, 2006, to 2.66% for the year ended June 30, 2007, as a result of the continued upward
repricing of interest bearing liabilities during the 2007 fiscal year. The increases in short term rates caused the weighted average cost of interest-bearing liabilities to increase by 97 basis points. The Companys net yield on average
interest-earnings assets decreased from 3.38% for fiscal 2006 to 3.21% for fiscal 2007.



- 21 -



---

Provision for Loan Losses.The provision for loan losses was $168,000 for the year ended June 30, 2007
compared with $363,000 for the year ended June 30, 2006. We experienced growth in loans receivable during the year ended June 30, 2007, of $1.5 million, compared to loan growth during the year ended June 30, 2006 of $21.5 million. The
reduction in loan volume from 2006 when considered with other asset quality metrics decreased the necessary amount of provision for loan losses when the changes were analyzed in our allowance for loan loss model. (See Analysis of Allowance for
Loan Losses). The table under Nonperforming Assets outlines an increase in our nonperforming loans. The net charge-offs for the year ended June 30, 2007, were $131,000 compared to the net charge-offs for the year ended
June 30, 2006 of $55,000. The following table provides an analysis for loan losses for the years ended June 30, 2007 and 2006, respectively. Allowance for loan losses stood at $1.9 million at the 2007 fiscal year end. At June 30,
2007, non-accrual loans aggregated $1.2 million, compared to $555,000 at June 30, 2006.

The following table describes the change in analysis for loan
losses for the last five years.



|                                                                                        |  |                             |       |   |                        |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|--------------------------------------------------------------------------------------- |  | --------------------------- | ----- | - | ---------------------- | - | ----- | ---- |  | - | ----- | - |  | ---- | ----- | - |  | - | ----- | -
|                                                                                        |  | For the Year Ended June 30, |      
|                                                                                        |  | 2007                        |       |   | 2006                   |   |       | 2005 |  |   | 2004  |   |  | 2003 |      
|                                                                                        |  |                             |       |   | (Dollars in thousands) |   |       |      | 
|Balance at the beginning of the year                                                    |  | $                           | 1,901 |   |                        | $ | 1,593 |      |  | $ | 1,532 |   |  | $    | 1,416 |   |  | $ | 1,066 |  
|Charge-offs:                                                                            |  |                             |       |   |                        |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Real estate mortgage                                                                    |  |                             | (70   | ) |                        |   | (7    | )    |  |   | (49   | ) |  |      | (205  | ) |  |   | (15   | )
|Installment loans to individuals                                                        |  |                             | (64   | ) |                        |   | (78   | )    |  |   | (121  | ) |  |      | (85   | ) |  |   | (37   | )
|                                                                                        |  |                             |       |   |                        |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|                                                                                        |  |                             | (134  | ) |                        |   | (85   | )    |  |   | (170  | ) |  |      | (290  | ) |  |   | (52   | )
|                                                                                        |  |                             |       |   |                        |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Recoveries:                                                                             |  |                             |       |   |                        |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Real estate mortgage                                                                    |  |                             |      |   |                        |   | 1     |      |  |   | 23    |   |  |      | 28    |   |  |   | 2     |  
|Installment loans to individuals                                                        |  |                             | 3     |   |                        |   | 29    |      |  |   | 16    |   |  |      | 3     |   |  |   |      |  
|                                                                                        |  |                             |       |   |                        |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|                                                                                        |  |                             | 3     |   |                        |   | 30    |      |  |   | 39    |   |  |      | 31    |   |  |   | 2     |  
|                                                                                        |  |                             |       |   |                        |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Net charge-offs                                                                         |  |                             | (131  | ) |                        |   | (55   | )    |  |   | (131  | ) |  |      | (259  | ) |  |   | (50   | )
|                                                                                        |  |                             |       |   |                        |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Provision for loan losses                                                               |  |                             | 168   |   |                        |   | 363   |      |  |   | 192   |   |  |      | 375   |   |  |   | 400   |  
|                                                                                        |  |                             |       |   |                        |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Balance at end of year                                                                  |  | $                           | 1,938 |   |                        | $ | 1,901 |      |  | $ | 1,593 |   |  | $    | 1,532 |   |  | $ | 1,416 |  
|                                                                                        |  |                             |       |   |                        |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Ratio of net charge-offs during the period to average loans outstanding during the year |  |                             | 0.07  | % |                        |   | 0.03  | %    |  |   | 0.10  | % |  |      | 0.23  | % |  |   | 0.04  | %

Non-Interest Income. Non-interest income increased $369,000 from $772,000 in fiscal 2006 to $1.1 million in
fiscal 2007. Service fees and charges increased by $89,000 to $606,000, principally as a result of an increase in checking accounts during the fiscal year. Income from the Companys brokerage services decreased, from $317,000 to $307,000 for
the years ended June 30, 2006 and 2007 respectively. Increases in non-interest income were also due to increases in other income and a gain on sale of restricted stock of $60,000 and $83,000, respectively. Fiscal 2006 results included a loss of
$144,000 on sale of investment securities and a resulting loss of $39,000 on the sale of $11.1 million in low yielding SAIF index loans.

Non-Interest
Expenses. Non-interest expenses increased $445,000 for the year ended June 30, 2007 when compared to the year ended June 30, 2006. We experienced increases in personnel cost, occupancy, data processing, advertising and stockholders
relations costs of $253,000, $24,000, $59,000, $49,000 and $61,000, respectively and a decrease in deferred FASB 91 loan origination personnel costs of $10,000 when compared to the 2006 period.

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 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, nature and volume of the loan portfolio, adverse situations that may affect the
borrowers ability to repay, the value and



- 22 -



---

adequacy of collateral, and prevailing economic conditions in the Companys market area. For loans determined to be impaired, the related allowance is
based on discounted cash flows using the loans initial effective interest rate or the fair value of the collateral if the loan is collateral dependent. 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 revision. 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.

The Companys policy regarding past due loans normally requires a prompt charge-off to the allowance
for loan losses when uncollectibility of the loan balance is confirmed. Further collection efforts are then pursued through various means available. Subsequent recoveries, if any, are credited to the allowance. Loans carried in a non-accrual status
are generally collateralized, and probable future losses are considered in the determination of the allowance for loan losses.

Non-performing Assets

The following table sets forth, at the dates indicated, information with respect to the Companys non-accrual loans, restructured loans, total
non-performing loans (non-accrual loans plus restructured loans), and total non-performing assets.



|                                                  |  |                             |        |   |                        |   |        |      |  |   |        |   |  |      |       |   |  |   |       |  
|------------------------------------------------- |  | --------------------------- | ------ | - | ---------------------- | - | ------ | ---- |  | - | ------ | - |  | ---- | ----- | - |  | - | ----- | -
|                                                  |  | For the Year Ended June 30, |       
|                                                  |  | 2007                        |        |   | 2006                   |   |        | 2005 |  |   | 2004   |   |  | 2003 |      
|                                                  |  |                             |        |   | (Dollars in thousands) |   |        |      | 
|Non-accrual loans                                 |  | $                           | 1,248  |   |                        | $ | 555    |      |  | $ | 1,106  |   |  | $    | 2,155 |   |  | $ | 2,252 |  
|Restructured loans                                |  |                             |       |   |                        |   |       |      |  |   |       |   |  |      |      |   |  |   |      |  
|                                                  |  |                             |        |   |                        |   |        |      |  |   |        |   |  |      |       |   |  |   |       |  
|Total non-performing loans                        |  |                             | 1,248  |   |                        |   | 555    |      |  |   | 1,106  |   |  |      | 2,155 |   |  |   | 2,252 |  
|Real estate owned                                 |  |                             | 94     |   |                        |   | 110    |      |  |   | 183    |   |  |      | 510   |   |  |   | 36    |  
|                                                  |  |                             |        |   |                        |   |        |      |  |   |        |   |  |      |       |   |  |   |       |  
|Total non-performing assets                       |  | $                           | 1,342  |   |                        | $ | 665    |      |  | $ | 1,289  |   |  | $    | 2,665 |   |  | $ | 2,288 |  
|                                                  |  |                             |        |   |                        |   |        |      |  |   |        |   |  |      |       |   |  |   |       |  
|Accruing loans past due 90 days or more           |  | $                           |   $   |   |                        |   |       |      |  | $ |       |   |  | $    |      |   |  | $ |      |  
|Allowance for loan losses                         |  |                             | 1,938  |   |                        |   | 1,901  |      |  |   | 1,593  |   |  |      | 1,532 |   |  |   | 1,416 |  
|Non-performing loans to period end loans          |  |                             | 0.70   | % |                        |   | 0.31   | %    |  |   | 0.71   | % |  |      | 1.86  | % |  |   | 2.06  | %
|Allowance for loan losses to period end loans     |  |                             | 1.08   | % |                        |   | 1.07   | %    |  |   | 1.02   | % |  |      | 1.32  | % |  |   | 1.29  | %
|Allowance for loan losses to non-performing loans |  |                             | 155.29 | % |                        |   | 342.52 | %    |  |   | 144.03 | % |  |      | 71.09 | % |  |   | 62.86 | %
|Non-performing assets to total assets             |  |                             | 0.56   | % |                        |   | 0.31   | %    |  |   | 0.66   | % |  |      | 1.70  | % |  |   | 1.60  | %

The accrual of interest on loans is discontinued at the time the loan is 90 days past due and moved to non-accrual
status. Past due status is based on contractual terms of the loan. In all cases, loans are placed on non-accrual status at an earlier date if collection of principal or interest is considered doubtful according to internal evaluation policies.

All interest accrued but not collected for loans that are placed on non-accrual or charged off is reversed against interest income. The interest on these
loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are
reasonably assured.

Loans are also placed on non-accrual status in cases where it is uncertain as to whether the borrower can satisfy the contractual
terms of the loan agreement. Amounts received on non-accrual loans generally are applied first to interest and then to principal only after all past due interest 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. Interest income on non-accrual loans that would have been recorded for the years ended June 30, 2007 and 2006 had the loans been current was approximately
$50,000 and $30,000, respectively.



- 23 -



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Analysis of Allowance for Loan Losses

The provision for loan losses charged to operations is an amount sufficient to bring the allowance for loan losses to an estimated balance considered adequate to absorb probable losses inherent in the portfolio. See
our critical accounting policy for additional discussion regarding the allowance for loan losses.

The following table sets forth the composition of the
loan portfolio by category at the dates indicated and highlights our general emphasis on mortgage lending.

Allocation of the Allowance for Loan Losses
(dollars in thousands)



|                                     |  |                     |       |                                              |                     |   |        |                     |                                              |  |        |        |  |                                              |       |  |        |  
|------------------------------------ |  | ------------------- | ----- | -------------------------------------------- | ------------------- | - | ------ | ------------------- | -------------------------------------------- |  | ------ | ------ |  | -------------------------------------------- | ----- |  | ------ | -
|                                     |  | As of June 30, 2007 |       |                                              | As of June 30, 2006 |   |        | As of June 30, 2005 |                                             
|                                     |  | Amount              |       | Percent ofloans ineachcategory tototal loans |                     |   | Amount |                     | Percent ofloans ineachcategory tototal loans |  |        | Amount |  | Percent ofloans ineachcategory tototal loans |      
|Commercial, Financial & Agricultural |  | $                   | 157   |                                              | 4.37                | % |        | $                   | 100                                          |  | 4.38   | %      |  | $                                            | 125   |  | 6.46   | %
|Real Estate  construction           |  |                     | 241   |                                              | 17.61               | % |        |                     | 208                                          |  | 15.54  | %      |  |                                              | 59    |  | 13.23  | %
|Real Estate  mortgage               |  |                     | 1,154 |                                              | 75.39               | % |        |                     | 1,225                                        |  | 77.14  | %      |  |                                              | 1,019 |  | 77.41  | %
|Installment loans to individuals     |  |                     | 90    |                                              | 2.04                | % |        |                     | 89                                           |  | 2.63   | %      |  |                                              | 154   |  | 2.75   | %
|Other                                |  |                     | 71    |                                              | 0.59                | % |        |                     | 51                                           |  | 0.31   | %      |  |                                              | 33    |  | 0.15   | %
|Unallocated                          |  |                     | 225   |                                              | N/A                 |   |        |                     | 228                                          |  | N/A    |        |  |                                              | 203   |  | N/A    |  
|                                     |  |                     |       |                                              |                     |   |        |                     |                                              |  |        |        |  |                                              |       |  |        |  
|                                     |  | $                   | 1,938 |                                              | 100.00              | % |        | $                   | 1,901                                        |  | 100.00 | %      |  | $                                            | 1,593 |  | 100.00 | %
|                                     |  |                     |       |                                              |                     |   |        |                     |                                              |  |        |        |  |                                              |       |  |        |  



|                                     |  |                     |       |                                              |                     |   |        |   |                                              |  |        |  
|------------------------------------ |  | ------------------- | ----- | -------------------------------------------- | ------------------- | - | ------ | - | -------------------------------------------- |  | ------ | -
|                                     |  |                    
|                                     |  | As of June 30, 2004 |       |                                              | As of June 30, 2003 |  
|                                     |  | Amount              |       | Percent ofloans ineachcategory tototal loans |                     |   | Amount |   | Percent ofloans ineachcategory tototal loans | 
|Commercial, Financial & Agricultural |  | $                   | 118   |                                              | 7.90                | % |        | $ | 339                                          |  | 5.50   | %
|Real Estate  construction           |  |                     | 31    |                                              | 6.32                | % |        |   |                                             |  | 2.12   | %
|Real Estate  mortgage               |  |                     | 875   |                                              | 81.74               | % |        |   | 824                                          |  | 84.58  | %
|Installment loans to individuals     |  |                     | 167   |                                              | 3.83                | % |        |   | 86                                           |  | 7.00   | %
|Other                                |  |                     | 9     |                                              | 0.21                | % |        |   | 29                                           |  | 0.80   | %
|Unallocated                          |  |                     | 332   |                                              | N/A                 |   |        |   | 138                                          |  | N/A    |  
|                                     |  |                     |       |                                              |                     |   |        |   |                                              |  |        |  
|                                     |  | $                   | 1,532 |                                              | 100.00              | % |        | $ | 1,416                                        |  | 100.00 | %
|                                     |  |                     |       |                                              |                     |   |        |   |                                              |  |        |  

Liquidity and Capital Resources

During the year ended June 30, 2007, Great Pee Dee paid total cash dividends of $0.64 per share or approximately $1.1 million. Although Great Pee Dee anticipates
that it will continue to declare cash dividends on a regular basis until the completion of the merger with First Bancorp, Inc. 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 the Bank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



- 24 -



---

security principal repayments, deposits, borrowings 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, 2007, liquid assets (cash, interest-earning deposits, federal funds sold and investment
securities) were approximately $39.8 million, which represents 23.3% of deposits. At that date, outstanding loan commitments were $30.7 million, the undisbursed portion of construction loans was $10.7 million and undrawn lines of credit totaled
$16.0 million. Funding for these commitments is expected to be provided from current liquidity, deposits, FHLB advances, loan and mortgage-backed securities principal repayments, maturing investments and income generated from operations. The Bank
also has access to the brokered certificates of deposit (CDs) market. The Bank had approximately $35.6 million in brokered CDs at June 30, 2007. Supplementing these liquidity sources, the Bank has available lines of credit from various
correspondent banks to purchase federal funds on a short-term basis of approximately $8.1 million. As of June 30, 2007, no borrowings were outstanding against these lines of credit. The Bank also has the ability to borrow up to $54.5 million
from the FHLB of Atlanta. As of June 30, 2007, $36.4 million was borrowed from the FHLB.

