Exhibit 13



GREAT PEE DEE BANCORP, INC.



2005 ANNUAL REPORT



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Great Pee Dee Bancorp, Inc. and Subsidiary



TABLE OF CONTENTS



|                                                        |  |         
|------------------------------------------------------- |  | --------
|                                                        |  | Page No.
|Report to Shareholders                                  |  | 1       
|                                                        | 
|Selected Consolidated Financial and Other Data          |  | 3       
|                                                        | 
|Managements Discussion and Analysis                    |  | 4       
|                                                        | 
|Report of Independent Registered Public Accounting Firm |  | 19      
|                                                        | 
|Consolidated Financial Statements                       |  |         
|                                                        | 
|Consolidated Statements of Financial Condition          |  | 20      
|                                                        | 
|Consolidated Statements of Operations                   |  | 21      
|                                                        | 
|Consolidated Statements of Stockholders Equity         |  | 22      
|                                                        | 
|Consolidated Statements of Cash Flows                   |  | 23      
|                                                        | 
|Notes to Consolidated Financial Statements              |  | 25      
|                                                        | 
|General Corporate Information                           |  | 50      



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Great Pee Dee Bancorp, Inc. and Subsidiary

Report to Shareholders



Great Pee Dee Bancorp, Inc., experienced growth in assets, market share, loan volume and interest
income during the fiscal year concluding June 30, 2005, as recent expansions continued to generate new business for the corporation.



Fiscal year 2004-2005 was the first full operating year for the corporations new home office facility and expanded support services infrastructure.
Even with the increases in personnel and occupancy expenses inherent in such an expansion, this investment in facilities and staffing has already resulted in significant growth. While total net income is down slightly due to startup costs, total
assets have grown and net interest income has increased.



The
residential loan business has remained strong, with the Florence office originating a high volume of loans as the Florence real estate market continues to expand. The corporation has forged strong alliances with Realtors throughout the area, further
contributing to our lending activity. Personnel in all three offices are involved in team-based business development training, resulting in increased sales of all types of financial products and services. The banks market share has increased
in both the Cheraw and Florence markets.



Net income was
$1,164,000 for the year ending June 30, 2005. Total assets grew by $39 million, or 25%, to $196 million. Total deposits increased by more than $28 million, or 25%. Actual net interest income increased by $236 thousand, even though the net interest
margin declined during the year. The investment division was also very productive, with gross fee income up 46% to $212 thousand.



Total loans increased by $40 million, or 34%, to $156 million. Commercial loans increased from $33.1 million to $53.6 million. Secondary market activity
was strong, with $11.6 million in loans sold during the 2004-05 fiscal year. The Florence office continued to be productive, with loans totaling $66 million and deposits totaling $54.4 million at that location.



Total shareholders equity was up $205,000 to $26,256,000. Dividends
paid during 2004-05 totaled $1.1 million, at $.635 per share, compared to $1 million, or $.605 during the previous year. The regular quarterly dividend increased to $.16 per share beginning with the first quarter.



The Company is exploring the possibility of expanding operations in the
growing Florence market. In addition, the Board of Directors continues to implement other strategies for increasing shareholder value, including continued business development, payment of regular and special dividends and repurchases of common
stock.



In closing, it is with great appreciation and a deep
sense of loss that the corporation notes the passing of Mr. Johnnie L. Craft on November 10, 2004. Mr. Craft served our organization and its predecessor, First Federal Savings and Loan Association, for many years as Secretary- Treasurer and was
instrumental in much of the companys growth.



The Board,
management and staff of Great Pee Dee Bancorp, Inc., wish to thank you for your continued confidence and loyalty as demonstrated by your investment in the corporation.



Sincerely,



|                                     
|-------------------------------------
|/s/ Herbert W. Watts                 
|Herbert W. Watts                     
|President and Chief Executive Officer



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Great Pee Dee Bancorp, Inc. and Subsidiary

Selected Consolidated Financial and Other Data



|                                                                        |  |                                              |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|----------------------------------------------------------------------- |  | -------------------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                                                        |  | At or for the year ended June 30,            |        
|                                                                        |  | 2005                                         |         |   | 2004 |   |         | 2003 |  |   | 2002    |   |  | 2001 |        
|                                                                        |  | (Dollars in thousands except per share data) |        
|Financial Condition Data:                                               |  |                                              |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Total assets                                                            |  | $                                            | 195,746 |   |      | $ | 156,355 |      |  | $ | 143,326 |   |  | $    | 131,034 |   |  | $ | 115,997 |  
|Investments(1)                                                          |  |                                              | 30,892  |   |      |   | 31,633  |      |  |   | 26,602  |   |  |      | 12,146  |   |  |   | 10,154  |  
|Loans receivable, net                                                   |  |                                              | 154,131 |   |      |   | 114,292 |      |  |   | 107,954 |   |  |      | 109,611 |   |  |   | 97,804  |  
|Loans held for sale                                                     |  |                                              | 1,116   |   |      |   | 1,310   |      |  |   | 2,056   |   |  |      | 3,072   |   |  |   | 3,431   |  
|Deposits                                                                |  |                                              | 136,573 |   |      |   | 108,945 |      |  |   | 108,812 |   |  |      | 88,090  |   |  |   | 77,624  |  
|Borrowings                                                              |  |                                              | 31,448  |   |      |   | 21,000  |      |  |   | 8,000   |   |  |      | 17,000  |   |  |   | 12,800  |  
|Stockholders equity                                                    |  |                                              | 26,256  |   |      |   | 26,051  |      |  |   | 26,043  |   |  |      | 25,569  |   |  |   | 25,130  |  
|                                                                        |  |                                              |         |   |     
|Operating Data:                                                         |  |                                              |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Interest income                                                         |  | $                                            | 9,371   |   |      | $ | 8,312   |      |  | $ | 8,426   |   |  | $    | 8,637   |   |  | $ | 7,905   |  
|Interest expense                                                        |  |                                              | 3,954   |   |      |   | 3,131   |      |  |   | 3,367   |   |  |      | 3,724   |   |  |   | 4,477   |  
|                                                                        |  |                                              |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net interest income                                                     |  |                                              | 5,417   |   |      |   | 5,181   |      |  |   | 5,059   |   |  |      | 4,913   |   |  |   | 3,428   |  
|Provision for loan losses                                               |  |                                              | 192     |   |      |   | 375     |      |  |   | 400     |   |  |      | 500     |   |  |   | 45      |  
|                                                                        |  |                                              |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net interest income after provision for loan losses                     |  |                                              | 5,225   |   |      |   | 4,806   |      |  |   | 4,659   |   |  |      | 4,413   |   |  |   | 3,383   |  
|Non-interest income                                                     |  |                                              | 1,316   |   |      |   | 1,274   |      |  |   | 1,080   |   |  |      | 826     |   |  |   | 723     |  
|Non-interest expense                                                    |  |                                              | 4,723   |   |      |   | 4,105   |      |  |   | 3,496   |   |  |      | 3,334   |   |  |   | 2,771   |  
|                                                                        |  |                                              |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Income before income taxes                                              |  |                                              | 1,818   |   |      |   | 1,975   |      |  |   | 2,243   |   |  |      | 1,905   |   |  |   | 1,335   |  
|Income tax expense                                                      |  |                                              | 654     |   |      |   | 727     |      |  |   | 833     |   |  |      | 703     |   |  |   | 488     |  
|                                                                        |  |                                              |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net income                                                              |  | $                                            | 1,164   |   |      | $ | 1,248   |      |  | $ | 1,410   |   |  | $    | 1,202   |   |  | $ | 847     |  
|                                                                        |  |                                              |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Per Common Share Data:(2)                                               |  |                                              |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net income, basic                                                       |  | $                                            | 0.68    |   |      | $ | 0.74    |      |  | $ | 0.87    |   |  | $    | 0.74    |   |  | $ | 0.51    |  
|Net income, diluted                                                     |  |                                              | 0.68    |   |      |   | 0.73    |      |  |   | 0.85    |   |  |      | 0.73    |   |  |   | 0.51    |  
|Regular cash dividends                                                  |  |                                              | 0.635   |   |      |   | 0.605   |      |  |   | 0.545   |   |  |      | 0.464   |   |  |   | 0.391   |  
|Dividend payment ratio                                                  |  |                                              | 93.38   | % |      |   | 81.76   | %    |  |   | 62.64   | % |  |      | 62.70   | % |  |   | 76.67   | %
|                                                                        |  |                                              |         |   |     
|Selected Other Data:                                                    |  |                                              |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Number of:                                                              |  |                                              |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Outstanding loans                                                       |  |                                              | 3,095   |   |      |   | 3,152   |      |  |   | 3,435   |   |  |      | 3,455   |   |  |   | 2,944   |  
|Deposit accounts                                                        |  |                                              | 6,582   |   |      |   | 6,180   |      |  |   | 5,793   |   |  |      | 6,262   |   |  |   | 7,061   |  
|Full-service offices                                                    |  |                                              | 3       |   |      |   | 3       |      |  |   | 2       |   |  |      | 2       |   |  |   | 2       |  
|Return on average assets                                                |  |                                              | 0.66    | % |      |   | 0.81    | %    |  |   | 1.01    | % |  |      | 0.98    | % |  |   | 0.78    | %
|Return on average equity                                                |  |                                              | 4.52    | % |      |   | 4.80    | %    |  |   | 5.49    | % |  |      | 4.74    | % |  |   | 3.34    | %
|Average equity to average assets                                        |  |                                              | 14.60   | % |      |   | 16.94   | %    |  |   | 18.32   | % |  |      | 20.58   | % |  |   | 23.48   | %
|Interest rate spread                                                    |  |                                              | 2.85    | % |      |   | 3.11    | %    |  |   | 3.24    | % |  |      | 3.52    | % |  |   | 2.23    | %
|Net yield on average interest-earning assets                            |  |                                              | 3.27    | % |      |   | 3.55    | %    |  |   | 3.79    | % |  |      | 4.18    | % |  |   | 3.33    | %
|Average interest-earning assets to average interest-bearing liabilities |  |                                              | 117.69  | % |      |   | 120.57  | %    |  |   | 121.96  | % |  |      | 120.78  | % |  |   | 125.41  | %
|Ratio of non-interest expense to average total assets                   |  |                                              | 2.67    | % |      |   | 2.67    | %    |  |   | 2.49    | % |  |      | 2.71    | % |  |   | 2.57    | %
|Non-performing assets to total assets                                   |  |                                              | 0.66    | % |      |   | 1.70    | %    |  |   | 1.60    | % |  |      | 0.86    | % |  |   | 0.52    | %
|Allowance for loan losses to non-performing loans at period end         |  |                                              | 144.03  | % |      |   | 71.09   | %    |  |   | 62.88   | % |  |      | 98.79   | % |  |   | 100.35  | %