Under federal capital regulations, the Bank 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 the Companys consolidated financial statements. At June 30, 2007 and 2006, the Bank exceeded all such requirements.

The Bank
is restricted in its ability to pay dividends and to make distributions. A significant source of the Companys funds is dividends received from the Bank. In fiscal 2007, a $2.9 million dividend was paid by the Bank to Company. At June 30,
2007, notification is required by Office of Thrift Supervision for any payment of dividends from the Bank to the Company.

Management is not aware of any
known trends, except the pending merger, 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.

Managements attestation under Section 404 of the Sarbanes-Oxley Act is required for the Company for the fiscal year ending
June 30, 2008.

Critical Accounting Policies and Estimates

The Companys discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of these consolidated financial statements requires the Company to make estimates and judgments regarding uncertainties that affect the reported amounts of assets, liabilities,
revenues and expenses. On an ongoing basis, the Company evaluates its estimates which are based upon historical experience and on other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these
estimates under different assumptions or conditions.

The Companys significant accounting policies are described in Note B to the consolidated
financial statements. The Company considers the following accounting policies to be most critical in their potential effect on its financial position or results of operations:

Allowance for Loan Losses

Due to the estimation process and the potential materiality of the amounts
involved, the Company has identified the accounting for the allowance for loan losses and the related provision for loan losses as an accounting policy critical to the Companys consolidated financial statements. The allowance for loan losses
is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent
recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon
managements periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrowers ability to repay, estimated value of any
underlying



- 25 -



---

collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision
as more information becomes available.

The allowance consists of specific, general and unallocated components. The specific component relates to loans
that are classified as either doubtful, substandard or special mention. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired
loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors. An unallocated component is maintained to cover uncertainties that
could affect managements estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in
the portfolio.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the
scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting
scheduled principal and interest payments when due. All non-accrual loans are considered impaired.

Loans that experience insignificant payment delays and
payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the
borrower, including the length of the delay, the reasons for the delay, the borrowers prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis by
either the present value of expected future cash flows discounted at the loans effective interest rate or the fair value of the collateral if the loan is collateral dependent.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and certain residential loans for impairment
disclosures, unless such loans are the subject of a restructuring agreement.

Interest Income Recognition

The accrual of interest on loans is discontinued at the time the loan is 90 days past due or impaired. Past due status is based on contractual terms of the loan. In all
cases, loans are placed on non-accrual status at an earlier date if collection of principal or interest is considered doubtful according to internal evaluation policies.

All interest accrued but not collected for loans that are placed on non-accrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery
method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Loans are also placed on non-accrual status in cases where it is uncertain as to whether the borrower can satisfy the contractual terms of the loan agreement. Amounts
received on non-accrual loans generally are applied first to interest and then to principal only after all past due interest 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.

Off-Balance Sheet Arrangements

Information about the Banks off-balance sheet risk exposure is presented in Note M to the accompanying consolidated financial statements. As part of our ongoing
business, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as special purpose entities (SPEs) or variable-interest entities (VIEs), which
generally are established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of June 30, 2007, we are not involved in any unconsolidated SPE or VIE transactions



- 26 -



---

Contractual Obligations

Information about the Companys contractual obligations is presented in the Footnotes to the accompanying consolidated financial statements and in our managements discussion and analysis.

Recent Accounting Pronouncements

See Note B
to the financial statements for a full description of recent accounting pronouncements including the respective expected dates of adoption and effects on results of operations and financial condition.

Forward-looking Statements

This 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.

Item 7. Financial Statements



- 27 -



---

LOGO

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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 subsidiary as of June 30, 2007 and 2006 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Companys internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal
control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 Subsidiary as of June 30, 2007 and 2006,
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.

LOGO

Charlotte, North Carolina

September 19, 2007



- 28 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

June 30, 2007 and 2006

---



|                                                                                           |  |      |             |   |      |   |             |  
|------------------------------------------------------------------------------------------ |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                           |  | 2007 |             |   | 2006 |  
|ASSETS                                                                                     |  |      |             |   |      |   |             |  
|Cash on hand and due from banks                                                            |  | $    | 3,206,762   |   |      | $ | 3,354,586   |  
|Interest-earning balances in other banks                                                   |  |      | 368,511     |   |      |   | 488,193     |  
|Federal funds sold                                                                         |  |      | 12,220,000  |   |      |   | 858,000     |  
|                                                                                           |  |      |             |   |      |   |             |  
|Cash and cash equivalents                                                                  |  |      | 15,795,273  |   |      |   | 4,700,779   |  
|Investment securities available for sale, at fair value (Note C)                           |  |      | 20,025,241  |   |      |   | 20,487,474  |  
|Loans (Note D)                                                                             |  |      | 178,686,662 |   |      |   | 177,175,621 |  
|Allowance for loan losses                                                                  |  |      | (1,937,997  | ) |      |   | (1,901,034  | )
|                                                                                           |  |      |             |   |      |   |             |  
|Net Loans                                                                                  |  |      | 176,748,665 |   |      |   | 175,274,587 |  
|Loans held for sale (Note P)                                                               |  |      | 12,318,262  |   |      |   | 958,150     |  
|Accrued interest receivable                                                                |  |      | 1,165,920   |   |      |   | 1,026,733   |  
|Restricted stock, at cost                                                                  |  |      | 2,252,700   |   |      |   | 1,997,787   |  
|Premises and equipment, net (Note E)                                                       |  |      | 4,901,813   |   |      |   | 5,017,468   |  
|Real estate                                                                                |  |      | 558,000     |   |      |   | 109,500     |  
|Intangible assets (Note F)                                                                 |  |      | 493,810     |   |      |   | 678,610     |  
|Other assets (Note K)                                                                      |  |      | 2,487,425   |   |      |   | 2,455,230   |  
|                                                                                           |  |      |             |   |      |   |             |  
|TOTAL ASSETS                                                                               |  | $    | 236,747,109 |   |      | $ | 212,706,318 |  
|                                                                                           |  |      |             |   |      |   |             |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                       |  |      |             |   |      |   |             |  
|LIABILITIES                                                                                |  |      |             |   |      |   |             |  
|Deposit accounts (Note G)                                                                  |  | $    | 171,203,575 |   |      | $ | 151,339,258 |  
|Short-term borrowings (Note H)                                                             |  |      | 4,500,000   |   |      |   | 9,500,000   |  
|Long-term borrowings (Note H)                                                              |  |      | 31,900,000  |   |      |   | 23,600,000  |  
|Accrued interest payable                                                                   |  |      | 392,274     |   |      |   | 287,356     |  
|Advance payments by borrowers for property taxes and insurance                             |  |      | 116,689     |   |      |   | 120,775     |  
|Accrued expenses and other liabilities                                                     |  |      | 1,319,956   |   |      |   | 1,319,337   |  
|                                                                                           |  |      |             |   |      |   |             |  
|TOTAL LIABILITIES                                                                          |  |      | 209,432,494 |   |      |   | 186,166,726 |  
|                                                                                           |  |      |             |   |      |   |             |  
|COMMITMENTS AND CONTINGENCIES (Note M)                                                     |  |      |             |   |      |   |             |  
|STOCKHOLDERS EQUITY (Notes I, J and L)                                                    |  |      |             |   |      |   |             |  
|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                                                                 |  |      | 22,130,865  |   |      |   | 22,093,615  |  
|Unearned compensation                                                                      |  |      | (581,643    | ) |      |   | (707,438    | )
|Retained earnings, substantially restricted                                                |  |      | 12,193,959  |   |      |   | 11,746,235  |  
|Accumulated other comprehensive loss                                                       |  |      | (486,697    | ) |      |   | (674,725    | )
|Common stock in treasury, at cost (434,636 and 434,448 shares, respectively)               |  |      | (5,964,115  | ) |      |   | (5,940,341  | )
|                                                                                           |  |      |             |   |      |   |             |  
|TOTAL STOCKHOLDERS EQUITY                                                                 |  |      | 27,314,615  |   |      |   | 26,539,592  |  
|                                                                                           |  |      |             |   |      |   |             |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                 |  | $    | 236,747,109 |   |      | $ | 212,706,318 |  
|                                                                                           |  |      |             |   |      |   |             |  

The accompanying notes are an integral part of these consolidated financial statements.



- 29 -



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended June 30, 2007 and 2006

---



|                                                    |  |      |            |   |      |   |            |  
|--------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                    |  | 2007 |            |   | 2006 |  
|INTEREST INCOME                                     |  |      |            |   |      |   |            |  
|Loans                                               |  | $    | 13,508,512 |   |      | $ | 11,575,412 |  
|Investments                                         |  |      | 880,335    |   |      |   | 1,093,238  |  
|Deposits in other banks and federal funds sold      |  |      | 126,988    |   |      |   | 84,996     |  
|                                                    |  |      |            |   |      |   |            |  
|TOTAL INTEREST INCOME                               |  |      | 14,515,835 |   |      |   | 12,753,646 |  
|                                                    |  |      |            |   |      |   |            |  
|INTEREST EXPENSE                                    |  |      |            |   |      |   |            |  
|Deposits (Note G)                                   |  |      | 6,288,224  |   |      |   | 4,755,585  |  
|Short-term borrowings                               |  |      | 503,936    |   |      |   | 213,342    |  
|Long-term borrowings                                |  |      | 1,170,459  |   |      |   | 1,068,922  |  
|                                                    |  |      |            |   |      |   |            |  
|TOTAL INTEREST EXPENSE                              |  |      | 7,962,619  |   |      |   | 6,037,849  |  
|                                                    |  |      |            |   |      |   |            |  
|NET INTEREST INCOME                                 |  |      | 6,553,216  |   |      |   | 6,715,797  |  
|PROVISION FOR LOAN LOSSES (Note D)                  |  |      | 167,500    |   |      |   | 362,500    |  
|                                                    |  |      |            |   |      |   |            |  
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |  |      | 6,385,716  |   |      |   | 6,353,297  |  
|                                                    |  |      |            |   |      |   |            |  
|NON-INTEREST INCOME                                 |  |      |            |   |      |   |            |  
|Service fees and charges                            |  |      | 606,175    |   |      |   | 516,863    |  
|Gain on sales of loans held for sale                |  |      | 84,068     |   |      |   | 73,605     |  
|Brokerage operations                                |  |      | 307,294    |   |      |   | 316,650    |  
|Loss on sale of investment securities               |  |      | (6,993     | ) |      |   | (143,640   | )
|Gain on sale of restricted stock                    |  |      | 83,070     |   |      |   |           |  
|Other                                               |  |      | 68,163     |   |      |   | 9,007      |  
|                                                    |  |      |            |   |      |   |            |  
|TOTAL NON-INTEREST INCOME                           |  |      | 1,141,777  |   |      |   | 772,485    |  
|                                                    |  |      |            |   |      |   |            |  
|NON-INTEREST EXPENSES                               |  |      |            |   |      |   |            |  
|Personnel costs                                     |  |      | 2,422,314  |   |      |   | 2,169,007  |  
|Occupancy                                           |  |      | 601,175    |   |      |   | 577,286    |  
|Data processing                                     |  |      | 554,719    |   |      |   | 495,455    |  
|Amortization of intangibles                         |  |      | 184,800    |   |      |   | 184,800    |  
|Advertising                                         |  |      | 156,687    |   |      |   | 107,659    |  
|Stockholder relations cost                          |  |      | 290,444    |   |      |   | 229,265    |  
|Other                                               |  |      | 818,659    |   |      |   | 820,475    |  
|                                                    |  |      |            |   |      |   |            |  
|TOTAL NON-INTEREST EXPENSES                         |  |      | 5,028,798  |   |      |   | 4,583,947  |  
|                                                    |  |      |            |   |      |   |            |  
|INCOME BEFORE INCOME TAXES                          |  |      | 2,498,695  |   |      |   | 2,541,835  |  
|INCOME TAXES (Note K)                               |  |      | 955,505    |   |      |   | 942,984    |  
|                                                    |  |      |            |   |      |   |            |  
|NET INCOME                                          |  | $    | 1,543,190  |   |      | $ | 1,598,851  |  
|                                                    |  |      |            |   |      |   |            |  
|EARNINGS PER COMMON SHARE (Note B)                  |  |      |            |   |      |   |            |  
|Basic                                               |  | $    | 0.90       |   |      | $ | 0.93       |  
|                                                    |  |      |            |   |      |   |            |  
|Diluted                                             |  | $    | 0.89       |   |      | $ | 0.92       |  
|                                                    |  |      |            |   |      |   |            |  
|WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (Note B) |  |      |            |   |      |   |            |  
|Basic                                               |  |      | 1,721,618  |   |      |   | 1,722,867  |  
|Diluted                                             |  |      | 1,726,159  |   |      |   | 1,729,891  |  

The accompanying notes are an integral part of these consolidated financial statements.



- 30 -



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

Years Ended June 30, 2007 and 2006

---



|                                                                    |  |                        |  |             |                             |  |                           |        |  |                       |            |   |                   |   |          |                                    |  |   |                |   |  |                           |          |   |  |   |            |   |  |   |            |  
|------------------------------------------------------------------- |  | ---------------------- |  | ----------- | --------------------------- |  | ------------------------- | ------ |  | --------------------- | ---------- | - | ----------------- | - | -------- | ---------------------------------- |  | - | -------------- | - |  | ------------------------- | -------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                                                    |  | Shares of common stock |  |             | Par value ofof
common stock |  | Additionalpaid-in capital |        |  | Unearned compensation |            |   | Retained earnings |   |          | Accumulatedothercomprehensive loss |  |   | Treasury stock |   |  | Totalstockholders equity |         
|                                                                    |  | Issued                 |  | In treasury |                             |  |                           |        |  |                       |            |  
|Balance at June 30, 2005                                            |  | 2,224,617              |  | 423,107     |                             |  | $                         | 22,246 |  | $                     | 22,008,532 |   |                   | $ | (872,774 | )                                  |  | $ | 11,242,041     |   |  | $                         | (387,823 | ) |  | $ | (5,755,747 | ) |  | $ | 26,256,475 |  
|Comprehensive income:                                               |  |                        |  |             |                             |  |                           |        |  |                       |            |   |                   |   |          |                                    |  |   |                |   |  |                           |          |   |  |   |            |   |  |   |            |  
|Net income                                                          |  |                       |  |            |                             |  |                           |       |  |                       |           |   |                   |   |         |                                    |  |   | 1,598,851      |   |  |                           |         |   |  |   |           |   |  |   | 1,598,851  |  
|Change in accumulated other comprehensive loss, net of income taxes |  |                       |  |            |                             |  |                           |       |  |                       |           |   |                   |   |         |                                    |  |   |               |   |  |                           | (286,902 | ) |  |   |           |   |  |   | (286,902   | )
|Total comprehensive income                                          |  |                        |  |             |                             |  |                           |        |  |                       |            |   |                   |   |          |                                    |  |   |                |   |  |                           |          |   |  |   |            |   |  |   | 1,311,949  |  
|                                                                    |  |                        |  |             |                             |  |                           |        |  |                       |            |   |                   |   |          |                                    |  |   |                |   |  |                           |          |   |  |   |            |   |  |   |            |  
|Purchase of treasury stock                                          |  |                       |  | 12,886      |                             |  |                           |       |  |                       |           |   |                   |   |         |                                    |  |   |               |   |  |                           |         |   |  |   | (200,319   | ) |  |   | (200,319   | )
|Exercise of stock options                                           |  |                       |  | (1,545      | )                           |  |                           |       |  |                       | (9,600     | ) |                   |   |         |                                    |  |   |               |   |  |                           |         |   |  |   | 15,725     |   |  |   | 6,125      |  
|RRP and incentive shares earned                                     |  |                       |  |            |                             |  |                           |       |  |                       |           |   |                   |   | 50,131   |                                    |  |   |               |   |  |                           |         |   |  |   |           |   |  |   | 50,131     |  
|Release of ESOP shares                                              |  |                       |  |            |                             |  |                           |       |  |                       | 87,940     |   |                   |   | 115,205  |                                    |  |   |               |   |  |                           |         |   |  |   |           |   |  |   | 203,145    |  
|Tax benefit of stock option exercise                                |  |                       |  |            |                             |  |                           |       |  |                       | 6,743      |   |                   |   |         |                                    |  |   |               |   |  |                           |         |   |  |   |           |   |  |   | 6,743      |  
|Cash dividends paid                                                 |  |                        |  |             |                             |  |                           |        |  |                       |            |   |                   |   |          |                                    |  |   |                |   |  |                           |          |   |  |   |            |   |  |   |            |  
|($0.64 per share)                                                   |  |                       |  |            |                             |  |                           |       |  |                       |           |   |                   |   |         |                                    |  |   | (1,094,657     | ) |  |                           |         |   |  |   |           |   |  |   | (1,094,657 | )
|                                                                    |  |                        |  |             |                             |  |                           |        |  |                       |            |   |                   |   |          |                                    |  |   |                |   |  |                           |          |   |  |   |            |   |  |   |            |  
|Balance at June 30, 2006                                            |  | 2,224,617              |  | 434,448     |                             |  |                           | 22,246 |  |                       | 22,093,615 |   |                   |   | (707,438 | )                                  |  |   | 11,746,235     |   |  |                           | (674,725 | ) |  |   | (5,940,341 | ) |  |   | 26,539,592 |  
|Comprehensive income:                                               |  |                        |  |             |                             |  |                           |        |  |                       |            |   |                   |   |          |                                    |  |   |                |   |  |                           |          |   |  |   |            |   |  |   |            |  
|Net income                                                          |  |                       |  |            |                             |  |                           |       |  |                       |           |   |                   |   |         |                                    |  |   | 1,543,190      |   |  |                           |         |   |  |   |           |   |  |   | 1,543,190  |  
|Change in accumulated other comprehensive loss, net of income taxes |  |                       |  |            |                             |  |                           |       |  |                       |           |   |                   |   |         |                                    |  |   |               |   |  |                           | 188,028  |   |  |   |           |   |  |   | 188,028    |  
|                                                                    |  |                        |  |             |                             |  |                           |        |  |                       |            |   |                   |   |          |                                    |  |   |                |   |  |                           |          |   |  |   |            |   |  |   |            |  
|Total comprehensive income                                          |  |                        |  |             |                             |  |                           |        |  |                       |            |   |                   |   |          |                                    |  |   |                |   |  |                           |          |   |  |   |            |   |  |   | 1,731,218  |  
|                                                                    |  |                        |  |             |                             |  |                           |        |  |                       |            |   |                   |   |          |                                    |  |   |                |   |  |                           |          |   |  |   |            |   |  |   |            |  
|Purchase of treasury stock                                          |  |                       |  | 9,073       |                             |  |                           |       |  |                       |           |   |                   |   |         |                                    |  |   |               |   |  |                           |         |   |  |   | (139,325   | ) |  |   | (139,325   | )
|Exercise of stock options                                           |  |                       |  | (4,885      | )                           |  |                           |       |  |                       | (19,355    | ) |                   |   |         |                                    |  |   |               |   |  |                           |         |   |  |   | 61,638     |   |  |   | 42,283     |  
|RRP shares issued                                                   |  |                       |  | (4,000      | )                           |  |                           |       |  |                       | (53,913    | ) |                   |   |         |                                    |  |   |               |   |  |                           |         |   |  |   | 53,913     |   |  |   |           |  
|Reclassification of unearned compensation                           |  |                       |  |            |                             |  |                           |       |  |                       | (18,944    | ) |                   |   | 18,944   |                                    |  |   |               |   |  |                           |         |   |  |   |           |   |  |   |           |  
|Release of ESOP shares                                              |  |                       |  |            |                             |  |                           |       |  |                       | 83,581     |   |                   |   | 106,851  |                                    |  |   |               |   |  |                           |         |   |  |   |           |   |  |   | 190,432    |  
|Tax benefit of stock option exercise                                |  |                       |  |            |                             |  |                           |       |  |                       | 9,368      |   |                   |   |         |                                    |  |   |               |   |  |                           |         |   |  |   |           |   |  |   | 9,368      |  
|Stock based compensation expense                                    |  |                       |  |            |                             |  |                           |       |  |                       | 36,513     |   |                   |   |         |                                    |  |   |               |   |  |                           |         |   |  |   |           |   |  |   | 36,513     |  
|Cash dividends paid                                                 |  |                        |  |             |                             |  |                           |        |  |                       |            |   |                   |   |          |                                    |  |   |                |   |  |                           |          |   |  |   |            |   |  |   |            |  
|($0.64 per share)                                                   |  |                       |  |            |                             |  |                           |       |  |                       |           |   |                   |   |         |                                    |  |   | (1,095,466     | ) |  |                           |         |   |  |   |           |   |  |   | (1,095,466 | )
|                                                                    |  |                        |  |             |                             |  |                           |        |  |                       |            |   |                   |   |          |                                    |  |   |                |   |  |                           |          |   |  |   |            |   |  |   |            |  
|Balance at June 30, 2007                                            |  | 2,224,617              |  | 434,636     |                             |  | $                         | 22,246 |  | $                     | 22,130,865 |   |                   | $ | (581,643 | )                                  |  | $ | 12,193,959     |   |  | $                         | (486,697 | ) |  | $ | (5,964,115 | ) |  | $ | 27,314,615 |  
|                                                                    |  |                        |  |             |                             |  |                           |        |  |                       |            |   |                   |   |          |                                    |  |   |                |   |  |                           |          |   |  |   |            |   |  |   |            |  

The accompanying notes are an integral part of these consolidated financial statements.



- 31 -



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended June 30, 2007 and 2006

---



|                                                                                         |  |      |             |   |      |   |             |  
|---------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                         |  | 2007 |             |   | 2006 |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                     |  |      |             |   |      |   |             |  
|Net income                                                                               |  | $    | 1,543,190   |   |      | $ | 1,598,851   |  
|Adjustments to reconcile net income to net cash provided (used) by operating activities: |  |      |             |   |      |   |             |  
|Depreciation                                                                             |  |      | 315,198     |   |      |   | 324,759     |  
|Amortization of intangibles                                                              |  |      | 184,800     |   |      |   | 184,800     |  
|Provision for loan losses                                                                |  |      | 167,500     |   |      |   | 362,500     |  
|Gain on sale of foreclosed real estate                                                   |  |      | (3,773      | ) |      |   | (1,428      | )
|Gain on sale of restricted stock                                                         |  |      | (83,070     | ) |      |   |            |  
|Loss on sale of investment securities                                                    |  |      | 6,993       |   |      |   | 143,640     |  
|Gain on sale of loans held for sale                                                      |  |      | (84,068     | ) |      |   | (73,605     | )
|Deferred income taxes                                                                    |  |      | (72,086     | ) |      |   | (166,058    | )
|ESOP contribution expense                                                                |  |      | 190,432     |   |      |   | 203,145     |  
|Stock-based compensation expense                                                         |  |      | 36,513      |   |      |   | 50,131      |  
|Proceeds from sales of loans held for sale                                               |  |      | 9,712,938   |   |      |   | 23,484,653  |  
|Originations of loans held for sale                                                      |  |      | (20,988,981 | ) |      |   | (12,066,598 | )
|Change in assets and liabilities:                                                        |  |      |             |   |      |   |             |  
|Increase in accrued interest receivable                                                  |  |      | (139,187    | ) |      |   | (136,944    | )
|Increase in other assets                                                                 |  |      | (75,674     | ) |      |   | (138,459    | )
|Increase in accrued interest payable                                                     |  |      | 104,918     |   |      |   | 96,622      |  
|Increase in accrued expenses and other liabilities                                       |  |      | 619         |   |      |   | 198,834     |  
|                                                                                         |  |      |             |   |      |   |             |  
|NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES                                         |  |      | (9,183,738  | ) |      |   | 14,064,843  |  
|                                                                                         |  |      |             |   |      |   |             |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                     |  |      |             |   |      |   |             |  
|Purchases of available for sale investments                                              |  |      | (3,899,675  | ) |      |   | (289,205    | )
|Proceeds from maturities, calls and sales of available for sale investment securities    |  |      | 4,658,506   |   |      |   | 7,971,375   |  
|Proceeds from the sale of land                                                           |  |      |            |   |      |   | 150,000     |  
|Purchase of real estate held for investment                                              |  |      | (464,000    | ) |      |   |            |  
|Purchase of restricted stock                                                             |  |      | (503,500    | ) |      |   | (317,000    | )
|Redemption of restricted stock                                                           |  |      | 331,657     |   |      |   |            |  
|Net increase in loans                                                                    |  |      | (1,752,186  | ) |      |   | (32,840,129 | )
|Purchase of premises and equipment                                                       |  |      | (199,543    | ) |      |   | (1,393,739  | )
|Proceeds from sale of real estate acquired in settlement of loans                        |  |      | 129,882     |   |      |   | 222,428     |  
|                                                                                         |  |      |             |   |      |   |             |  
|NET CASH USED IN INVESTING ACTIVITIES                                                    |  |      | (1,698,859  | ) |      |   | (26,496,270 | )
|                                                                                         |  |      |             |   |      |   |             |  

The accompanying notes are an integral part of these consolidated financial statements



- 32 -



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended June 30, 2007 and 2006

---



|                                                                                                                     |  |      |            |   |      |   |            |  
|-------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                                                                     |  | 2007 |            |   | 2006 |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                                                                 |  |      |            |   |      |   |            |  
|Net increase (decrease) in demand accounts                                                                           |  | $    | 850,118    |   |      | $ | (4,761,598 | )
|Net increase in certificates of deposit                                                                              |  |      | 19,014,199 |   |      |   | 19,527,604 |  
|Decrease in advance payments by borrowers for taxes and insurance                                                    |  |      | (4,086     | ) |      |   | (36,692    | )
|Net increase (decrease) in short-term borrowings                                                                     |  |      | (5,000,000 | ) |      |   | 1,052,000  |  
|Proceeds from long-term borrowings                                                                                   |  |      | 8,300,000  |   |      |   | 600,000    |  
|Purchase of treasury stock                                                                                           |  |      | (139,325   | ) |      |   | (200,319   | )
|Proceeds from exercise of stock options                                                                              |  |      | 42,283     |   |      |   | 6,125      |  
|Tax benefit from exercise of non-qualified stock options                                                             |  |      | 9,368      |   |      |   | 6,743      |  
|Cash dividends paid                                                                                                  |  |      | (1,095,466 | ) |      |   | (1,094,657 | )
|                                                                                                                     |  |      |            |   |      |   |            |  
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                                                            |  |      | 21,977,091 |   |      |   | 15,099,206 |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|NET INCREASE IN CASH AND CASH EQUIVALENTS                                                                            |  |      | 11,094,494 |   |      |   | 2,667,779  |  
|CASH AND CASH EQUIVALENTS, BEGINNING                                                                                 |  |      | 4,700,779  |   |      |   | 2,033,000  |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|CASH AND CASH EQUIVALENTS, ENDING                                                                                    |  | $    | 15,795,273 |   |      | $ | 4,700,779  |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                                                                    |  |      |            |   |      |   |            |  
|Cash paid during the year for:                                                                                       |  |      |            |   |      |   |            |  
|Interest                                                                                                             |  | $    | 7,857,701  |   |      | $ | 5,941,227  |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|Income taxes                                                                                                         |  | $    | 1,176,275  |   |      | $ | 986,500    |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES                                                 |  |      |            |   |      |   |            |  
|Loans receivable transferred to real estate acquired in settlement of loans                                          |  | $    | 301,058    |   |      | $ | 362,026    |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|Loans receivable originated to finance the sale of foreclosed real estate sold                                       |  | $    | 190,450    |   |      | $ | 214,850    |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|Net unrealized gain (loss) on investment securities available for sale, net of deferred income tax expense (benefit) |  | $    | 188,028    |   |      | $ | (286,902   | )
|                                                                                                                     |  |      |            |   |      |   |            |  
|Reclassification of loans to loans held for sale                                                                     |  | $    |           |   |      | $ | 11,187,000 |  
|                                                                                                                     |  |      |            |   |      |   |            |  

The accompanying notes are an integral part of these consolidated financial statements.



- 33 -



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE AMERGER BETWEEN
GREAT PEE DEE BANCORP, INC. AND FIRST BANCORP

On July 12, 2007, Great Pee Dee Bancorp, Inc. entered into a merger agreement with First Bancorp.
Pursuant to the agreement, Great Pee Dee will be merged with and into First Bancorp. Under the terms of the merger agreement, each share of Great Pee Dee common stock issued and outstanding at the effective time of the merger will be converted into
and exchanged for the right to receive 1.15 shares of First Bancorp common stock. The total transaction price is valued at approximately $38.2 million. Closing of the merger, which is expected to occur in the fourth quarter of 2007 or the first
quarter of 2008, is subject to certain conditions, including the approval of the shareholders of Great Pee Dee, regulatory approvals, and other customary closing conditions. The Banks offices will become branch offices of First Bank, the
wholly-owned subsidiary of First Bancorp.

NOTE BSIGNIFICANT ACCOUNTING POLICIES

Organization and Operations

On December 31, 1997, pursuant to a Plan of Conversion which was approved by its
members and regulators, Sentry Bank & Trust (Sentry or the Bank), formerly First Federal Savings and Loan Association of Cheraw, 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 Sentry Bank & Trust upon its conversion to stock form. Great Pee Dee has no operations and conducts no business on its own other than owning its subsidiary, investing in liquid assets and lending funds to the Employee Stock
Ownership Plan (the ESOP) which was formed in connection with the Conversion. The consolidated entity is hereafter referred to as the Company.