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

|(2) | Retroactively reflects the effects of a 10% stock dividend in fiscal 2002.
|--- | --------------------------------------------------------------------------



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis



Managements discussion and analysis is intended to assist readers in the understanding and evaluation of the
financial condition and results of operations of Great Pee Dee Bancorp, Inc. and 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.



Description of Business



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



Great Pee Dee has no operations and conducts no business of its own other than owning its one
subsidiary, investing its liquid assets, and lending funds to the Great Pee Dee Bancorp, Inc. Employee Stock Ownership Plan (the ESOP) which was formed in connection with the Conversion. Sentrys three full service banking offices
are located in Cheraw and Florence, South Carolina. The principal business of the Bank is accepting deposits from the general public and using those deposits and other sources of funds to make loans secured by real estate located in the Banks
primary market area of Chesterfield, Marlboro and Florence Counties, South Carolina, as well as other types of loans. On June 30, 2005, approximately 83% of the Banks total loans were composed of real estate loans.



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



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.



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis



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, 2005 |            
|                                                                            |  | 1 Year or Less                       |             |   | More Than 1 Year to3 Years |   |             | More Than 3 Years to5 Years |  |   | More Than 5 Years |   |  | Total |           
|INTEREST-EARNING ASSETS:                                                    |  |                                      |             |   |                            |   |             |                             |  |   |                   |   |  |       |            |   |  |   |             |  
|Loans receivable:                                                           |  |                                      |             |   |                            |   |             |                             |  |   |                   |   |  |       |            |   |  |   |             |  
|Real estate loans:                                                          |  |                                      |             |   |                            |   |             |                             |  |   |                   |   |  |       |            |   |  |   |             |  
|Adjustable rate                                                             |  | $                                    | 41,125,519  |   |                            | $ | 12,197,301  |                             |  | $ | 5,201,573         |   |  | $     | 271,603    |   |  | $ | 58,795,996  |  
|Fixed rate                                                                  |  |                                      | 8,190,740   |   |                            |   | 8,584,804   |                             |  |   | 13,032,942        |   |  |       | 52,700,937 |   |  |   | 82,509,423  |  
|Other loans                                                                 |  |                                      | 6,853,350   |   |                            |   | 2,015,415   |                             |  |   | 3,703,627         |   |  |       | 2,026,492  |   |  |   | 14,598,884  |  
|Loans held for sale                                                         |  |                                      | 1,115,600   |   |                            |   |            |                             |  |   |                  |   |  |       |           |   |  |   | 1,115,600   |  
|Interest-earning balances in other banks                                    |  |                                      | 432,266     |   |                            |   |            |                             |  |   |                  |   |  |       |           |   |  |   | 432,266     |  
|Investment securities available for sale                                    |  |                                      |            |   |                            |   | 9,575,000   |                             |  |   | 3,285,845         |   |  |       | 16,234,034 |   |  |   | 29,094,879  |  
|Restricted stock(1)                                                         |  |                                      |            |   |                            |   |            |                             |  |   |                  |   |  |       | 1,680,787  |   |  |   | 1,680,787   |  
|                                                                            |  |                                      |             |   |                            |   |             |                             |  |   |                   |   |  |       |            |   |  |   |             |  
|Total interest-earning assets                                               |  | $                                    | 57,717,475  |   |                            | $ | 32,372,520  |                             |  | $ | 25,223,987        |   |  | $     | 72,913,853 |   |  | $ | 188,227,835 |  
|                                                                            |  |                                      |             |   |                            |   |             |                             |  |   |                   |   |  |       |            |   |  |   |             |  
|INTEREST-BEARING LIABILITIES:                                               |  |                                      |             |   |                            |   |             |                             |  |   |                   |   |  |       |            |   |  |   |             |  
|Deposit accounts:                                                           |  |                                      |             |   |                            |   |             |                             |  |   |                   |   |  |       |            |   |  |   |             |  
|Demand                                                                      |  | $                                    | 35,692,233  |   |                            | $ |            |                             |  | $ |                  |   |  | $     |           |   |  | $ | 35,692,233  |  
|Time over $100,000                                                          |  |                                      | 30,039,078  |   |                            |   | 22,371,247  |                             |  |   | 1,474,477         |   |  |       |           |   |  |   | 53,884,802  |  
|Other time                                                                  |  |                                      | 24,404,976  |   |                            |   | 14,036,957  |                             |  |   | 1,055,176         |   |  |       | 157,300    |   |  |   | 39,654,409  |  
|Borrowings:                                                                 |  |                                      |             |   |                            |   |             |                             |  |   |                   |   |  |       |            |   |  |   |             |  
|Short-term                                                                  |  |                                      | 8,448,000   |   |                            |   |            |                             |  |   |                  |   |  |       |           |   |  |   | 8,448,000   |  
|Long-term                                                                   |  |                                      |            |   |                            |   |            |                             |  |   |                  |   |  |       | 23,000,000 |   |  |   | 23,000,000  |  
|                                                                            |  |                                      |             |   |                            |   |             |                             |  |   |                   |   |  |       |            |   |  |   |             |  
|Total interest-bearing liabilities                                          |  | $                                    | 98,584,287  |   |                            | $ | 36,408,204  |                             |  | $ | 2,529,653         |   |  | $     | 23,157,300 |   |  | $ | 160,679,444 |  
|                                                                            |  |                                      |             |   |                            |   |             |                             |  |   |                   |   |  |       |            |   |  |   |             |  
|INTEREST SENSITIVITY GAP PER PERIOD                                         |  | $                                    | (40,866,812 | ) |                            | $ | (4,035,684  | )                           |  | $ | 22,694,334        |   |  | $     | 49,756,553 |   |  | $ | 27,548,391  |  
|                                                                            |  |                                      |             |   |                           
|CUMULATIVE INTEREST SENSITIVITY GAP                                         |  | $                                    | (40,866,812 | ) |                            | $ | (44,902,496 | )                           |  | $ | (22,208,162       | ) |  | $     | 27,548,391 |   |  | $ | 27,548,391  |  
|                                                                            |  |                                      |             |   |                           
|CUMULATIVE GAP AS A PERCENTAGE OF TOTAL INTEREST-EARNING ASSETS             |  |                                      | -21.71      | % |                            |   | -23.86      | %                           |  |   | -11.80            | % |  |       | 14.64      | % |  |   | 14.64       | %
|                                                                            |  |                                      |             |   |                           
|CUMULATIVE RATIO OF INTEREST-EARNING ASSETS TO INTEREST-BEARING LIABILITIES |  |                                      | 58.55       | % |                            |   | 66.74       | %                           |  |   | 83.85             | % |  |       | 117.14     | % |  |   | 117.14      | %