Nature of Business

Sentry 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 and commercial real estate loans within 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.
Sentry 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.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of the Parent and its
subsidiary, together referred to as the Company. All significant inter-company transactions and balances are eliminated in consolidation.

The
accounting and reporting policies of Sentry follow accounting principles generally accepted in the United States of America and general practices within the banking industry. The following is a summary of the more significant accounting policies.

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.



- 34 -



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE BSIGNIFICANT
ACCOUNTING POLICIES (Continued)

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 loan losses and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans.

Investment Securities

Available-for-sale securities are reported
at fair value and consist of bonds, notes and mortgage-backed securities not classified as trading securities or 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 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 income as realized losses. In estimating other-than-temporary impairment losses, management considers (1) the
length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer of a
period of time sufficient to allow for any anticipated recovery in fair value. Premiums and discounts are recognized in interest income using the interest method over the terms of the securities.

Loans Held for Sale

Mortgage loans originated and intended for sale
in the secondary market or to other investors (See Note P) are carried at the lower of aggregate cost or fair value as determined by aggregate outstanding commitments from investors or current investor yield requirements. Net unrealized losses are
recognized through a valuation allowance by charges to income.

Mortgage loans held for sale are generally sold with servicing rights released. The
carrying value of mortgage loans sold is reduced by loan origination fees received from the borrower. Gains or losses on sales of mortgage loans are recognized based upon the difference between the selling price (including investor yield
requirements and servicing released premiums) and the carrying value of the related mortgage loans sold.

Loans Receivable

The Company grants mortgage, commercial and consumer loans to customers. A substantial portion of the loan portfolio is represented by mortgage loans throughout its
primary market area. The ability of the Companys debtors to honor their contracts is dependent upon the real estate and general economic conditions in this area.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for charge-offs, the
allowance for loan losses, and any deferred fees or costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment
of the related loan yield using the interest method.



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---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE BSIGNIFICANT
ACCOUNTING POLICIES (Continued)

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income. Loan losses are charged against the allowance when management believes the uncollectibility of a
loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Loans carried in a non-accrual status are generally collateralized, and probable future losses are considered in the determination of the allowance for loan
losses.

The allowance for loan losses is evaluated on a regular basis by management and is based upon managements periodic review of the
collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrowers ability to repay, estimated value of any underlying collateral and prevailing economic
conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance consists of specific, general and unallocated components. The specific component relates to loans that are classified as either doubtful, substandard or special mention. For such loans that are also classified as impaired, an
allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical
loss experience adjusted for qualitative factors. An unallocated component is maintained to cover uncertainties that could affect managements estimate of probable losses. The unallocated component of the allowance reflects the margin of
imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.

A loan is
considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors
considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.

Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case
basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrowers prior payment record, and the amount of the shortfall in relation to
the principal and interest owed. Impairment is measured on a loan by loan basis for loans by either the present value of expected future cash flows discounted at the loans effective interest rate or the fair value of the collateral if the loan
is collateral dependent.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not
separately identify individual consumer and certain residential loans for impairment disclosures.



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---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE BSIGNIFICANT
ACCOUNTING POLICIES (Continued)

Off-Balance Sheet Credit Related Financial Instruments

In the ordinary course of business, the Company has entered into commitments to extend credit, including mortgage loan commitments, home equity line commitments, and
letters of credit. Such financial instruments are recorded when they are funded.

Rate Lock and Sales Commitments

Loan commitments related to the origination or acquisition of mortgage loans that will be held for sale must be accounted for as derivative instruments. The Company
enters into commitments to originate loans whereby the interest rate on the loan is determined prior to funding (rate lock commitments). Rate lock commitments on mortgage loans that are intended to be sold are considered to be derivatives. Fair
value is based on fees currently charged to enter into similar agreements, and for fixed-rate commitments also considers the difference between current levels of interest rates and the committed rates. It has been determined that the value of these
commitments is not significant and has not been recognized in these consolidated financial statements.

The Company has entered into agreements to
sell certain of the loans at a stated interest rate. These sales commitments are considered to be derivatives. Fair value is based upon the difference between the current levels of interest rates for similar loans and the rate on the loan
committed to be sold. It has been determined that the value of these commitments is not significant and has not been recognized in these consolidated financial statements.

Premises and Equipment

Land is carried at cost. Buildings and equipment are carried at cost less accumulated
depreciation, calculated on the straight-line method over the estimated useful life of the related assets ranging from 40 years for buildings and 3 to 15 years for equipment.

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 income.

Restricted Stock

Investments in stock of the Federal Home Loan Bank of Atlanta (FHLB) are required by law of every member. This investment is carried at cost since redemption
of this stock has historically been at par. No ready market exists for the stock and it has no quoted market value. Due to the redemption requirements of the Federal Home Loan Bank no impairment exists in this stock.

Real Estate

Real estate acquired in settlement of loans is held for
sale and is initially recorded at fair value at the date of foreclosure. Fair values at foreclosure are based on appraisals less estimated selling costs. Losses arising at the time of acquisition of foreclosed properties are charged against the
allowance for loan losses. Subsequent gains and losses are provided by a charge to income in the period in which the need arises.

Real estate acquired and
held for sale is initially recorded at the purchase price at the date of acquisition. Gains and losses on the sale of other real estate owned and subsequent write-downs from periodic reevaluation of fair value are charged to other operating income.



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---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE BSIGNIFICANT
ACCOUNTING POLICIES (Continued)

Intangible Assets

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 is accounted for in accordance with Statement of Financial Accounting Standards
(SFAS) No. 72, Accounting for Certain Acquisitions of Banking or Thrift Institutions,as amended by SFAS No. 147,Acquisition of Certain Financial Institutions.As a result, none of those intangible assets constitutes
goodwill that must cease to be amortized under the provisions of SFAS No. 142, Goodwill and Other Intangible Assets.

In connection with the
March 2000 acquisition of a branch office in Florence, South Carolina, the Company recorded for $250,000 a non-compete agreement and recorded deposit-related intangible assets of $1,850,000. The non-compete agreement has been fully amortized. The
deposit-related intangible assets are being amortized using the straight-line method over ten years, ending June 30, 2010.

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 Company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 K. Such a deferred tax liability will only be recognized when it becomes apparent that those temporary differences will reverse in the foreseeable future.

Interest Income

The accrual of interest on loans is
discontinued at the time the loan is 90 days past due or impaired unless the credit is well-secured and in process of collection. Past due status is based on contractual terms of the loan. In all cases, loans are placed on non-accrual or charged-off
at an earlier date if collection of principal or interest is considered doubtful according to internal evaluation policies.

All interest accrued but not
collected for loans that are placed on non-accrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned
to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.



- 38 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE BSIGNIFICANT
ACCOUNTING POLICIES (Continued)

Interest Income (Continued)

Loans are also placed on non-accrual status in cases where it is uncertain as to whether the borrower can satisfy the contractual terms of the loan agreement. Amounts received on non-accrual loans generally are applied first to interest and
then to principal only after all past due interest 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.

Non-Interest Income

The primary sources of non-interest income are
service charges on deposit accounts, gains on sale of loans held for sale and investment services income. Deposit service charges are collected and recognized on a daily basis when the related activity to generate the revenue occurs. Gains on sale
of loans held for sale are recognized at the time of sale to a third-party and the loan is derecognized. See the policy note on loans held for sale for additional information. Investment services revenue is recognized monthly based upon commission
remittances from our clearing broker.

Advertising Expense

Advertising and public relations costs are generally expensed as incurred. External costs incurred in producing media advertising are expensed the first time the advertising takes place. External costs relating to direct mailing costs are
expensed in the period in which the direct mailings are sent. Advertising and public relations costs of $156,687 and $107,659 were included in the Companys results of operations for 2007 and 2006, respectively.

Stock Compensation Plans

Effective July 1, 2006, the Company
adopted Statement of Financial Accounting Standards (SFAS) No. 123 (revised 2004), Share-Based Payment, (SFAS No. 123R) which was issued by the Financial Accounting Standards Board (FASB) in
December 2004. SFAS No. 123R revises SFAS No. 123 Accounting for Stock Based Compensation, and supersedes Accounting Principles Bulletin (APB) No. 25, Accounting for Stock Issued to
Employees, (APB No. 25) and its related interpretations. SFAS No. 123R requires recognition of the cost of employee services received in exchange for an award of equity instruments in the financial statements over the period the
employee is required to perform the services in exchange for the award (presumptively the vesting period). SFAS No. 123R also requires measurement of the cost of employee services received in exchange for an award based on the grant-date fair
value of the award. SFAS No. 123R also amends SFAS No. 95 Statement of Cash Flows, to require that excess tax benefits be reported as financing cash inflows, rather than as a reduction of taxes paid, which is included
within operating cash flows.

The Company adopted SFAS No. 123R using the modified prospective application as permitted under SFAS No. 123R.
Accordingly, prior period amounts have not been restated. Under this application, the Company is required to record compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards that
remain outstanding at the date of adoption.

Prior to the adoption of SFAS No. 123R, the Company used the intrinsic value method as prescribed by APB
No. 25 and thus recognized no compensation expense for options granted with exercise prices equal to the fair market value of the Companys common stock on the date of grant.



- 39 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE B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. In accordance with accounting principles generally accepted in the United
States of America, Employee Stock Ownership Plan (ESOP) shares are only considered outstanding for earnings per share calculations when they are earned or committed to be released. 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. Anti-dilutive options have been excluded form the computation.
Approximately 79,000 options were anti-dilutive for the fiscal year ending June 30, 2007. Potential common shares that may be issued by the Company relate to outstanding stock options and restricted stock are determined using the treasury stock
method.

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



|                                                                                                |  |                      |  |          
|----------------------------------------------------------------------------------------------- |  | -------------------- |  | ---------
|                                                                                                |  | Years Ended June 30,
|                                                                                                |  | 2007                 |  | 2006     
|Average number of common shares outstanding used to calculate basic earnings per common share   |  | 1,721,618            |  | 1,722,867
|Effect of dilutive options and restricted stock                                                 |  | 4,541                |  | 7,024    
|                                                                                                |  |                      |  |          
|Average number of common shares outstanding used to calculate diluted earnings per common share |  | 1,726,159            |  | 1,729,891
|                                                                                                |  |                      |  |          

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 stockholders equity section of the balance sheet, such items, along with net income, are components of comprehensive income.

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



|                                                                   |  |      |          |   |      |   |          |  
|------------------------------------------------------------------ |  | ---- | -------- | - | ---- | - | -------- | -
|                                                                   |  | 2007 |          |   | 2006 |  
|Unrealized holding gains (losses) on available-for-sale securities |  | $    | 296,598  |   |      | $ | (609,185 | )
|Tax effect                                                         |  |      | (112,906 | ) |      |   | 233,763  |  
|Reclassification adjustment for losses realized in income          |  |      | 6,993    |   |      |   | 143,640  |  
|Tax effect                                                         |  |      | (2,657   | ) |      |   | (55,120  | )
|                                                                   |  |      |          |   |      |   |          |  
|Net of tax amount                                                  |  | $    | 188,028  |   |      | $ | (286,902 | )
|                                                                   |  |      |          |   |      |   |          |  



- 40 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE BSIGNIFICANT
ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements

The following is a summary of recent authoritative pronouncements that could impact the accounting, reporting, and / or disclosure of financial information by the Company.

In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instrumentsan amendment of FASB Statements No. 133 and
140. This Statement amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities. This Statement resolves issues addressed in SFAS No. 133 Implementation Issue No. D1,Application of Statement 133 to Beneficial Interests in Securitized FinancialAssets. SFAS No. 155 is
effective for all financial instruments acquired or issued after the beginning of an entitys first fiscal year that begins after September 15, 2006. The Company does not believe that the adoption of SFAS No. 155 will have a material
impact on its financial position, results of operations and cash flows.

In March 2006, the FASB issued SFAS No. 156, Accounting for
Servicing of Financial Assetsan amendment of FASB Statement No. 140. This Statement amends FASB No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, with
respect to the accounting for separately recognized servicing assets and servicing liabilities. SFAS No. 156 requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial
asset by entering into a servicing contract; requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable; permits an entity to choose its subsequent measurement methods for
each class of separately recognized servicing assets and servicing liabilities; at its initial adoption, permits a one-time reclassification of available-for-sale securities to trading securities by entities with recognized servicing rights, without
calling into question the treatment of other available-for-sale securities under Statement 115, provided that the available-for-sale securities are identified in some manner as offsetting the entitys exposure to changes in fair value of
servicing assets or servicing liabilities that a servicer elects to subsequently measure at fair value; and requires separate presentation of servicing assets and servicing liabilities subsequently measured at fair value in the statement of
financial position and additional disclosures for all separately recognized servicing assets and servicing liabilities. SFAS No. 156 is effective as of the beginning of its first fiscal year that begins after September 15, 2006. The
Company does not believe the adoption of SFAS No. 156 will have a material impact on its financial position, results of operations and cash flows.

In
September 2006, the FASB issued SFAS No. 157 Fair Value Measurements, which enhances existing guidance for measuring assets and liabilities using fair value and requires additional disclosure about the use of fair value for
measurement. The Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company has not yet evaluated the impact of SFAS No. 157.



- 41 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE BSIGNIFICANT
ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements (Continued)

In September 2006, the FASB issued SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans, which amends SFAS No. 87 and SFAS No. 106 to
require recognition of the overfunded or underfunded status of pension and other postretirement benefit plans on the balance sheet. Under SFAS No. 158, gains and losses, prior service costs and credits, and any remaining transition amounts
under SFAS No. 87 and SFAS No. 106 that have not yet been recognized through net periodic benefit cost will be recognized in accumulated other comprehensive income, net of tax effects, until they are amortized as a component of net
periodic cost. The measurement date  the date at which the benefit obligation and plan assets are measured  is required to be the companys fiscal year end. SFAS No. 158 is effective for publicly  held companies for
fiscal years ending after December 15, 2006, except for the measurement date provisions, which are effective for fiscal years ending after December 15, 2008. The Company does not have a defined benefit pension plan. Therefore, SFAS
No. 158 will not impact the Companys consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair
Value Option for Financial Assets and Financial Liabilities  Including an amendment of SFAS No. 115. This statement permits, but does not require, entities to measure many financial instruments at fair value. The objective is to
provide entities with an opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. Entities electing this option will apply it
when the entity first recognizes an eligible instrument and will report unrealized gains and losses on such instruments in current earnings. This statement 1) applies to all entities, 2) specifies certain election dates, 3) can be applied on an
instrumentbyinstrument basis with some exceptions, 4) is irrevocable and 5) applies only to entire instruments. One exception is demand deposit liabilities which are explicitly excluded as qualifying for fair value. With respect to SFAS
No. 115, available for sale and held to maturity securities at the effective date are eligible for the fair value option at that date. If the fair value option is elected for those securities at the effective date, cumulative unrealized gains
and losses at that date shall be included in the cumulativeeffect adjustment and thereafter, such securities will be accounted for as trading securities. SFAS No. 159 is effective for financial statements issued for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. SFAS No. 159 does contain an early election option that would allow the Company to elect the fair value option for existing eligible items as of the beginning of a
fiscal year that begins on or before November 15, 2007. The Company has not early adopted SFAS 159 and does not expect the adoption of SFAS 159 to materially impact the Companys consolidated financial statements.



- 42 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE BSIGNIFICANT
ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements (Continued)

In September 2006, the FASB ratified the consensus reached related to EITF No. 065, Accounting for Purchases of Life InsuranceDetermining the Amount That Could Be Realized in Accordance with
FASB Technical Bulletin No. 854, Accounting for Purchases of Life Insurance. EITF No. 065 states that a policyholder should consider any additional amounts included in the contractual terms of the insurance policy other
than the cash surrender value in determining the amount that could be realized under the insurance contract. EITF No. 065 also states that a policyholder should determine the amount that could be realized under the life insurance contract
assuming the surrender of an individuallife by individuallife policy (or certificate by certificate in a group policy). EITF No. 065 is effective for fiscal years beginning after December 15, 2006. EITF No. 06-5 will
not impact the Companys consolidated financial statements

In July 2006, the FASB issued Financial Interpretation No. 48, Accounting
for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109 (FIN 48), which is a change in accounting for income taxes. FIN 48 specifies how tax benefits for uncertain tax positions are to be recognized,
measured, and derecognized in financial statements; requires certain disclosures of uncertain tax matters; specifies how reserves for uncertain tax positions should be classified on the balance sheet; and provides transition and interim period
guidance, among other provisions. FIN 48 is effective for fiscal years beginning after December 15, 2006 and as a result, is effective for the Company in the first quarter of fiscal 2008. The Company is currently evaluating the impact of FIN 48
on its consolidated financial statements.

Reclassifications

Certain items were reclassified in the June 30, 2006 financial statements to be consistent with the June 30, 2007 presentation. The reclassifications had no impact upon net income or stockholders
equity as previously recorded.

NOTE CINVESTMENT SECURITIES

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



|                                           |  |               |            |                      |   |                       |  |            |         |  |   |           
|------------------------------------------ |  | ------------- | ---------- | -------------------- | - | --------------------- |  | ---------- | ------- |  | - | ----------
|                                           |  | June 30, 2007
|                                           |  | Amortizedcost |            | Grossunrealizedgains |   | Grossunrealizedlosses |  | Fair value
|Securities available for sale:             |  |               |            |                      |   |                       |  |            |         |  |   |           
|Trust preferred securities                 |  | $             | 544,751    |                      | $ | 3,348                 |  | $          | 17,980  |  | $ | 530,119   
|Government sponsored enterprise securities |  |               | 3,900,000  |                      |   |                      |  |            | 48,526  |  |   | 3,851,474 
|Municipal securities                       |  |               | 919,927    |                      |   |                      |  |            | 9,182   |  |   | 910,745   
|Mortgage-backed securities                 |  |               | 15,436,160 |                      |   |                      |  |            | 703,257 |  |   | 14,732,903
|                                           |  |               |            |                      |   |                       |  |            |         |  |   |           
|                                           |  | $             | 20,800,838 |                      | $ | 3,348                 |  | $          | 778,945 |  | $ | 20,025,241
|                                           |  |               |            |                      |   |                       |  |            |         |  |   |           



- 43 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE CINVESTMENT
SECURITIES (Continued)



|                                           |  |               |            |                      |   |                       |  |            |           |  |   |           
|------------------------------------------ |  | ------------- | ---------- | -------------------- | - | --------------------- |  | ---------- | --------- |  | - | ----------
|                                           |  | June 30, 2006
|                                           |  | Amortizedcost |            | Grossunrealizedgains |   | Grossunrealizedlosses |  | Fair value
|Securities available for sale:             |  |               |            |                      |   |                       |  |            |           |  |   |           
|Trust preferred securities                 |  | $             | 519,421    |                      | $ | 160                   |  | $          | 25,154    |  | $ | 494,427   
|Government sponsored enterprise securities |  |               | 5,400,000  |                      |   |                      |  |            | 116,344   |  |   | 5,283,656 
|Municipal securities                       |  |               | 1,020,692  |                      |   |                      |  |            | 13,140    |  |   | 1,007,552 
|Mortgage-backed securities                 |  |               | 14,626,549 |                      |   |                      |  |            | 924,710   |  |   | 13,701,839
|                                           |  |               |            |                      |   |                       |  |            |           |  |   |           
|                                           |  | $             | 21,566,662 |                      | $ | 160                   |  | $          | 1,079,348 |  | $ | 20,487,474
|                                           |  |               |            |                      |   |                       |  |            |           |  |   |           

The amortized cost and fair values of debt securities available for sale at June 30, 2007 by contractual
maturity are shown below. 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.



|                                       |  |                               |            |            |   |            
|-------------------------------------- |  | ----------------------------- | ---------- | ---------- | - | -----------
|                                       |  | Securities Available-for-Sale
|                                       |  | Amortizedcost                 |            | Fair value
|Due in one year or less                |  | $                             | 3,000,000  |            | $ | 2,960,850  
|Due after one year through five years  |  |                               | 3,081,971  |            |   | 2,978,378  
|Due after five years through ten years |  |                               | 4,342,271  |            |   | 4,144,128  
|Due after ten years                    |  |                               | 10,376,596 |            |   | 9,941,885  
|                                       |  |                               |            |            |   |            
|                                       |  | $                             | 20,800,838 |            |   | $20,025,241
|                                       |  |                               |            |            |   |            

The fair value of securities with unrealized losses at June 30, 2007 is as follows:



|                                           |  |                     |           |                     |   |                     |  |                  |            |  |   |        
|------------------------------------------ |  | ------------------- | --------- | ------------------- | - | ------------------- |  | ---------------- | ---------- |  | - | -------
|                                           |  | Less than 12 Months |           | More than 12 Months
|                                           |  | Estimatedfair value |           | Unrealizedlosses    |   | Estimatedfair value |  | Unrealizedlosses
|Government sponsored enterprise securities |  | $                   |          |                     | $ |                    |  | $                | 3,851,474  |  | $ | 48,526 
|Mortgage backed securities                 |  |                     | 1,436,039 |                     |   | 24,985              |  |                  | 11,332,571 |  |   | 678,272
|Municipals securities                      |  |                     | 810,745   |                     |   | 9,182               |  |                  |           |  |   |       
|Trust preferred securities                 |  |                     | 252,145   |                     |   | 7,855               |  |                  | 89,875     |  |   | 10,125 
|                                           |  |                     |           |                     |   |                     |  |                  |            |  |   |        
|Total                                      |  | $                   | 2,498,929 |                     | $ | 42,022              |  | $                | 15,273,920 |  | $ | 736,923
|                                           |  |                     |           |                     |   |                     |  |                  |            |  |   |        



- 44 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE CINVESTMENT
SECURITIES (Continued)

The fair value of securities with unrealized losses at June 30, 2006 is as follows:



|                                |  |                     |           |                     |   |                     |  |                  |            |  |   |          
|------------------------------- |  | ------------------- | --------- | ------------------- | - | ------------------- |  | ---------------- | ---------- |  | - | ---------
|                                |  | Less than 12 Months |           | More than 12 Months
|                                |  | Estimatedfair value |           | Unrealizedlosses    |   | Estimatedfair value |  | Unrealizedlosses
|Government sponsored enterprise |  |                     |           |                     |   |                     |  |                  |            |  |   |          
|Securities                      |  | $                   | 980,000   |                     | $ | 20,000              |  | $                | 4,303,656  |  | $ | 96,344   
|Mortgage backed securities      |  |                     |          |                     |   |                    |  |                  | 13,701,840 |  |   | 924,710  
|Municipals securities           |  |                     | 812,787   |                     |   | 7,905               |  |                  | 194,764    |  |   | 5,235    
|Trust preferred securities      |  |                     | 68,355    |                     |   | 6,645               |  |                  | 256,491    |  |   | 18,509   
|                                |  |                     |           |                     |   |                     |  |                  |            |  |   |          
|Total                           |  | $                   | 1,861,142 |                     | $ | 34,550              |  | $                | 18,456,751 |  | $ | 1,044,798
|                                |  |                     |           |                     |   |                     |  |                  |            |  |   |          

Management of the Company believes all unrealized losses as of June 30, 2007 and 2006 represent temporary
impairment. Approximately 94.6% of the unrealized losses, or 11 individual securities, consisted of securities in a continuous loss position for 12 months or more as of June 30, 2007 and approximately 96.8% of the unrealized losses, or 10
individual securities, consisted of securities in a continuous loss position for 12 months or more as of June 30, 2006. The Company has the ability and intends to hold these securities until recovery. The Company believes, based on industry
analysis reports and credit ratings, that the deterioration in value is attributable to changes in market interest rates and not in credit quality of the issuer and therefore, these losses are not considered other-than-temporary.

Proceeds from sales of available-for-sale securities during the year ended June 30, 2007 were $293,007 that resulted in gross realized losses of $6,993. Proceeds
from sales of available-for-sale securities during the year ended June 30, 2006 were $4,756,360 that resulted in gross realized losses of $143,640. Securities with a par of $8,329,180 and $11,400,000 and a fair value of $7,916,781 and
$10,909,302 at June 30, 2007 and 2006 respectively, were pledged to secure public monies on deposit as required by law.



- 45 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE DLOANS
RECEIVABLE

Loans receivable consist of the following:



|                                             |  |      |             |      |   |            
|-------------------------------------------- |  | ---- | ----------- | ---- | - | -----------
|                                             |  | 2007 |             | 2006
|Type of loan:                                |  |      |             |      |   |            
|Real estate loans:                           |  |      |             |      |   |            
|1-to-4 family residential                    |  | $    | 66,198,626  |      | $ | 65,417,553 
|Commercial                                   |  |      | 59,019,691  |      |   | 61,345,237 
|Construction and land                        |  |      | 31,502,345  |      |   | 27,570,247 
|Home improvement loans                       |  |      | 9,651,177   |      |   | 10,098,347 
|                                             |  |      |             |      |   |            
|Total real estate loans                      |  |      | 166,371,839 |      |   | 164,431,384
|                                             |  |      |             |      |   |            
|Other loans:                                 |  |      |             |      |   |            
|Commercial                                   |  |      | 7,819,761   |      |   | 7,769,767  
|Consumer                                     |  |      | 3,643,336   |      |   | 4,669,864  
|Loans secured by deposits                    |  |      | 1,052,279   |      |   | 553,332    
|                                             |  |      |             |      |   |            
|Total other loans                            |  |      | 12,515,376  |      |   | 12,992,963 
|                                             |  |      |             |      |   |            
|Subtotal                                     |  |      | 178,887,215 |      |   | 177,424,347
|Less:                                        |  |      |             |      |   |            
|Deferred loan origination fees, net of costs |  |      | 200,553     |      |   | 248,726    
|                                             |  |      |             |      |   |            
|Total loans                                  |  | $    | 178,686,662 |      | $ | 177,175,621
|                                             |  |      |             |      |   |            

The allowance for loan losses is summarized as follows:



|                             |  |      |           |   |      |   |           |  
|---------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                             |  | 2007 |           |   | 2006 |  
|Balance at beginning of year |  | $    | 1,901,034 |   |      | $ | 1,593,223 |  
|Provision for loan losses    |  |      | 167,500   |   |      |   | 362,500   |  
|Charge-offs                  |  |      | (133,638  | ) |      |   | (85,475   | )
|Recoveries                   |  |      | 3,101     |   |      |   | 30,786    |  
|                             |  |      |           |   |      |   |           |  
|Balance at end of year       |  | $    | 1,937,997 |   |      | $ | 1,901,034 |  
|                             |  |      |           |   |      |   |           |  

At June 30, 2007 and 2006, the recorded investment in loans considered impaired in accordance with SFAS
No. 114 totaled $1.2 million and $555,000, respectively, with corresponding valuation allowances of $98,000 and $54,000, respectively. For the years ended June 30, 2007 and 2006, the average recorded investment in impaired loans was
approximately $743,000 and $964,000, respectively. Interest income that was foregone on impaired loans for the years ended June 30, 2007, and 2006 amounted to approximately $50,000 and $30,000, respectively.

Non-accrual loans at June 30, 2007 and 2006 were approximately $1.2 million and $555,000, respectively. No loans past due 90 days were accruing interest.



- 46 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE DLOANS
RECEIVABLE (Continued)

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:



|                                             |  |      |           |   |      |   |          
|-------------------------------------------- |  | ---- | --------- | - | ---- | - | ---------
|                                             |  | 2007 |           |   | 2006
|Balance at beginning of year                 |  | $    | 3,438,734 |   |      | $ | 3,347,040
|Net borrowings, (repayments) during the year |  |      | (357,362  | ) |      |   | 91,694   
|                                             |  |      |           |   |      |   |          
|Balance at end of year                       |  | $    | 3,081,372 |   |      | $ | 3,438,734
|                                             |  |      |           |   |      |   |          

NOTE EPREMISES AND EQUIPMENT

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



|                          |  |      |            |   |      |   |            |  
|------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                          |  | 2007 |            |   | 2006 |  
|Land                      |  | $    | 1,591,670  |   |      | $ | 1,591,670  |  
|Building and improvements |  |      | 3,456,867  |   |      |   | 3,331,692  |  
|Furniture and equipment   |  |      | 1,938,203  |   |      |   | 1,863,835  |  
|                          |  |      |            |   |      |   |            |  
|                          |  |      | 6,986,740  |   |      |   | 6,787,197  |  
|Accumulated depreciation  |  |      | (2,084,927 | ) |      |   | (1,769,729 | )
|                          |  |      |            |   |      |   |            |  
|                          |  | $    | 4,901,813  |   |      | $ | 5,017,468  |  
|                          |  |      |            |   |      |   |            |  

Depreciation expense for the years ended June 30, 2007 and 2006 amounted to $315,198 and $324,759,
respectively.

The Bank has a non-cancelable operating lease for the land on which its Florence branch is located. Future minimum rent commitments under
this lease are as follows:



|           |  |   |        
|---------- |  | - | -------
|2008       |  | $ | 24,000 
|2009       |  |   | 24,000 
|2010       |  |   | 24,000 
|2011       |  |   | 24,000 
|2012       |  |   | 30,750 
|Thereafter |  |   | 140,250
|           |  |   |        
|           |  | $ | 267,000
|           |  |   |        

The lease has an initial term of fifteen years with renewal options for two additional ten-year terms followed by
one additional five-year term. Total rent expense for the years ended June 30, 2007 and 2006 was $22,500 and $18,000, respectively.