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|(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.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis



The preceding table sets forth the amounts of interest-earning assets and interest-bearing liabilities outstanding at
June 30, 2005 which is 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. Passbook accounts and money market deposit accounts are assumed to be subject
to immediate re-pricing and depositor availability and have been placed in the shortest period. In making the gap computations, none of the assumptions sometimes made regarding prepayment rates and deposit decay rates have been used for any other
interest-earning assets or interest-bearing liabilities. In addition, the table does not reflect scheduled principal payments that will be received throughout the lives of the loans. The interest rate sensitivity of the Companys assets and
liabilities illustrated in the preceding table would vary substantially if different assumptions were used or if actual experience differs from that indicated by such assumptions.



The Companys one-year interest sensitivity gap as a percentage of total interest-earning assets at June 30, 2005, was -21.71%. At June
30, 2005, the Companys three-year and five-year cumulative interest sensitivity gaps as a percentage of total interest-earning assets were -11.80% and a 14.64%, respectively.



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



The following table presents information regarding possible changes in the Sentrys NPV as of June 30, 2005, 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                                      |  | $                      | 19,241 |                 | $ | (9,312 | )                |  | -33 | %
|Up 200 basis points                                      |  |                        | 22,737 |                 |   | (5,816 | )                |  | -20 | %
|Up 100 basis points                                      |  |                        | 25,742 |                 |   | (2,811 | )                |  | -10 | %
|Static (Includes certain unrecorded deposit intangibles) |  |                        | 28,553 |                 |   |       |                  |  |    | %
|Down 100 basis points                                    |  |                        | 30,587 |                 |   | 2,034  |                  |  | 7   | %



- 6 -



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis



Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions,
including relative levels of market interest rates, loan prepayments and deposit decay, and should not be relied upon as indicative of actual results. Further, the computations do not reflect any actions management may undertake in response to
changes in interest rates. The table set forth above indicates that in the event of a 200 basis point increase in interest rates, Sentry would be expected to experience a 20% decrease in NPV. Because of the overall low levels of interest rates, the
analysis provided at June 30, 2005, did not include the effects of downward adjustments exceeding 100 basis points.



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). The following table sets forth information relating to average balances of the Companys assets and liabilities for the years ended June 30, 2005 and
2004. For the periods indicated, the table reflects the average yield on interest-earning assets and the average cost of interest-bearing liabilities (derived by dividing income or expense by the monthly average balance of interest-earning assets or
interest-bearing liabilities, respectively) as well as the net yield on interest-earning assets (which reflects the impact of the net earning balance). Non-accruing loans were included in the computation of average balances.



|                                                                                 |  |                          |         |   |                          |   |             |  |      |                |  |   |          |   |             |   |       |  |      |  
|-------------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ------------------------ | - | ----------- |  | ---- | -------------- |  | - | -------- | - | ----------- | - | ----- |  | ---- | -
|                                                                                 |  | Year Ended June 30, 2005 |         |   | Year Ended June 30, 2004 |  
|                                                                                 |  | AverageBalance           |         |   | Interest                 |   | AverageRate |  |      | AverageBalance |  |   | Interest |   | AverageRate |  
|                                                                                 |  | (Dollars in thousands)   |        
|Interest-earning assets:                                                         |  |                          |         |   |                          |   |             |  |      |                |  |   |          |   |             |   |       |  |      |  
|Interest-earning balances                                                        |  | $                        | 3,621   |   |                          | $ | 86          |  | 2.38 | %              |  | $ | 1,803    |   |             | $ | 27    |  | 1.50 | %
|Investments(1)                                                                   |  |                          | 27,864  |   |                          |   | 1,081       |  | 3.88 | %              |  |   | 30,113   |   |             |   | 1,057 |  | 3.51 | %
|Loans(2)                                                                         |  |                          | 134,018 |   |                          |   | 8,204       |  | 6.12 | %              |  |   | 114,182  |   |             |   | 7,228 |  | 6.33 | %
|                                                                                 |  |                          |         |   |                          |   |             |  |      |                |  |   |          |   |             |   |       |  |      |  
|Total interest-earning assets                                                    |  |                          | 165,503 |   |                          |   | 9,371       |  | 5.66 | %              |  |   | 146,098  |   |             |   | 8,312 |  | 5.69 | %
|                                                                                 |  |                          |         |   |                          |   |             |  |      |                |  |   |          |   |             |   |       |  |      |  
|Other assets                                                                     |  |                          | 11,070  |   |                          |   |             |  |      |                |  |   | 7,427    |   |             |   |       |  |      |  
|                                                                                 |  |                          |         |   |                          |   |             |  |      |                |  |   |          |   |             |   |       |  |      |  
|Total assets                                                                     |  | $                        | 176,573 |   |                          |   |             |  |      |                |  | $ | 153,525  |   |             |   |       |  |      |  
|                                                                                 |  |                          |         |   |                          |   |             |  |      |                |  |   |          |   |             |   |       |  |      |  
|Interest-bearing liabilities:                                                    |  |                          |         |   |                          |   |             |  |      |                |  |   |          |   |             |   |       |  |      |  
|Deposits                                                                         |  | $                        | 116,141 |   |                          |   | 3,170       |  | 2.73 | %              |  | $ | 102,948  |   |             |   | 2,563 |  | 2.49 | %
|Borrowings                                                                       |  |                          | 24,482  |   |                          |   | 784         |  | 3.20 | %              |  |   | 18,222   |   |             |   | 568   |  | 3.12 | %
|                                                                                 |  |                          |         |   |                          |   |             |  |      |                |  |   |          |   |             |   |       |  |      |  
|Total interest-bearing liabilities                                               |  |                          | 140,623 |   |                          |   | 3,954       |  | 2.81 | %              |  |   | 121,170  |   |             |   | 3,131 |  | 2.58 | %
|                                                                                 |  |                          |         |   |                          |   |             |  |      |                |  |   |          |   |             |   |       |  |      |  
|Non-interest bearing deposits                                                    |  |                          | 7,445   |   |                          |   |             |  |      |                |  |   | 5,860    |   |             |   |       |  |      |  
|Other liabilities                                                                |  |                          | 2,733   |   |                          |   |             |  |      |                |  |   | 492      |   |             |   |       |  |      |  
|                                                                                 |  |                          |         |   |                          |  
|Stockholders equity                                                             |  |                          | 25,772  |   |                          |   |             |  |      |                |  |   | 26,003   |   |             |   |       |  |      |  
|                                                                                 |  |                          |         |   |                          |   |             |  |      |                |  |   |          |   |             |   |       |  |      |  
|Total liabilities and stockholders equity                                       |  | $                        | 176,573 |   |                          |   |             |  |      |                |  | $ | 153,525  |   |             |   |       |  |      |  
|                                                                                 |  |                          |         |   |                          |   |             |  |      |                |  |   |          |   |             |   |       |  |      |  
|Net interest income and interest rate spread                                     |  |                          |         |   |                          | $ | 5,417       |  | 2.85 | %              |  |   |          |   |             | $ | 5,181 |  | 3.11 | %
|                                                                                 |  |                          |         |   |                          |   |             |  |      |                |  |   |          |   |             |   |       |  |      |  
|Net yield on average interest-earning assets                                     |  |                          |         |   |                          |   |             |  | 3.27 | %              |  |   |          |   |             |   |       |  | 3.55 | %
|                                                                                 |  |                          |         |   |                          |   |             |  |      |                |  |   |          |   |             |   |       |  |      |  
|Ratio of average interest-earning assets to average interest-bearing liabilities |  |                          | 117.69  | % |                          |   |             |  |      |                |  |   | 120.57   | % |             |   |       |  |      |  
|                                                                                 |  |                          |         |   |                          |   |             |  |      |                |  |   |          |   |             |   |       |  |      |  

---

|(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.
|--- | ------------------------------------------------------



- 7 -



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis



Rate/Volume Analysis



The following table analyzes the dollar amount of changes in interest income and interest expense for major components of interest-earning
assets and interest-bearing liabilities. The table distinguishes between (i) changes attributable to volume (changes in volume multiplied by the prior periods rate), (ii) changes attributable to rate (changes in rate multiplied by the prior
periods volume), and (iii) 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, 2005 vs. 2004
|                              |  | Increase (Decrease) Due To       
|                              |  | Volume                            |       |   | Rate |   |      | Total
|                              |  | (Dollars in thousands)           
|Interest income:              |  |                                   |       |   |      |   |      |       |  |   |      
|Interest-earning balances     |  | $                                 | 35    |   |      | $ | 24   |       |  | $ | 59   
|Investments                   |  |                                   | (83   | ) |      |   | 107  |       |  |   | 24   
|Loans                         |  |                                   | 1,236 |   |      |   | (260 | )     |  |   | 976  
|                              |  |                                   |       |   |      |   |      |       |  |   |      
|Total interest income         |  |                                   | 1,188 |   |      |   | (129 | )     |  |   | 1,059
|                              |  |                                   |       |   |      |   |      |       |  |   |      
|Interest expense:             |  |                                   |       |   |      |   |      |       |  |   |      
|Deposits                      |  |                                   | 344   |   |      |   | 263  |       |  |   | 607  
|Borrowings                    |  |                                   | 198   |   |      |   | 18   |       |  |   | 216  
|                              |  |                                   |       |   |      |   |      |       |  |   |      
|Total interest expense        |  |                                   | 542   |   |      |   | 281  |       |  |   | 823  
|                              |  |                                   |       |   |      |   |      |       |  |   |      
|Net interest income (expense) |  | $                                 | 646   |   |      | $ | (410 | )     |  | $ | 236  
|                              |  |                                   |       |   |      |   |      |       |  |   |      



Comparison of
Financial Condition at June 30, 2005 and 2004



The Companys total
assets increased by $39.3 million during the year ended June 30, 2005 from $156.4 million at June 30, 2004 to $195.7 million at June 30, 2005. Funding for this growth was provided principally by an increase in deposits including brokered
certificates of deposits, borrowings from the Federal Home Loan Bank of Atlanta and Federal Funds purchased.



The increase in total assets was reflected principally as growth in loans. Loans increased $39.9 million from $115.8 million at June 30, 2004 to $155.7 million at June 30, 2005. The overall makeup of the loan
portfolio is still predominately made up of real estate loans. Commercial loans, including commercial real estate loans, increased from $33.1 million to $53.6 million during the year.



Total deposits increased by $28 million with $15.9 million coming from brokered certificates of deposits. Brokered certificates of deposits
were used as an alternative funding source due to the highly competitive nature of the local deposit market.



During the year ended June 30, 2005, total stockholders equity did not change significantly, as approximately $1.1 million of the $1.2 million in net income for 2005 was paid out in dividends. This represents
$0.635 per share compared with $0.605 per share for the previous year end. At June 30, 2005 the Bank continued to exceed all applicable regulatory capital requirements.



- 8 -



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis



Comparison of Results of Operations for the Years Ended June 30, 2005 and 2004



Net Income. Net income for the year ended June 30, 2005, was $1.2
million, or diluted net income per share of $0.68, as compared with net income of $1.2 million, or $0.73 per diluted share, for the year ended June 30, 2004.



Net Interest Income. Net interest income for the year ended June 30, 2005 was $5.4 million as compared with $5.2 million during the year ended June 30, 2004, an increase
of $236 thousand. The Companys interest rate spread decreased from 3.11% for the year ended June 30, 2004, to 2.85% for the year ended June 30, 2005, as a result of the sustained trend of lower interest rates during the first part of the 2005
fiscal year. This downward trend in rates resulted in a significant decrease in our ARM loan portfolio yields due to a lagging re-pricing index feature. The weighted average yield on interest-earning assets decreased by three basis points. The
recent increase in short term rates caused the weighted average cost of interest-bearing liabilities to increase by 23 basis points. The Companys net yield on average interest-earnings assets decreased from 3.55% for fiscal 2004 to 3.27% for
fiscal 2005.



Provision for Loan Losses.The provision for loan losses
was $192 thousand compared with $375 thousand for the year ended June 30, 2004. Despite growth in loans receivable during the year ended June 30, 2005 of $40 million, the decrease in impaired loans from June 30, 2004 to 2005 of $1 million, reduced
the necessary amount of allowance for loan losses when the changes were analyzed in our allowance for loan loss model (See Analysis of Allowance for Loan Losses). The decline of non-performing loans reflects an increase in our credit
quality. The table under Nonperforming Assets outlines the decline of our nonperforming loans. The net charge-offs for the twelve-months ended June 30, 2005, were $131 thousand compared to the net charge-offs for the year ended June 30,
2004 of $259 thousand. The following table provides an analysis for loan losses for the twelve-months ended June 30, 2005 and 2004, respectively. Allowance for loan losses stood at $1.6 million at the fiscal 2005 year end. At June 30, 2005,
non-accrual loans aggregated $1.1 million, compared to $2.1 million at June 30, 2004.



- 9 -



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis



The following table describes the change in analysis for loan losses for the years ended June 30, 2005 and 2004,
respectfully.



|                                                                                          |  |                            |       |   |      |   |       |  
|----------------------------------------------------------------------------------------- |  | -------------------------- | ----- | - | ---- | - | ----- | -
|                                                                                          |  | For the Year EndedJune 30, |      
|                                                                                          |  | 2005                       |       |   | 2004 |  
|                                                                                          |  | (Dollars in thousands)     |      
|Balance at the beginning of the period                                                    |  | $                          | 1,532 |   |      | $ | 1,416 |  
|                                                                                          |  |                           
|Charge-offs:                                                                              |  |                            |       |   |      |   |       |  
|Real estate mortgage                                                                      |  |                            | (49   | ) |      |   | (205  | )
|Installment loans to individuals                                                          |  |                            | (121  | ) |      |   | (85   | )
|                                                                                          |  |                            |       |   |      |   |       |  
|                                                                                          |  |                            | (170  | ) |      |   | (290  | )
|                                                                                          |  |                            |       |   |      |   |       |  
|Recoveries:                                                                               |  |                            |       |   |      |   |       |  
|Real estate mortgage                                                                      |  |                            | 23    |   |      |   | 28    |  
|Installment loans to individuals                                                          |  |                            | 16    |   |      |   | 3     |  
|                                                                                          |  |                            |       |   |      |   |       |  
|                                                                                          |  |                            | 39    |   |      |   | 31    |  
|                                                                                          |  |                            |       |   |      |   |       |  
|Net charge-offs                                                                           |  |                            | (131  | ) |      |   | (259  | )
|                                                                                          |  |                            |       |   |      |   |       |  
|Provision for loan losses                                                                 |  |                            | 192   |   |      |   | 375   |  
|                                                                                          |  |                            |       |   |      |   |       |  
|Balance at end of period                                                                  |  | $                          | 1,593 |   |      | $ | 1,532 |  
|                                                                                          |  |                            |       |   |      |   |       |  
|Ratio of net charge-offs during the period to average loans outstanding during the period |  |                            | 0.10% |   |      |   | 0.23% |  



Non-Interest Income. Non-interest
income increased $42 thousand from $1.3 million in fiscal 2004 to $1.3 million in fiscal 2005. Service fees and charges increased by $176 thousand to $854 thousand, principally as a result of an increase in checking accounts during the fiscal year.
Income from the Companys brokerage services increased significantly, from $145 thousand to $212 thousand for the years ended June 30, 2004 and 2005, respectively, as the Company hired two new Investment Services professionals that facilitated
our brokerage fee increase. Fiscal 2004 results included a non-recurring investment gain of $159 thousand. Gross loans of $11.6 million were sold during fiscal 2005, resulting in gains of $149 thousand. This compares to loans sold of $19.3 million
and gains of $230 thousand the previous fiscal year.