- 47 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE FINTANGIBLE
ASSETS

The following is a summary of the approximate gross carrying amount and accumulated amortization of amortized intangible assets as of
June 30, 2007 and 2006:



|                                                  |  |                     |           |                         |   |                     |  |                         |           |  |   |          
|------------------------------------------------- |  | ------------------- | --------- | ----------------------- | - | ------------------- |  | ----------------------- | --------- |  | - | ---------
|                                                  |  | 2007                |           | 2006                   
|                                                  |  | GrossCarryingAmount |           | AccumulatedAmortization |   | GrossCarryingAmount |  | AccumulatedAmortization
|Deposit intangibles related to branch acquisition |  | $                   | 1,850,000 |                         | $ | 1,356,000           |  | $                       | 1,850,000 |  | $ | 1,171,000
|                                                  |  |                     |           |                         |   |                     |  |                         |           |  |   |          

The following table presents the estimated amortization for intangible assets for each of the three fiscal years
ending June 30, 2010. These estimates are subject to change in future periods to the extent management determines it is necessary to make adjustments to the carrying value or estimated useful lives of amortized intangible assets.



|     |  |                              |        
|---- |  | ---------------------------- | -------
|     |  | Estimatedamortizationexpense
|2008 |  | $                            | 185,000
|2009 |  |                              | 185,000
|2010 |  |                              | 124,000
|     |  |                              |        
|     |  | $                            | 494,000
|     |  |                              |        

NOTE GDEPOSIT ACCOUNTS

A comparative summary of deposit accounts at June 30, 2007 and 2006 follows:



|                        |  |      |             |      |   |            
|----------------------- |  | ---- | ----------- | ---- | - | -----------
|                        |  | 2007 |             | 2006
|Demand accounts:        |  |      |             |      |   |            
|Non-interest bearing    |  | $    | 8,379,470   |      | $ | 8,841,298  
|Savings                 |  |      | 2,582,525   |      |   | 2,865,257  
|Money market and NOW    |  |      | 28,232,885  |      |   | 26,638,207 
|                        |  |      |             |      |   |            
|Total demand accounts   |  |      | 39,194,880  |      |   | 38,344,762 
|Certificates of deposit |  |      | 132,008,695 |      |   | 112,994,496
|                        |  |      |             |      |   |            
|Total deposit accounts  |  | $    | 171,203,575 |      | $ | 151,339,258
|                        |  |      |             |      |   |            



- 48 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE GDEPOSIT
ACCOUNTS (Continued)

A summary of certificate accounts by maturity as of June 30, 2007 follows:



|                                    |  |                    |            |                  |   |            |  |   |            
|----------------------------------- |  | ------------------ | ---------- | ---------------- | - | ---------- |  | - | -----------
|                                    |  | Less than $100,000 |            | $100,000 or more |   | Total     
|One year or less                    |  | $                  | 38,853,839 |                  | $ | 53,585,962 |  | $ | 92,439,801 
|More than one year to three years   |  |                    | 12,038,086 |                  |   | 24,941,778 |  |   | 36,979,864 
|More than three years to five years |  |                    | 464,785    |                  |   | 2,108,847  |  |   | 2,573,632  
|More than five years                |  |                    | 15,398     |                  |   |           |  |   | 15,398     
|                                    |  |                    |            |                  |   |            |  |   |            
|Total certificate accounts          |  | $                  | 51,372,108 |                  | $ | 80,636,587 |  | $ | 132,008,695
|                                    |  |                    |            |                  |   |            |  |   |            

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



|                               |  |      |           |   |      |   |           |  
|------------------------------ |  | ---- | --------- | - | ---- | - | --------- | -
|                               |  | 2007 |           |   | 2006 |  
|Savings accounts               |  | $    | 19,335    |   |      | $ | 21,668    |  
|Money market accounts and NOW  |  |      | 761,393   |   |      |   | 669,166   |  
|Certificates of deposit        |  |      | 5,518,767 |   |      |   | 4,084,107 |  
|                               |  |      |           |   |      |   |           |  
|                               |  |      | 6,299,495 |   |      |   | 4,774,941 |  
|Penalties for early withdrawal |  |      | (11,271   | ) |      |   | (19,356   | )
|                               |  |      |           |   |      |   |           |  
|                               |  | $    | 6,288,224 |   |      | $ | 4,755,585 |  
|                               |  |      |           |   |      |   |           |  

NOTE HBORROWINGS

The Bank had total short-term borrowings of $4,500,000 and $9,500,000 at June 30, 2007 and 2006, respectively. The borrowings consisted of advances from the Federal Home Loan Bank of Atlanta and federal funds purchased. The borrowings
carried rates ranging from 3.66% to 5.37% at June 30, 2007 and rates ranging from 3.97% to 5.45% as of June 30, 2006.

The Banks long-term
borrowings are all at fixed rates. The borrowings have stated interest rates and maturities as follows:



|                                                         |  |             |            |      |   |           
|-------------------------------------------------------- |  | ----------- | ---------- | ---- | - | ----------
|                                                         |  | At June 30,
|                                                         |  | 2007        |            | 2006
|5.37% due on September 5, 2007                           |  | $           | 7,000,000  |      | $ |          
|3.00% due on September 5, 2008, called September 5, 2006 |  |             |           |      |   | 10,000,000
|4.21% due on December 12, 2011                           |  |             | 1,800,000  |      |   |          
|5.32% due on May 28, 2008                                |  |             | 2,000,000  |      |   |          
|4.51% due on April 20, 2012, callable April 20, 2009     |  |             | 7,500,000  |      |   |          
|3.66% due on August 10, 2015, called August 10, 2007     |  |             | 5,600,000  |      |   | 5,600,000 
|5.09% due on August 10, 2007                             |  |             | 5,000,000  |      |   | 5,000,000 
|5.15% due on August 1, 2011                              |  |             | 3,000,000  |      |   | 3,000,000 
|                                                         |  |             |            |      |   |           
|                                                         |  | $           | 31,900,000 |      | $ | 23,600,000
|                                                         |  |             |            |      |   |           

At June 30, 2007, the Bank has a $54.5 million available credit line from the Federal Home Loan Bank. All
advances are secured by a blanket-floating lien on the Banks 1-to-4 family residential mortgage loans. As of June 30, 2007 and 2006, the Bank had borrowed $36.4 million and $33.1 million, respectively, on this line.

The Bank also has an $8.1 million available credit line from its correspondent bank.



- 49 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE IEMPLOYEE AND
DIRECTOR BENEFIT PLANS

Stock-Based Compensation

The Company has three share-based compensation plans in effect at June 30, 2007. The compensation cost that has been charged against income for those plans was approximately $37,000 and $50,000 for the fiscal years ended June 30,
2007 and 2006 respectively. The Company recorded a $14,000 and $19,000 deferred tax benefit related to share-based compensation for the fiscal year ended June 30, 2007 and 2006, respectively.

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, 88,874 shares of common stock were reserved for issuance to key officers and directors with vesting of the awards determined at the time of the grant. Within the Plan, 81,392 shares have been granted as of
June 30, 2007, leaving 7,482 shares that can be granted.

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. Options granted
to directors, executive officers, and employees vest over terms up to three years. All options will expire if not exercised within ten years from the date of grant. Within the Plan, 234,999 shares have been granted as of June 30, 2007, leaving
7,234 options that can be granted.

The 2003 Long Term Incentive Stock Benefit Plan was approved at the 2003 Annual Meeting and authorizes up to 88,388
shares of common stock to be granted in either stock options or stock awards for issuance to key officers and directors with vesting of the awards determined at the time of the grant. Within the Plan, 13,000 shares have been granted as of
June 30, 2007, leaving 75,388 options or shares that can be granted.

The share-based awards granted under the aforementioned Plans have similar
characteristics, except that some awards have been granted in options and certain awards have been granted in restricted stock. Therefore, the following disclosures have been disaggregated for the stock option and restricted stock awards of the
Plans due to their dissimilar characteristics.

The fair market value of each option award is estimated on the date of grant using the Black-Scholes option
pricing model. The Company granted 2,727 reload stock options for the fiscal ended June 30, 2007 and 2,239 reload stock options for the fiscal year ended June 30, 2006. The fair value of options granted was estimated to be $1.57 for
options granted in the year ended June 30, 2007 and $2.15 for options granted in the year ended June 30, 2006.

The risk-free interest rate is
based upon a U.S. Treasury instrument with a life that is similar to the expected life of the option grant. Expected volatility is based upon the historical volatility of the Company based upon trading history. The expected term of the options is
based upon the average life of previously issued stock options. The expected dividend yield is based upon current yield on date of grant. No post-vesting restrictions exist for these options. The following table illustrates the assumptions for the
Black-Scholes model used in determining the fair value of options granted to employees in the fiscal years ended June 30, 2007 and 2006.



- 50 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE IEMPLOYEE AND
DIRECTOR BENEFIT PLANS (Continued)



|                        |  |             |   |  |         |  
|----------------------- |  | ----------- | - |  | ------- | -
|                        |  | At June 30, |  
|                        |  | 2007        |   |  | 2006    |  
|Dividend yield          |  | 4.30        | % |  | 4.00    | %
|Risk-free interest rate |  | 4.75        | % |  | 5.00    | %
|Volatility              |  | 18.00       | % |  | 25.00   | %
|Expected life           |  | 2 Years     |   |  | 2 Years |  

A summary of option activity under the stock option plans for the fiscal year ended June 30, 2007 and 2006,
respectively.



|                             |  |         |   |  |                              |       |                                         |           |                         |   |        
|---------------------------- |  | ------- | - |  | ---------------------------- | ----- | --------------------------------------- | --------- | ----------------------- | - | -------
|                             |  | Shares  |   |  | Weightedaverageexerciseprice |       | Weightedaverageremainingcontractualterm |           | Aggregateintrinsicvalue
|At June 30, 2006             |  | 125,515 |   |  | $                            | 15.70 |                                         |           |                         |   |        
|Exercised                    |  | (7,612  | ) |  |                              | 11.17 |                                         |           |                         |   |        
|Authorized                   |  |        |   |  |                              |      |                                         |           |                         |   |        
|Forfeited                    |  | (9,170  | ) |  |                              | 17.29 |                                         |           |                         |   |        
|Granted                      |  | 2,727   |   |  |                              | 16.00 |                                         |           |                         |   |        
|                             |  |         |   |  |                              |       |                                         |           |                         |   |        
|Outstanding at June 30, 2007 |  | 111,460 |   |  | $                            | 15.89 |                                         | 2.3 Years |                         | $ | 107,822
|                             |  |         |   |  |                              |       |                                         |           |                         |   |        
|Exercisable at June 30, 2007 |  | 111,460 |   |  | $                            | 15.89 |                                         | 2.3 Years |                         | $ | 107,822
|                             |  |         |   |  |                              |       |                                         |           |                         |   |        

For the fiscal years ended June 30, 2007 and 2006, respectively, the intrinsic value of options exercised was
approximately $35,000 and $17,000. The fair value of options vested for the fiscal years ended June 30, 2007 and 2006 was approximately $4,000 and $3,000, respectively.

Cash received from option exercises under all share-based payment arrangements for the fiscal year ended June 30, 2007 and 2006 was $42,000 and $6,000. The actual tax benefit in stockholders equity realized
for the tax deductions from option exercise of the share-based payment arrangements totaled approximately $9,000 for the fiscal year ended June 30, 2007 and $7,000 for the fiscal year ended June 30, 2006.



- 51 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE IEMPLOYEE AND
DIRECTOR BENEFIT PLANS (Continued)

Restricted Stock

A summary of the status of the Companys restricted stock as of fiscal year ended June 30, 2007 and is presented below:



|                        |  |        |   |  |                                     |      
|----------------------- |  | ------ | - |  | ----------------------------------- | -----
|                        |  | Shares |   |  | Weightedaveragegrant datefair value
|Balance - June 30, 2006 |  | 3,000  |   |  | $                                   | 17.05
|Granted                 |  | 4,000  |   |  |                                     | 15.45
|Vested                  |  | (3,000 | ) |  |                                     | 17.05
|Forfeited               |  |       |   |  |                                     |     
|                        |  |        |   |  |                                     |      
|Balance - June 30, 2007 |  | 4,000  |   |  | $                                   | 15.45
|                        |  |        |   |  |                                     |      

The fair value of restricted stock vested over the fiscal years ended June 30, 2007 and 2006, respectively
was $33,000 and $50,000.

As of June 30, 2007, there was $47,600 of total unrecognized compensation costs related to non-vested share-based
compensation arrangements granted under all of the Companys stock benefit plans. That cost is expected to be recognized over a weighted-average period of 3.0 years.

The Company funds the option shares and restricted stock from authorized but unissued shares and treasury stock. The Company does not typically purchase shares to fulfill the obligations of the stock benefit plans.
Company policy does allow option holders to exercise options with seasoned shares.

The adoption of SFAS 123R and its fair value compensation cost
recognition provisions are different from the non-recognition provisions under SFAS 123 and the intrinsic value method for compensation cost allowed under APB 25. The effect (increase/ (decrease)) of the adoption of SFAS 123R is as follows: (In
thousands)



|                                           |  |                         |    |  
|------------------------------------------ |  | ----------------------- | -- | -
|                                           |  | Year EndedJune 30, 2007 |   
|Income before income tax expense           |  | $                       | (4 | )
|Net income                                 |  | $                       | (3 | )
|Cash flow from operating activities        |  | $                       | (9 | )
|Cash flow provided by financing activities |  | $                       | 9  |  
|Basic earnings per share                   |  | $                       |   |  
|Diluted earnings per share                 |  | $                       |   |  



- 52 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE IEMPLOYEE AND
DIRECTOR BENEFIT PLANS (Continued)

The following illustrates the effect on net income available to common stockholders if the Company had applied the
fair value recognition provisions of SFAS No. 123 to the fiscal year ended June 30, 2006. (in thousands, except per share data):



|                                                                                                                                      |  |                                              |      
|------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------- | -----
|                                                                                                                                      |  | Year EndedJune 30, 2006                     
|                                                                                                                                      |  | (Amounts in thousands,except per share data)
|Net income:                                                                                                                           |  |                                              |      
|As reported                                                                                                                           |  | $                                            | 1,599
|Add: Total stock-based employee compensation expense included in reported net income, net of related tax effects                      |  |                                              | 31   
|Deduct: Total stock-based employee compensation expense determined under fair value method for all awards, net of related tax
effects |  |                                              | 34   
|                                                                                                                                      |  |                                              |      
|Pro forma                                                                                                                             |  | $                                            | 1,596
|                                                                                                                                      |  |                                              |      
|Basic net income per share:                                                                                                           |  |                                              |      
|As reported                                                                                                                           |  | $                                            | 0.93 
|Pro forma                                                                                                                             |  |                                              | 0.93 
|Diluted net income per share:                                                                                                         |  |                                              |      
|As reported                                                                                                                           |  | $                                            | 0.92 
|Pro forma                                                                                                                             |  |                                              | 0.92 



- 53 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE IEMPLOYEE AND
DIRECTOR BENEFIT PLANS (Continued)

Employee Stock Ownership Plan

In the mutual-to-stock conversion, the Companys Employee Stock Ownership Plan (the ESOP) purchased 174,570 shares of the common stock of Great Pee Dee sold in the public offering at a total cost of
$1,745,700. The number of shares in the ESOP increased by approximately 17,000 as a result of the 10% stock dividend in fiscal year 2002. The ESOP executed a note payable to Great Pee Dee for the full price of the shares purchased. The note is to be
repaid over thirty 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 consolidated 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, 2007, the outstanding balance of the note is $581,643 and is included in unearned compensation as a reduction of stockholders equity.

Shares are 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 seven years of credited service. Forfeitures of non vested benefits will be reallocated among remaining participating employees in the same proportion as contributions.

Expense of $190,432 and $203,145 has been incurred in connection with the ESOP during the years ended June 30, 2007 and 2006, respectively. The
expense includes, in addition to the cash contribution necessary to fund the ESOP, $84,000 and $88,000 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, 2007 and 2006, respectively. The Bank has credited this amount to additional paid-in capital for the years then ended.

At June 30, 2007, 78,643 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 $1.1 million at June 30, 2007. Subsequent to June 30, 2007 the Company has filed with the Internal Revenue Service to terminate the ESOP as a condition of its
previously announced merger.

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. The
Company may also elect to make discretionary contributions on behalf of certain officers. This plan is not entitled to favorable tax treatment under current law. Related deferred income tax benefits are included in the accompanying consolidated
financial statements. There were no expenses associated with the plan for the years ended June 30, 2007 and 2006.

Directors Deferred
Compensation Plan

The Bank has 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 consolidated financial statements.
Expenses for this plan totaled $16,000 and $14,000 for the years ended June 30, 2007 and 2006, respectively.



- 54 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE IEMPLOYEE AND
DIRECTOR BENEFIT PLANS (Continued)

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, 2007 and 2006
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 $51,000 and $27,000 for the years ended June 30, 2007 and 2006,
respectively.

NOTE J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.
Treasury shares have been used for various purposes, including grants under the RRP, shares issued in the form of a 10% stock dividend in fiscal 2002 and shares issued in connection with exercise of stock options. At June 30, 2007, 434,636
shares were held as treasury stock.

NOTE KINCOME TAXES

The components of income tax expense are as follows for the years ended June 30, 2007 and 2006:



|                           |  |      |           |   |      |   |           |  
|-------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                           |  | 2007 |           |   | 2006 |  
|Current tax expense:       |  |      |           |   |      |   |           |  
|Federal                    |  | $    | 887,346   |   |      | $ | 950,413   |  
|State                      |  |      | 140,245   |   |      |   | 158,629   |  
|                           |  |      |           |   |      |   |           |  
|                           |  |      | 1,027,591 |   |      |   | 1,109,042 |  
|                           |  |      |           |   |      |   |           |  
|Deferred tax benefit:      |  |      |           |   |      |   |           |  
|Federal                    |  |      | (60,692   | ) |      |   | (139,810  | )
|State                      |  |      | (11,394   | ) |      |   | (26,248   | )
|                           |  |      |           |   |      |   |           |  
|                           |  |      | (72,086   | ) |      |   | (166,058  | )
|                           |  |      |           |   |      |   |           |  
|Provision for income taxes |  | $    | 955,505   |   |      | $ | 942,984   |  
|                           |  |      |           |   |      |   |           |  

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, 2007 and 2006:



|                                             |  |      |         |   |      |   |         |  
|-------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                             |  | 2007 |         |   | 2006 |  
|Income tax at federal statutory rate         |  | $    | 849,556 |   |      | $ | 864,224 |  
|State income tax, net of federal tax benefit |  |      | 85,042  |   |      |   | 87,372  |  
|Tax exempt interest income                   |  |      | (24,907 | ) |      |   | (28,239 | )
|ESOP                                         |  |      | 10,845  |   |      |   | 14,333  |  
|Other                                        |  |      | 34,969  |   |      |   | 5,294   |  
|                                             |  |      |         |   |      |   |         |  
|Provision for income taxes                   |  | $    | 955,505 |   |      | $ | 942,984 |  
|                                             |  |      |         |   |      |   |         |  



- 55 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE KINCOME TAXES
(Continued)

Deferred tax assets and liabilities arising from temporary differences at June 30, 2007 and 2006 are summarized as follows:



|                                      |  |      |           |   |      |   |           |  
|------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                                      |  | 2007 |           |   | 2006 |  
|Deferred tax assets relating to:      |  |      |           |   |      |   |           |  
|Deferred compensation                 |  | $    | 106,296   |   |      | $ | 106,296   |  
|Allowance for loan losses             |  |      | 735,664   |   |      |   | 721,633   |  
|Unrealized securities losses          |  |      | 294,350   |   |      |   | 409,796   |  
|Other                                 |  |      | 6,996     |   |      |   |          |  
|Amortization of intangibles           |  |      | 206,701   |   |      |   | 189,694   |  
|                                      |  |      |           |   |      |   |           |  
|Total deferred tax assets             |  |      | 1,350,007 |   |      |   | 1,427,419 |  
|                                      |  |      |           |   |      |   |           |  
|Deferred tax liabilities relating to: |  |      |           |   |      |   |           |  
|Premises and equipment                |  |      | (148,398  | ) |      |   | (191,644  | )
|FHLB stock dividends                  |  |      | (6,074    | ) |      |   | (9,010    | )
|Prepaid expenses                      |  |      | (33,912   | ) |      |   | (21,783   | )
|                                      |  |      |           |   |      |   |           |  
|Total deferred tax liabilities        |  |      | (188,384  | ) |      |   | (222,437  | )
|                                      |  |      |           |   |      |   |           |  
|Net deferred tax asset                |  | $    | 1,161,623 |   |      | $ | 1,204,982 |  
|                                      |  |      |           |   |      |   |           |  

Deferred tax asset represent the future tax benefit of deductible differences and, if it is more likely that not
that a tax asset will not be realized, a valuation allowance is required to reduce the recorded deferred tax assets to net realizable value. Management has determined that it is more likely than not that the entire deferred tax asset at
June 30, 2007 will be realized, and accordingly, has not established a valuation allowance. Net deferred tax assets are included in other assets.

Retained earnings at June 30, 2007, includes approximately $1.5 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 carry back of net operating losses would create income for tax purposes only, which would be subject to the then current corporate income
tax rate.

NOTE L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.

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, 2007, that the Bank meets all capital adequacy requirements to which it is subject.



- 56 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE L - REGULATORY MATTERS
(Continued)

As of June 30, 2007, 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, 2007 and 2006 are presented in the following table.



|                       |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|---------------------- |  | ---------------------- | ------ | ----- | ------------------------------ | - | ------ | --------------------------------------------------------------------- | ------ |  | ---- | ------ |  | ----- | ------ |  | ----- | -
|                       |  | Actual                 |        |       | Minimum For CapitalRequirement |   |        | Minimum To Be WellCapitalized UnderPrompt CorrectiveAction Provisions |       
|                       |  | Amount                 |        | Ratio |                                |   | Amount |                                                                       | Ratio  |  |      | Amount |  | Ratio |       
|                       |  | (Dollars in Thousands) |       
|June 30, 2007:         |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Total Risk Weighted    |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Capital to Risk        |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Weighted Assets:       |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Consolidated           |  | $                      | 29,236 |       | 16.91                          | % |        | $                                                                     | 13,832 |  | 8.00 | %      |  | $     | N/A    |  | N/A   |  
|Sentry                 |  |                        | 26,019 |       | 15.14                          | % |        |                                                                       | 13,752 |  | 8.00 | %      |  |       | 17,190 |  | 10.00 | %
|Tier 1 Capital to Risk |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Weighted Assets:       |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Consolidated           |  | $                      | 27,298 |       | 15.79                          | % |        | $                                                                     | 6,916  |  | 4.00 | %      |  | $     | N/A    |  | N/A   |  
|Sentry                 |  |                        | 24,081 |       | 14.01                          | % |        |                                                                       | 6,876  |  | 4.00 | %      |  |       | 10,314 |  | 6.00  | %
|Tier 1 Capital to      |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Adjusted Total Assets: |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Consolidated           |  | $                      | 27,298 |       | 11.34                          | % |        | $                                                                     | 9,629  |  | 4.00 | %      |  | $     | N/A    |  | N/A   |  
|Sentry                 |  |                        | 24,081 |       | 10.05                          | % |        |                                                                       | 9,593  |  | 4.00 | %      |  |       | 11,985 |  | 5.00  | %
|Tangible Capital to    |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Adjusted Total Assets: |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Consolidated           |  | $                      | 27,298 |       | 11.34                          | % |        | $                                                                     | 3,611  |  | 1.50 | %      |  | $     | N/A    |  | N/A   |  
|Sentry                 |  |                        | 24,081 |       | 10.05                          | % |        |                                                                       | 3,598  |  | 1.50 | %      |  |       | N/A    |  | N/A   |  
|June 30, 2006:         |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Total Risk Weighted    |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Capital to Risk        |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Weighted Assets:       |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Consolidated           |  | $                      | 28,436 |       | 17.71                          | % |        | $                                                                     | 12,843 |  | 8.00 | %      |  | $     | N/A    |  | N/A   |  
|Sentry                 |  |                        | 27,100 |       | 16.97                          | % |        |                                                                       | 12,773 |  | 8.00 | %      |  |       | 15,966 |  | 10.00 | %
|Tier 1 Capital to Risk |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Weighted Assets:       |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Consolidated           |  | $                      | 26,535 |       | 16.53                          | % |        | $                                                                     | 6,421  |  | 4.00 | %      |  | $     | N/A    |  | N/A   |  
|Sentry                 |  |                        | 25,199 |       | 15.78                          | % |        |                                                                       | 6,386  |  | 4.00 | %      |  |       | 9,580  |  | 6.00  | %
|Tier 1 Capital to      |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Adjusted Total Assets: |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Consolidated           |  | $                      | 26,535 |       | 12.48                          | % |        | $                                                                     | 8,508  |  | 4.00 | %      |  | $     | N/A    |  | N/A   |  
|Sentry                 |  |                        | 25,199 |       | 11.90                          | % |        |                                                                       | 8,472  |  | 4.00 | %      |  |       | 10,590 |  | 5.00  | %
|Tangible Capital to    |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Adjusted Total Assets: |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Consolidated           |  | $                      | 26,535 |       | 12.48                          | % |        | $                                                                     | 3,190  |  | 1.50 | %      |  | $     | N/A    |  | N/A   |  
|Sentry                 |  |                        | 25,199 |       | 11.90                          | % |        |                                                                       | 3,177  |  | 1.50 | %      |  |       | N/A    |  | N/A   |  



- 57 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE LREGULATORY
MATTERS

The Bank is restricted in its ability to pay dividends. A significant source of Great Pee Dees funds is dividends received from the Bank.
In fiscal 2007, a $2.9 million dividend was paid by the Bank to Great Pee Dee. At June 30, 2007, notification is required by Office of Thrift Supervision for any payment of dividends from Sentry Bank & Trust to Great Pee Dee.

NOTE MCONCENTRATION OF CREDIT RISK AND OFF-BALANCE SHEET RISK

Financial instruments, which potentially subject the Bank to concentrations of credit risk, consist principally of loans receivable, investment securities, federal funds sold and amounts due from banks.

The Bank makes loans to individuals and small businesses for various personal and commercial purposes primarily Chesterfield County, Marlboro County, Florence County and
other 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s loan portfolio is not concentrated in loans to any single borrower or a relatively small number of borrowers. Additionally, Management is not aware of any concentrations of loans to classes of borrowers or industries that
would be similarly affected by economic conditions.

In addition to monitoring potential concentrations of loans to particular borrowers or groups of
borrowers, industries and geographic regions, Management monitors exposure to credit risk from concentrations of lending products and practices such as loans that subject borrowers to substantial payment increases (e.g. principal deferral periods,
loans with initial interest-only periods, etc), and loans with high loan-to-value ratios. Management has determined that there is no concentration of credit risk associated with its lending policies or practices. Additionally, there are industry
practices that could subject the Bank to increased credit risk should economic conditions change over the course of a loans life. For example, the Bank makes variable rate loans and fixed rate principal-amortizing loans with maturities prior
to the loan being fully paid (i.e. balloon payment loans). These loans are underwritten and monitored to manage the associated risks. Therefore, management believes that these particular practices do not subject the Bank to unusual credit risk.

The Banks investment portfolio consists principally of obligations of the United States, its agencies or its corporations and general obligation
municipal securities. In the opinion of Management, there is no concentration of credit risk in its investment portfolio. The Bank places its deposits and correspondent accounts with and sells its federal funds to high quality institutions.
Management believes credit risk associated with correspondent accounts is not significant.

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, 2007 is as follows (in thousands):



|                                                                    |  |   |       
|------------------------------------------------------------------- |  | - | ------
|Financial instruments whose contract amounts represent credit risk: |  |   |       
|Commitments to extend credit                                        |  | $ | 30,729
|Undisbursed construction loans in process                           |  |   | 10,731
|Lines of credit                                                     |  |   | 16,021
|Letters of credit                                                   |  |   | 1,107 
|                                                                    |  |   |       
|                                                                    |  | $ | 58,588
|                                                                    |  |   |       



- 58 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE MCONCENTRATION
OF CREDIT RISK AND OFF-BALANCE SHEET RISK (Continued)

At June 30, 2007, the Bank had loan commitments outstanding of approximately $3.6 million,
at fixed interest rates ranging from 7.63% to 7.88%. 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.

NOTE NDISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS

The Bank has implemented SFAS No. 107, Disclosures About Fair Value of Financial Instruments, 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, short and long-term borrowings, 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.

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

The fair value 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.



- 59 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE NDISCLOSURES
ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)

Restricted Stock

Restricted stock is comprised primarily of FHLB stock. 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 a formula derived by the FHLB.

Deposit Liabilities

The carrying amount of demand deposits approximates fair values. The fair value of certificates
of deposit is estimated by discounting future cash flows using rates currently offered for deposits of similar remaining maturities.

Short and Long-Term Borrowings

The fair value of these borrowings is based upon discounting future cash flows using
current rates at which borrowings of similar maturity could be obtained.

Accrued Interest and Advance Payments by Borrowers for
Property Taxes and Insurance

The carrying amounts of these items approximate fair values.