Non-Interest Expenses.
Non-interest expenses increased to $4.7 million for the year ended June 30, 2005, as compared with $4.1 million for the year ended June 30, 2004, an increase of $618 thousand. Personnel and occupancy costs increased by $291 thousand and $119
thousand, respectively, principally reflecting costs incurred in connection with the staffing and opening of the new home office facility. Other non-interest expenses increased $83 thousand during the year ended June 30, 2005, due to increases in
accounting and auditing fees.



- 10 -



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis



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



|                                                  |  |                        |        |   |               |   |       |  
|------------------------------------------------- |  | ---------------------- | ------ | - | ------------- | - | ----- | -
|                                                  |  | June 30, 2005          |        |   | June 30, 2004 |  
|                                                  |  | (Dollars in thousands) |       
|Non-accrual loans                                 |  | $                      | 1,106  |   |               | $ | 2,155 |  
|Restructured loans                                |  |                        |       |   |               |   |      |  
|                                                  |  |                        |        |   |               |   |       |  
|Total non-performing loans                        |  |                        | 1,106  |   |               |   | 2,155 |  
|                                                  |  |                       
|Real estate owned                                 |  |                        | 183    |   |               |   | 510   |  
|                                                  |  |                        |        |   |               |   |       |  
|Total non-performing assets                       |  | $                      | 1,289  |   |               | $ | 2,665 |  
|                                                  |  |                        |        |   |               |   |       |  
|Accruing loans past due 90 days or more           |  | $                      |       |   |               | $ |      |  
|Allowance for loan losses                         |  |                        | 1,593  |   |               |   | 1,532 |  
|Non-performing loans to period end loans          |  |                        | 0.71   | % |               |   | 1.86  | %
|Allowance for loan losses to period end loans     |  |                        | 1.03   | % |               |   | 1.32  | %
|Allowance for loan losses to non-performing loans |  |                        | 144.03 | % |               |   | 71.09 | %
|Non-performing assets to total assets             |  |                        | 0.66   | % |               |   | 1.70  | %





- 11 -



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis



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 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, 2005 and 2004 had the loans been current was approximately $50,000 and $81,000, respectively.



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 losses inherent in the portfolio.



Managements determination of the adequacy of the allowance is based primarily on a mathematical model that estimates the appropriate allowance for loan losses. This
model has two components. The first component involves the estimation of losses on loans defined as impaired loans. A loan is considered to be impaired when, based on current information and events, it is probable the Company will be
unable to collect all amounts due according to the contractual terms of the loan agreement. The estimated valuation allowance is the difference, if any, between the loan balance outstanding and the value of the impaired loan as determined by either
1) an estimate of the cash flows that the Company expects to receive from the borrower discounted at the loans effective rate, or 2) in the case of a collateral-dependent loan, the fair value of the collateral.



The second component of the allowance model is to estimate losses for all loans not
considered to be impaired loans. First, loans that have been risk graded by the Company as having more than standard risk but are not considered to be impaired are assigned estimated loss percentages



- 12 -



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis



generally accepted in the banking industry. These classifications are either doubtful, substandard, or special mention. Loans that are classified by the
Company as having standard credit risk are segregated by loan type, and estimated loss percentages are assigned to each loan type, based on the historical losses, current economic conditions, and operational conditions specific to each
loan type.



The reserve estimated for impaired loans is then added to the
reserve estimated for all other loans. This becomes the Companys allocated allowance. In addition to the allocated allowance derived from the model, management also evaluates other data such as the ratio of the allowance for loan
losses to total loans, net loan growth information, nonperforming asset levels and trends in such data. Based on this additional analysis, the Company may determine that an additional amount of allowance for loan losses is necessary to reserve for
probable losses. This additional amount, if any, is the Companys unallocated allowance. The sum of the allocated allowance and the unallocated allowance is compared to the actual allowance for loan losses recorded on the books of
the Company and any adjustment necessary for the recorded allowance to equal the computed allowance is recorded as a provision for loan losses. The provision for loan losses is a direct charge to earnings in the period recorded.



As part of its ongoing review of the asset quality, the Company revised its allowance for
loan loss model in August of 2004 to better reflect the Companys experience, the nature of its loan portfolio and improvement in assigning risks to specific loans and loan types. This change resulted in a larger percentage of the allowance for
loan loss reserve being included in the allocated portion and a smaller percentage in the unallocated portion.



Although management uses the best information available to make evaluations, future adjustments may be necessary if economic, operational, or other conditions change. In addition, various regulatory agencies, as an
integral part of their examination process, periodically review the Companys allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance based on the examiners judgment about information
available to them at the time of their examinations.



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



|                                     |  |                     |       |                                                |                     |   |        |   |                                                |  |        |  
|------------------------------------ |  | ------------------- | ----- | ---------------------------------------------- | ------------------- | - | ------ | - | ---------------------------------------------- |  | ------ | -
|                                     |  | As of June 30, 2005 |       |                                                | As of June 30, 2004 |  
|                                     |  | Amount              |       | Percent of loansin each categoryto total loans |                     |   | Amount |   | Percent of loansin each categoryto total loans | 
|Commercial, Financial & Agricultural |  | $                   | 125   |                                                | 6.46                | % |        | $ | 118                                            |  | 7.90   | %
|Real Estate - construction           |  |                     | 59    |                                                | 5.03                | % |        |   | 31                                             |  | 2.67   | %
|Real Estate - mortgage               |  |                     | 1,019 |                                                | 85.61               | % |        |   | 875                                            |  | 85.39  | %
|Installment loans to individuals     |  |                     | 154   |                                                | 2.86                | % |        |   | 167                                            |  | 3.67   | %
|Other                                |  |                     | 33    |                                                | 0.04                | % |        |   | 9                                              |  | 0.37   | %
|Unallocated                          |  |                     | 203   |                                                | N/A                 |   |        |   | 332                                            |  | N/A    |  
|                                     |  |                     |       |                                                |                     |   |        |   |                                                |  |        |  
|                                     |  | $                   | 1,593 |                                                | 100.00              | % |        | $ | 1,532                                          |  | 100.00 | %
|                                     |  |                     |       |                                                |                     |   |        |   |                                                |  |        |  



- 13 -



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis



Liquidity and Capital Resources



During the year ended June 30, 2005, Great Pee Dee paid total cash dividends of $0.635 per
share or approximately $1.1 million. Although Great Pee Dee anticipates that it will continue to declare cash dividends on a regular basis, the Board of Directors will review its policy on the payment of dividends on an ongoing basis, and such
payment will be subject to future earnings, cash flows, capital needs, and regulatory restrictions.



Maintaining adequate liquidity while managing interest rate risk is the primary goal of 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 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, 2005, liquid assets (cash, interest-earning deposits, federal funds sold and investment securities) were approximately $30.8 million, which represents 22.5% of deposits. At that date, outstanding loan commitments were $9.3
million, the un-disbursed portion of construction loans was $13.4 million and un-drawn lines of credit totaled $4.4 million. Funding for these commitments is expected to be provided from 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 deposits (CDs) market. The Bank had approximately $15.9 million in brokered CDs at June 30, 2005. 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 $7.0 million. As of June 30, 2005, $3.4 million was outstanding against these lines of
credit. The Bank also has the ability to borrow up to $48.0 million from the FHLB of Atlanta. As of June 30, 2005, $28.0 million was borrowed from 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 Sentrys financial statements. At June 30, 2005 and 2004, Sentry exceeded all
such requirements.



The Bank is restricted in its ability to pay dividends and
to make distributions. A significant source of Great Pee Dees funds is dividends received from the Bank. In fiscal 2005, no dividends were paid by the Bank to Great Pee Dee. At June 30, 2005, prior approval is required by Office of Thrift
Supervision for any payment of dividends from Sentry Bank & Trust to Great Pee Dee.



- 14 -



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis



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



Section 404 of the Sarbanes-Oxley Act is applicable to the Company under existing rules for the fiscal year ending June 30, 2007. Implementation is scheduled to begin
during fiscal 2006 and is anticipated to have an impact on earnings.



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. 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.



- 15 -



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis



The Companys significant accounting policies are described in Note A 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 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.



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 commercial and construction 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
residential loans for impairment disclosures, unless such loans are the subject of a restructuring agreement.



- 16 -



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis



Interest Income Recognition



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 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 L to the accompanying 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, 2005, we are not involved in any unconsolidated SPE or VIE transactions.