Financial Instruments with Off-Balance Sheet Risk

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

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,
2007 and 2006:



|                                                               |  |                |             |                     |   |                |  |                     |             |  |   |            
|-------------------------------------------------------------- |  | -------------- | ----------- | ------------------- | - | -------------- |  | ------------------- | ----------- |  | - | -----------
|                                                               |  | 2007           |             | 2006               
|                                                               |  | Carryingamount |             | Estimated fairvalue |   | Carryingamount |  | Estimated fairvalue
|Financial                                                      |  |                |             |                     |   |                |  |                     |             |  |   |            
|Cash, interest-earning balances, federal funds sold            |  | $              | 15,795,273  |                     | $ | 15,795,273     |  | $                   | 4,700,779   |  | $ | 4,700,779  
|Investment securities                                          |  |                | 20,025,241  |                     |   | 20,025,241     |  |                     | 20,487,474  |  |   | 20,487,474 
|Loans receivable, net                                          |  |                | 176,748,665 |                     |   | 178,108,392    |  |                     | 175,274,587 |  |   | 174,634,585
|Loans held for sale                                            |  |                | 12,318,262  |                     |   | 12,318,262     |  |                     | 958,150     |  |   | 958,150    
|Accrued interest receivable                                    |  |                | 1,165,920   |                     |   | 1,165,920      |  |                     | 1,026,733   |  |   | 1,026,733  
|Restricted stock                                               |  |                | 2,252,700   |                     |   | 2,252,700      |  |                     | 1,997,787   |  |   | 1,997,787  
|Financial liabilities:                                         |  |                |             |                     |   |                |  |                     |             |  |   |            
|Deposits                                                       |  |                | 171,203,575 |                     |   | 167,779,504    |  |                     | 151,339,258 |  |   | 149,825,865
|Short-term borrowings                                          |  |                | 4,500,000   |                     |   | 4,500,000      |  |                     | 9,500,000   |  |   | 9,500,000  
|Long-term borrowings                                           |  |                | 31,900,000  |                     |   | 31,992,100     |  |                     | 23,600,000  |  |   | 23,781,538 
|Accrued interest payable                                       |  |                | 392,274     |                     |   | 392,274        |  |                     | 287,356     |  |   | 287,356    
|Advance payments by borrowers for property taxes and insurance |  |                | 116,689     |                     |   | 116,689        |  |                     | 120,775     |  |   | 120,775    



- 60 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE OLIQUIDATION
ACCOUNT

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 sub account 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.

NOTE PRELATED PARTY TRANSACTIONS

Beginning in April 2007, Sentry Bank & Trust entered into a loan origination relationship with United Partners Bank (Proposed). This is a non-contractual, non-recourse, verbal agreement to originate loans on
behalf of United Partners Bank (Proposed) during its organizational phase. United Partners Bank (Proposed) has agreed to purchase these loans at cost from Sentry Bank & Trust (the Bank) after their organization phase is completed. The
dollar volume amounts of these loans have reached $12 million and are expected to reach a high of $32 million.

Sentry Bank & Trust has extended
to the organizers of United Partners Bank (Proposed) a line of credit loan in the amount of $2 million dollars to fund the organizational phase. Full repayment is anticipated when United Partners Bank (Proposed) completes their organization.

The President of Great Pee Dee Bancorp, Inc., and Sentry Bank & Trust, is listed as an official organizer and proposed director of United
Partners Bank (Proposed).

Sentry Bank & Trust, has made an investment of $220,000 in the subscription offering of United Partners Bank
(Proposed). This investment has been recorded in other assets.



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE QPARENT COMPANY
FINANCIAL DATA

Following are condensed financial statements of Great Pee Dee as of and for the years ended June 30, 2007 and 2006:

Condensed Statements of Financial Condition

As of June 30, 2007 and 2006



|                                           |  |      |            |   |      |   |            |  
|------------------------------------------ |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                           |  | 2007 |            |   | 2006 |  
|Assets:                                    |  |      |            |   |      |   |            |  
|Cash on hand and in banks                  |  | $    | 2,561,601  |   |      | $ | 663,810    |  
|Investment securities, available for sale  |  |      | 530,119    |   |      |   | 494,427    |  
|Investment in subsidiary                   |  |      | 24,097,352 |   |      |   | 25,218,232 |  
|Accrued interest receivable                |  |      | 5,448      |   |      |   | 3,521      |  
|Other assets                               |  |      | 361,166    |   |      |   | 342,164    |  
|                                           |  |      |            |   |      |   |            |  
|Total assets                               |  | $    | 27,555,686 |   |      | $ | 26,722,154 |  
|                                           |  |      |            |   |      |   |            |  
|Liabilities:                               |  |      |            |   |      |   |            |  
|Other liabilities                          |  | $    | 241,071    |   |      | $ | 182,562    |  
|                                           |  |      |            |   |      |   |            |  
|Stockholders equity:                      |  |      |            |   |      |   |            |  
|Common stock                               |  |      | 22,246     |   |      |   | 22,246     |  
|Additional paid-in capital                 |  |      | 22,130,865 |   |      |   | 22,093,615 |  
|Unearned compensation                      |  |      | (581,643   | ) |      |   | (707,438   | )
|Retained earnings                          |  |      | 12,193,959 |   |      |   | 11,746,235 |  
|Accumulated other comprehensive loss       |  |      | (486,697   | ) |      |   | (674,725   | )
|Treasury stock                             |  |      | (5,964,115 | ) |      |   | (5,940,341 | )
|                                           |  |      |            |   |      |   |            |  
|                                           |  |      | 27,314,615 |   |      |   | 26,539,592 |  
|                                           |  |      |            |   |      |   |            |  
|Total liabilities and stockholders equity |  | $    | 27,555,686 |   |      | $ | 26,722,154 |  
|                                           |  |      |            |   |      |   |            |  



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---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007 and 2006

---

NOTE QPARENT COMPANY
FINANCIAL DATA (Continued)

Condensed Statements of Operations

Years Ended June 30, 2007 and 2006



|                                               |  |      |            |   |      |   |           |  
|---------------------------------------------- |  | ---- | ---------- | - | ---- | - | --------- | -
|                                               |  | 2007 |            |   | 2006 |  
|Equity in undistributed earnings of subsidiary |  | $    | (1,388,720 | ) |      | $ | 1,052,081 |  
|Distributed earnings of subsidiary             |  |      | 2,954,000  |   |      |   | 600,000   |  
|Interest and other income                      |  |      | 158,201    |   |      |   | 85,418    |  
|Operating expenses                             |  |      | (194,061   | ) |      |   | (172,528  | )
|Income taxes                                   |  |      | 13,770     |   |      |   | 33,880    |  
|                                               |  |      |            |   |      |   |           |  
|Net income                                     |  | $    | 1,543,190  |   |      | $ | 1,598,851 |  
|                                               |  |      |            |   |      |   |           |  

Condensed Statements of Cash Flows

Years Ended June 30, 2007 and 2006



|                                                                                  |  |      |            |   |      |   |            |  
|--------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                                  |  | 2007 |            |   | 2006 |  
|Cash flows from operating activities:                                             |  |      |            |   |      |   |            |  
|Net income                                                                        |  | $    | 1,543,190  |   |      | $ | 1,598,851  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |      |            |   |      |   |            |  
|Equity in undistributed earnings of subsidiary                                    |  |      | 1,388,720  |   |      |   | (1,052,081 | )
|Unearned compensation                                                             |  |      | 83,581     |   |      |   | 87,940     |  
|Loss on sale of investment securities                                             |  |      | 6,993      |   |      |   |           |  
|Other                                                                             |  |      | (13,706    | ) |      |   | (121,035   | )
|                                                                                  |  |      |            |   |      |   |            |  
|Net cash provided by operating activities                                         |  |      | 3,008,778  |   |      |   | 513,675    |  
|                                                                                  |  |      |            |   |      |   |            |  
|Cash flows from investing activities:                                             |  |      |            |   |      |   |            |  
|Purchase of securities available for sale                                         |  |      | (497,830   | ) |      |   | (18,554    | )
|Proceeds from sale and maturities of securities available for sale                |  |      | 472,500    |   |      |   | 50,000     |  
|Collection of loan to ESOP                                                        |  |      | 106,851    |   |      |   | 115,205    |  
|                                                                                  |  |      |            |   |      |   |            |  
|Net cash provided by investing activities                                         |  |      | 81,521     |   |      |   | 146,651    |  
|                                                                                  |  |      |            |   |      |   |            |  
|Cash flows from financing activities:                                             |  |      |            |   |      |   |            |  
|Purchase of treasury stock                                                        |  |      | (139,325   | ) |      |   | (200,319   | )
|Proceeds from option exercise                                                     |  |      | 42,283     |   |      |   | 6,125      |  
|Cash dividends paid                                                               |  |      | (1,095,466 | ) |      |   | (1,094,657 | )
|                                                                                  |  |      |            |   |      |   |            |  
|Net cash used by financing activities                                             |  |      | (1,192,508 | ) |      |   | (1,288,851 | )
|                                                                                  |  |      |            |   |      |   |            |  
|Net increase (decrease) in cash and cash equivalents                              |  |      | 1,897,791  |   |      |   | (628,525   | )
|Cash and cash equivalents, beginning                                              |  |      | 663,810    |   |      |   | 1,292,335  |  
|                                                                                  |  |      |            |   |      |   |            |  
|Cash and cash equivalents, ending                                                 |  | $    | 2,561,601  |   |      | $ | 663,810    |  
|                                                                                  |  |      |            |   |      |   |            |  



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---

Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 8A.
Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer
and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this annual
report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this annual report, our disclosure controls and procedures were effective to ensure that information
required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms.

There were no changes in our internal controls over financial reporting that occurred during the quarter ended June 30, 2007 that has
materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 8B. Other
Information

Not applicable.

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the
Exchange Act

Information included in Great Pee Dee Bancorp, Inc.s Proxy Statement for its 2007 Annual Meeting of Shareholders
is incorporated herein by reference or will be filed by amendment to this Annual Report.

Item 10. Executive Compensation

Information included in Great Pee Dee Bancorp, Inc.s Proxy Statement for its 2007 Annual Meeting of Shareholders is incorporated herein by reference
or will be filed by amendment to this Annual Report.

Item 11. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters

Information included in Great Pee Dee Bancorp, Inc.s Proxy Statement for its 2007 Annual Meeting of
Shareholders is incorporated herein by reference or will be filed by amendment to this Annual Report.

Item 12. Certain Relationships and
Related Transactions

Information included in Great Pee Dee Bancorp, Inc.s Proxy Statement for its 2007 Annual Meeting of
Shareholders is incorporated herein by reference or will be filed by amendment to this Annual Report.



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---

Item 13. Exhibits

The following exhibits are filed as part of this report.



|     |  |                                                                                                                              
|---- |  | -----------------------------------------------------------------------------------------------------------------------------
|     | 
|3.1  |  | Certificate of Incorporation of Great Pee Dee Bancorp, Inc.*                                                                 
|     | 
|3.2  |  | Bylaws of Great Pee Dee Bancorp, Inc.*                                                                                       
|     | 
|4.0  |  | Stock Certificate of Great Pee Dee Bancorp, Inc.*                                                                            
|     | 
|10.1 |  | Great Pee Dee Bancorp, Inc. Employee Stock Ownership Plan and Trust*                                                         
|     | 
|10.2 |  | Employee Agreement for John S. Long**                                                                                        
|     | 
|10.3 |  | 2003 Long-Term Incentive Stock Benefit Plan ***                                                                              
|     | 
|10.4 |  | Great Pee Dee Bancorp, Inc. and First Federal Savings and Loan Association of Cheraw Deferred Compensation Plan for Directors
|     | 
|10.5 |  | Great Pee Dee Bancorp, Inc. and Sentry Bank & Trust 2005 Deferred Compensation Plan for Directors                            
|     | 
|10.6 |  | First Federal Savings and Loan Association of Cheraw Non-Qualified Supplemental Plan                                         
|     | 
|10.7 |  | First Federal Savings and Loan Association of Cheraw Restated Non-Qualified Deferred Compensation Plan*                      
|     | 
|10.8 |  | Great Pee Dee Bancorp, Inc. 1998 Stock Option Plan****                                                                       
|     | 
|10.9 |  | Great Pee Dee Bancorp, Inc. 1998 Recognition and Retention Plan****                                                          
|     | 
|21   |  | Subsidiary List                                                                                                              
|     | 
|23   |  | Consent of Dixon Hughes PLLC                                                                                                 
|     | 
|31.1 |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                           
|     | 
|31.2 |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                           
|     | 
|32   |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002       

---

|* | Incorporated herein by reference into this document from the Exhibits to Form SB-2 Registration Statement, initially filed on September 26, 1997, Registration
No. 333-36489.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|** | Incorporated herein by reference into this document from the Exhibits to the Annual Report on Form 10-KSB, filed on September 27, 2001.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------



|*** | Incorporated herein by reference into this document from the Companys Proxy Statement for the 2003 Annual Meeting of Stockholders, filed on September 17, 2003.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



|**** | Incorporated herein by reference into this document from the Companys Proxy Statement for the 1998 Annual Meeting of Stockholders, filed on December 1, 1998.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 14. Principal Accountant Fees and Services

Information required by this Item is incorporated by reference to the Proxy Statement under the caption Proposal 2-Ratification of The Appointment
of Independent Registered Public Accounting Firm, or will be filed by amendment to this Annual Report.



- 65 -



---

SIGNATURES

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



|                         |  |  |  |     |  |                             |  |                                      
|------------------------ |  |  |  | --- |  | --------------------------- |  | -------------------------------------
|                         |  |  |  |     |  | GREAT PEE DEE BANCORP, INC.
|                         |  |  | 
|Date: September 21, 2007 |  |  |  | By: |  | /s/ John S. Long           
|                         |  |  |  |     |  |                             |  | John S. Long                         
|                         |  |  |  |     |  |                             |  | President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange of 1934, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.



|                         |  |                                                               |  |                          |  |     |  |                                                     
|------------------------ |  | ------------------------------------------------------------- |  | ------------------------ |  | --- |  | ----------------------------------------------------
|                         |  |                                                               |  |                         
|By:                      |  | /s/ John S. Long                                              |  |                          |  | By: |  | /s/ John M. Digby                                   
|                         |  | John S. Long, President, Chief Executive Officer and Director |  |                          |  |     |  | John M. Digby, Chief Financial Officer and Treasurer
|                         |  | (Principal Executive Officer)                                 |  |                          |  |     |  | (Principal Financial and Accounting Officer)        
|                         |  |                                                              
|Date: September 21, 2007 |  |                                                               |  | Date: September 21, 2007
|                         |  |                                                               |  |                         
|By:                      |  | /s/ Robert M. Bennett, Jr.                                    |  |                          |  | By: |  | /s/ William R. Butler                               
|                         |  | Robert M. Bennett, Jr., Director                              |  |                          |  |     |  | William R. Butler, Director                         
|                         |  |                                                              
|Date: September 21, 2007 |  |                                                               |  | Date: September 21, 2007
|                         |  |                                                               |  |                         
|By:                      |  | /s/ James C. Crawford, III                                    |  |                          |  | By: |  | /s/ Henry P. Duvall, IV                             
|                         |  | James C. Crawford, III, Chairman                              |  |                          |  |     |  | Henry P. Duvall, IV, Director                       
|                         |  |                                                              
|Date: September 21, 2007 |  |                                                               |  | Date: September 21, 2007
|                         |  |                                                               |  |                         
|By:                      |  | /s/ H. Malloy Evans, Jr.                                      |  |                          |  | By: |  | /s/ Herbert W. Watts                                
|                         |  | H. Malloy Evans, Jr., Director                                |  |                          |  |     |  | Herbert W. Watts, Director                          
|                         |  |                                                              
|Date: September 21, 2007 |  |                                                               |  | Date: September 21, 2007



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