Recent Accounting Pronouncements



See Note A 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 annual report contains statements which constitute forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the use of forward looking terminology, such as may, will, expect,



- 17 -



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis



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.



- 18 -



---

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, 2005 and 2004 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 consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its
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 internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Great Pee Dee Bancorp, Inc. and Subsidiary as of June 30, 2005 and 2004, 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
|August 22, 2005          



- 19 -



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

June 30, 2005 and 2004



|                                                                                           |  |      |             |   |      |   |             |  
|------------------------------------------------------------------------------------------ |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                           |  | 2005 |             |   | 2004 |  
|ASSETS                                                                                     |  |      |             |   |      |   |             |  
|                                                                                           |  |     
|Cash on hand and in banks                                                                  |  | $    | 1,600,734   |   |      | $ | 1,217,385   |  
|Interest-earning balances in other banks                                                   |  |      | 432,266     |   |      |   | 656,539     |  
|Federal funds sold                                                                         |  |      |            |   |      |   | 2,005,142   |  
|                                                                                           |  |      |             |   |      |   |             |  
|Cash and cash equivalents                                                                  |  |      | 2,033,000   |   |      |   | 3,879,066   |  
|                                                                                           |  |     
|Investment securities available for sale, at fair value (Note B)                           |  |      | 28,778,830  |   |      |   | 27,846,829  |  
|                                                                                           |  |     
|Loans (Note C)                                                                             |  |      | 155,724,356 |   |      |   | 115,824,085 |  
|Allowance for loan losses                                                                  |  |      | (1,593,223  | ) |      |   | (1,531,874  | )
|                                                                                           |  |      |             |   |      |   |             |  
|NET LOANS                                                                                  |  |      | 154,131,133 |   |      |   | 114,292,211 |  
|                                                                                           |  |     
|Loans held for sale                                                                        |  |      | 1,115,600   |   |      |   | 1,310,420   |  
|Accrued interest receivable                                                                |  |      | 889,789     |   |      |   | 578,436     |  
|Restricted stock, at cost                                                                  |  |      | 1,680,787   |   |      |   | 1,124,300   |  
|Premises and equipment, net (Note D)                                                       |  |      | 4,098,488   |   |      |   | 4,276,087   |  
|Real estate acquired in settlement of loans                                                |  |      | 183,324     |   |      |   | 509,551     |  
|Intangible assets (Note E)                                                                 |  |      | 863,410     |   |      |   | 1,048,210   |  
|Other assets (Note J)                                                                      |  |      | 1,972,069   |   |      |   | 1,490,223   |  
|                                                                                           |  |      |             |   |      |   |             |  
|TOTAL ASSETS                                                                               |  | $    | 195,746,430 |   |      | $ | 156,355,333 |  
|                                                                                           |  |      |             |   |      |   |             |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                       |  |      |             |   |      |   |             |  
|                                                                                           |  |     
|LIABILITIES                                                                                |  |      |             |   |      |   |             |  
|Deposit accounts (Note F)                                                                  |  | $    | 136,573,252 |   |      | $ | 108,945,242 |  
|Short-term borrowings (Note G)                                                             |  |      | 8,448,000   |   |      |   | 3,000,000   |  
|Long-term borrowings (Note G)                                                              |  |      | 23,000,000  |   |      |   | 18,000,000  |  
|Accrued interest payable                                                                   |  |      | 190,734     |   |      |   | 90,586      |  
|Advance payments by borrowers for property taxes and insurance                             |  |      | 157,466     |   |      |   | 117,197     |  
|Accrued expenses and other liabilities                                                     |  |      | 1,120,503   |   |      |   | 151,204     |  
|                                                                                           |  |      |             |   |      |   |             |  
|TOTAL LIABILITIES                                                                          |  |      | 169,489,955 |   |      |   | 130,304,229 |  
|                                                                                           |  |      |             |   |      |   |             |  
|COMMITMENTS AND CONTINGENCIES (Note L)                                                     |  |      |             |   |      |   |             |  
|                                                                                           |  |     
|STOCKHOLDERS EQUITY (Notes H, I and K)                                                    |  |      |             |   |      |   |             |  
|Preferred stock, no par value, 400,000 shares authorized, no shares issued and outstanding |  |      |            |   |      |   |            |  
|Common stock, $.01 par value, 3,600,000 shares authorized; 2,224,617 shares issued         |  |      | 22,246      |   |      |   | 22,246      |  
|Additional paid-in capital                                                                 |  |      | 22,008,532  |   |      |   | 21,982,899  |  
|Unearned compensation (Note H)                                                             |  |      | (872,774    | ) |      |   | (1,058,586  | )
|Retained earnings, substantially restricted                                                |  |      | 11,242,041  |   |      |   | 11,162,369  |  
|Accumulated other comprehensive loss                                                       |  |      | (387,823    | ) |      |   | (723,400    | )
|Common stock in treasury, at cost (423,107 and 412,833 shares, respectively)               |  |      | (5,755,747  | ) |      |   | (5,334,424  | )
|                                                                                           |  |      |             |   |      |   |             |  
|TOTAL STOCKHOLDERS EQUITY                                                                 |  |      | 26,256,475  |   |      |   | 26,051,104  |  
|                                                                                           |  |      |             |   |      |   |             |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                 |  | $    | 195,746,430 |   |      | $ | 156,355,333 |  
|                                                                                           |  |      |             |   |      |   |             |  



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



- 20 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended June 30, 2005 and 2004



|                                                    |  |      |           |      |   |          
|--------------------------------------------------- |  | ---- | --------- | ---- | - | ---------
|                                                    |  | 2005 |           | 2004
|INTEREST INCOME                                     |  |      |           |      |   |          
|Loans                                               |  | $    | 8,203,766 |      | $ | 7,228,207
|Investments                                         |  |      | 1,080,925 |      |   | 1,056,365
|Deposits in other banks and federal funds sold      |  |      | 86,178    |      |   | 27,388   
|                                                    |  |      |           |      |   |          
|TOTAL INTEREST INCOME                               |  |      | 9,370,869 |      |   | 8,311,960
|                                                    |  |      |           |      |   |          
|INTEREST EXPENSE                                    |  |      |           |      |   |          
|Deposits (Note F)                                   |  |      | 3,169,322 |      |   | 2,562,773
|Short-term borrowings                               |  |      | 119,551   |      |   | 61,129   
|Long-term borrowings                                |  |      | 664,558   |      |   | 506,731  
|                                                    |  |      |           |      |   |          
|TOTAL INTEREST EXPENSE                              |  |      | 3,953,431 |      |   | 3,130,633
|                                                    |  |      |           |      |   |          
|NET INTEREST INCOME                                 |  |      | 5,417,438 |      |   | 5,181,327
|                                                    |  |     
|PROVISION FOR LOAN LOSSES (Note C)                  |  |      | 192,000   |      |   | 375,000  
|                                                    |  |      |           |      |   |          
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |  |      | 5,225,438 |      |   | 4,806,327
|                                                    |  |      |           |      |   |          
|NON-INTEREST INCOME                                 |  |      |           |      |   |          
|Service fees and charges                            |  |      | 854,031   |      |   | 678,428  
|Gain on sales of loans held for sale                |  |      | 149,211   |      |   | 229,985  
|Brokerage operations                                |  |      | 212,255   |      |   | 145,428  
|Gain on sale of investment securities               |  |      |          |      |   | 159,216  
|Other                                               |  |      | 100,584   |      |   | 61,216   
|                                                    |  |      |           |      |   |          
|TOTAL NON-INTEREST INCOME                           |  |      | 1,316,081 |      |   | 1,274,273
|                                                    |  |      |           |      |   |          
|NON-INTEREST EXPENSES                               |  |      |           |      |   |          
|Personnel costs                                     |  |      | 2,376,561 |      |   | 2,085,693
|Occupancy                                           |  |      | 552,548   |      |   | 434,106  
|Data processing                                     |  |      | 313,383   |      |   | 285,846  
|Amortization of intangibles                         |  |      | 184,800   |      |   | 185,000  
|Advertising                                         |  |      | 140,943   |      |   | 68,156   
|Stockholder relations cost                          |  |      | 181,313   |      |   | 155,436  
|Other                                               |  |      | 973,752   |      |   | 891,092  
|                                                    |  |      |           |      |   |          
|TOTAL NON-INTEREST EXPENSES                         |  |      | 4,723,300 |      |   | 4,105,329
|                                                    |  |      |           |      |   |          
|INCOME BEFORE INCOME TAXES                          |  |      | 1,818,219 |      |   | 1,975,271
|                                                    |  |     
|INCOME TAXES (Note J)                               |  |      | 654,525   |      |   | 726,812  
|                                                    |  |      |           |      |   |          
|NET INCOME                                          |  | $    | 1,163,694 |      | $ | 1,248,459
|                                                    |  |      |           |      |   |          
|EARNINGS PER COMMON SHARE (Note A)                  |  |      |           |      |   |          
|Basic                                               |  | $    | 0.68      |      | $ | 0.74     
|                                                    |  |      |           |      |   |          
|Diluted                                             |  | $    | 0.68      |      | $ | 0.73     
|                                                    |  |      |           |      |   |          
|WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (Note A) |  |      |           |      |   |          
|Basic                                               |  |      | 1,713,429 |      |   | 1,676,447
|Diluted                                             |  |      | 1,720,797 |      |   | 1,717,815



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



21



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

Years Ended June 30, 2005 and 2004



|                                                                                                    |        |                        |             |         |                         |  |                           |        |  |                      |            |   |                  |   |            |                                   |  |   |               |   |  |                          |          |   |  |   |            |   |  |   |            |  
|--------------------------------------------------------------------------------------------------- | ------ | ---------------------- | ----------- | ------- | ----------------------- |  | ------------------------- | ------ |  | -------------------- | ---------- | - | ---------------- | - | ---------- | --------------------------------- |  | - | ------------- | - |  | ------------------------ | -------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                                                                                    |        | Shares of common stock |             |         | Par value ofcommonstock |  | Additionalpaid-in capital |        |  | Unearnedcompensation |            |   | Retainedearnings |   |            | Accumulatedothercomprehensiveloss |  |   | Treasurystock |   |  | Totalstockholdersequity |         
|                                                                                                    | Issued |                        | In treasury |         |                         |  |                           |        |  |                      |           
|Balance at June 30, 2003                                                                            |        | 2,224,617              |             | 461,002 |                         |  | $                         | 22,246 |  | $                    | 21,911,185 |   |                  | $ | (1,082,623 | )                                 |  | $ | 10,942,704    |   |  | $                        | (31,400  | ) |  | $ | (5,718,843 | ) |  | $ | 26,043,269 |  
|                                                                                                    |        |                        |             |         |                         |  |                           |        | 
|Comprehensive income:                                                                               |        |                        |             |         |                         |  |                           |        |  |                      |            |   |                  |   |            |                                   |  |   |               |   |  |                          |          |   |  |   |            |   |  |   |            |  
|Net income                                                                                          |        |                       |             |        |                         |  |                           |       |  |                      |           |   |                  |   |           |                                   |  |   | 1,248,459     |   |  |                          |         |   |  |   |           |   |  |   | 1,248,459  |  
|Change in accumulated other comprehensive loss, net of reclassification adjustment and income taxes |        |                       |             |        |                         |  |                           |       |  |                      |           |   |                  |   |           |                                   |  |   |              |   |  |                          | (692,000 | ) |  |   |           |   |  |   | (692,000   | )
|                                                                                                    |        |                        |             |         |                         |  |                           |        |  |                      |            |   |                  |   |            |                                   |  |   |               |   |  |                          |          |   |  |   |            |   |  |   |            |  
|Total comprehensive income                                                                          |        |                        |             |         |                         |  |                           |        |  |                      |            |   |                  |   |            |                                   |  |   |               |   |  |                          |          |   |  |   |            |   |  |   | 556,459    |  
|                                                                                                    |        |                        |             |         |                         |  |                           |        |  |                      |            |   |                  |   |            |                                   |  |   |               |   |  |                          |          |   |  |   |            |   |  |   |            |  
|Purchase of treasury stock                                                                          |        |                       |             | 5,700   |                         |  |                           |       |  |                      |           |   |                  |   |           |                                   |  |   |              |   |  |                          |         |   |  |   | (96,732    | ) |  |   | (96,732    | )
|Exercise of stock options                                                                           |        |                       |             | (88,208 | )                       |  |                           |       |  |                      | (921,956   | ) |                  |   |           |                                   |  |   |              |   |  |                          |         |   |  |   | 1,120,517  |   |  |   | 198,561    |  
|Shares traded to exercise options                                                                   |        |                       |             | 46,112  |                         |  |                           |       |  |                      | 790,144    |   |                  |   |           |                                   |  |   |              |   |  |                          |         |   |  |   | (790,144   | ) |  |   |           |  
|Shares issued to incentive plan                                                                     |        |                       |             | (9,000  | )                       |  |                           |       |  |                      | 37,157     |   |                  |   | (153,450   | )                                 |  |   |              |   |  |                          |         |   |  |   | 116,293    |   |  |   |           |  
|RRP and incentive shares earned                                                                     |        |                       |             |        |                         |  |                           |       |  |                      |           |   |                  |   | 48,705     |                                   |  |   |              |   |  |                          |         |   |  |   |           |   |  |   | 48,705     |  
|Release of ESOP shares                                                                              |        |                       |             |        |                         |  |                           |       |  |                      | 93,703     |   |                  |   | 128,782    |                                   |  |   |              |   |  |                          |         |   |  |   |           |   |  |   | 222,485    |  
|Shares issued to deferred compensation plan                                                         |        |                       |             | (2,773  | )                       |  |                           |       |  |                      | 6,666      |   |                  |   |           |                                   |  |   |              |   |  |                          |         |   |  |   | 34,485     |   |  |   | 41,151     |  
|Tax benefit of stock option exercise                                                                |        |                       |             |        |                         |  |                           |       |  |                      | 66,000     |   |                  |   |           |                                   |  |   |              |   |  |                          |         |   |  |   |           |   |  |   | 66,000     |  
|Cash dividends paid ($0.605 per share)                                                              |        |                       |             |        |                         |  |                           |       |  |                      |           |   |                  |   |           |                                   |  |   | (1,028,794    | ) |  |                          |         |   |  |   |           |   |  |   | (1,028,794 | )
|                                                                                                    |        |                        |             |         |                         |  |                           |        |  |                      |            |   |                  |   |            |                                   |  |   |               |   |  |                          |          |   |  |   |            |   |  |   |            |  
|Balance at June 30, 2004                                                                            |        | 2,224,617              |             | 412,833 |                         |  |                           | 22,246 |  |                      | 21,982,899 |   |                  |   | (1,058,586 | )                                 |  |   | 11,162,369    |   |  |                          | (723,400 | ) |  |   | (5,334,424 | ) |  |   | 26,051,104 |  
|                                                                                                    |        |                        |             |         |                         |  |                           |        | 
|Comprehensive income:                                                                               |        |                        |             |         |                         |  |                           |        |  |                      |            |   |                  |   |            |                                   |  |   |               |   |  |                          |          |   |  |   |            |   |  |   |            |  
|Net income                                                                                          |        |                       |             |        |                         |  |                           |       |  |                      |           |   |                  |   |           |                                   |  |   | 1,163,694     |   |  |                          |         |   |  |   |           |   |  |   | 1,163,694  |  
|Change in accumulated other comprehensive loss, net of income taxes                                 |        |                       |             |        |                         |  |                           |       |  |                      |           |   |                  |   |           |                                   |  |   |              |   |  |                          | 335,577  |   |  |   |           |   |  |   | 335,577    |  
|                                                                                                    |        |                        |             |         |                         |  |                           |        |  |                      |            |   |                  |   |            |                                   |  |   |               |   |  |                          |          |   |  |   |            |   |  |   |            |  
|Total comprehensive income                                                                          |        |                        |             |         |                         |  |                           |        |  |                      |            |   |                  |   |            |                                   |  |   |               |   |  |                          |          |   |  |   |            |   |  |   | 1,499,271  |  
|                                                                                                    |        |                        |             |         |                         |  |                           |        |  |                      |            |   |                  |   |            |                                   |  |   |               |   |  |                          |          |   |  |   |            |   |  |   |            |  
|Purchase of treasury stock                                                                          |        |                       |             | 52,269  |                         |  |                           |       |  |                      |           |   |                  |   |           |                                   |  |   |              |   |  |                          |         |   |  |   | (807,209   | ) |  |   | (807,209   | )
|Exercise of stock options                                                                           |        |                       |             | (84,389 | )                       |  |                           |       |  |                      | (899,843   | ) |                  |   |           |                                   |  |   |              |   |  |                          |         |   |  |   | 1,118,304  |   |  |   | 218,461    |  
|Shares traded to exercise options                                                                   |        |                       |             | 42,394  |                         |  |                           |       |  |                      | 732,418    |   |                  |   |           |                                   |  |   |              |   |  |                          |         |   |  |   | (732,418   | ) |  |   |           |  
|RRP and incentive shares earned                                                                     |        |                       |             |        |                         |  |                           |       |  |                      |           |   |                  |   | 62,380     |                                   |  |   |              |   |  |                          |         |   |  |   |           |   |  |   | 62,380     |  
|Release of ESOP shares                                                                              |        |                       |             |        |                         |  |                           |       |  |                      | 88,246     |   |                  |   | 123,432    |                                   |  |   |              |   |  |                          |         |   |  |   |           |   |  |   | 211,678    |  
|Tax benefit of stock option exercise                                                                |        |                       |             |        |                         |  |                           |       |  |                      | 104,812    |   |                  |   |           |                                   |  |   |              |   |  |                          |         |   |  |   |           |   |  |   | 104,812    |  
|Cash dividends paid ($0.635 per share)                                                              |        |                       |             |        |                         |  |                           |       |  |                      |           |   |                  |   |           |                                   |  |   | (1,084,022    | ) |  |                          |         |   |  |   |           |   |  |   | (1,084,022 | )
|                                                                                                    |        |                        |             |         |                         |  |                           |        |  |                      |            |   |                  |   |            |                                   |  |   |               |   |  |                          |          |   |  |   |            |   |  |   |            |  
|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 |  
|                                                                                                    |        |                        |             |         |                         |  |                           |        |  |                      |            |   |                  |   |            |                                   |  |   |               |   |  |                          |          |   |  |   |            |   |  |   |            |  



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



22



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended June 30, 2005 and 2004



|                                                                                      |  |      |             |   |      |   |             |  
|------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                      |  | 2005 |             |   | 2004 |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                  |  |      |             |   |      |   |             |  
|Net income                                                                            |  | $    | 1,163,694   |   |      | $ | 1,248,459   |  
|Adjustments to reconcile net income to net cash provided by operating activities:     |  |      |             |   |      |   |             |  
|Depreciation                                                                          |  |      | 321,242     |   |      |   | 235,093     |  
|Amortization                                                                          |  |      | 184,800     |   |      |   | 185,000     |  
|Provision for loan losses                                                             |  |      | 192,000     |   |      |   | 375,000     |  
|Gain on sale of foreclosed real estate                                                |  |      | (90,781     | ) |      |   | (27,678     | )
|Gain on sale of investment securities                                                 |  |      |            |   |      |   | (159,216    | )
|Gain on sale of loans held for sale                                                   |  |      | (149,211    | ) |      |   | (229,985    | )
|Deferred income taxes                                                                 |  |      | 44,997      |   |      |   | 34,269      |  
|Stock issued for deferred compensation                                                |  |      |            |   |      |   | 41,151      |  
|ESOP contribution expense                                                             |  |      | 211,678     |   |      |   | 222,485     |  
|Vesting of recognition and retention and incentive plans                              |  |      | 62,380      |   |      |   | 48,705      |  
|Proceeds from sales of loans held for sale                                            |  |      | 11,592,576  |   |      |   | 19,307,678  |  
|Originations of loans held for sale                                                   |  |      | (11,248,545 | ) |      |   | (18,331,974 | )
|Change in assets and liabilities:                                                     |  |      |             |   |      |   |             |  
|(Increase) decrease in accrued interest receivable                                    |  |      | (311,353    | ) |      |   | 213,963     |  
|Increase in other assets                                                              |  |      | (725,955    | ) |      |   | (305,240    | )
|Increase (decrease) in accrued interest payable                                       |  |      | 100,148     |   |      |   | (5,456      | )
|Increase (decrease) in accrued expenses and other liabilities                         |  |      | 969,299     |   |      |   | (115,090    | )
|                                                                                      |  |      |             |   |      |   |             |  
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                             |  |      | 2,316,969   |   |      |   | 2,737,164   |  
|                                                                                      |  |      |             |   |      |   |             |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                  |  |      |             |   |      |   |             |  
|Purchases of held to maturity investment securities                                   |  |      |            |   |      |   | (14,111,941 | )
|Proceeds from maturities and calls of held to maturity investment securities          |  |      |            |   |      |   | 4,195,999   |  
|Purchases of available for sale investments                                           |  |      | (6,473,469  | ) |      |   | (13,857,938 | )
|Proceeds from maturities, calls and sales of available for sale investment securities |  |      | 6,076,157   |   |      |   | 13,502,892  |  
|Purchase of restricted stock                                                          |  |      | (556,487    | ) |      |   | (549,700    | )
|Redemption of restricted stock                                                        |  |      |            |   |      |   | 100,000     |  
|Net increase in loans                                                                 |  |      | (39,767,455 | ) |      |   | (7,159,192  | )
|Purchase of premises and equipment                                                    |  |      | (143,643    | ) |      |   | (2,170,852  | )
|Proceeds from sale of real estate acquired in settlement of loans                     |  |      | 153,541     |   |      |   |            |  
|                                                                                      |  |      |             |   |      |   |             |  
|NET CASH USED BY INVESTING ACTIVITIES                                                 |  |      | (40,711,356 | ) |      |   | (20,050,732 | )
|                                                                                      |  |      |             |   |      |   |             |  



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



23



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended June
30, 2005 and 2004



|                                                                                                                     |  |      |            |   |      |   |            |  
|-------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                                                                     |  | 2005 |            |   | 2004 |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                                                                 |  |      |            |   |      |   |            |  
|Net increase (decrease) in demand accounts                                                                           |  | $    | (2,160,820 | ) |      | $ | 972,409    |  
|Net increase (decrease) in certificates of deposit                                                                   |  |      | 29,788,830 |   |      |   | (839,428   | )
|Increase in advance payments by borrowers for taxes and insurance                                                    |  |      | 40,269     |   |      |   | 9,399      |  
|Net increase in short-term borrowings                                                                                |  |      | 5,448,000  |   |      |   | 3,000,000  |  
|Proceeds from long-term borrowings                                                                                   |  |      | 5,000,000  |   |      |   | 10,000,000 |  
|Purchase of treasury stock                                                                                           |  |      | (807,209   | ) |      |   | (96,732    | )
|Proceeds from exercise of stock options                                                                              |  |      | 218,461    |   |      |   | 198,561    |  
|Tax benefit from exercise of non-qualified stock options                                                             |  |      | 104,812    |   |      |   | 66,000     |  
|Cash dividends paid                                                                                                  |  |      | (1,084,022 | ) |      |   | (1,028,794 | )
|                                                                                                                     |  |      |            |   |      |   |            |  
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                                                            |  |      | 36,548,321 |   |      |   | 12,281,415 |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|NET DECREASE IN CASH AND CASH EQUIVALENTS                                                                            |  |      | (1,846,066 | ) |      |   | (5,032,153 | )
|                                                                                                                     |  |     
|CASH AND CASH EQUIVALENTS, BEGINNING                                                                                 |  |      | 3,879,066  |   |      |   | 8,911,219  |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|CASH AND CASH EQUIVALENTS, ENDING                                                                                    |  | $    | 2,033,000  |   |      | $ | 3,879,066  |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                                                                    |  |      |            |   |      |   |            |  
|Cash paid during the year for:                                                                                       |  |      |            |   |      |   |            |  
|Interest                                                                                                             |  | $    | 3,853,283  |   |      | $ | 3,136,089  |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|Income taxes                                                                                                         |  | $    | 304,000    |   |      | $ | 899,892    |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES                                                 |  |      |            |   |      |   |            |  
|Loans receivable transferred to real estate acquired in settlement of loans                                          |  | $    | 256,417    |   |      | $ | 836,013    |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|Loans receivable originated to finance the sale of foreclosed real estate sold                                       |  | $    | 519,884    |   |      | $ | 393,436    |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|Net unrealized gain (loss) on investment securities available for sale, net of deferred income tax expense (benefit) |  | $    | 335,577    |   |      | $ | (692,000   | )
|                                                                                                                     |  |      |            |   |      |   |            |  
|Transfer of investments held to maturity to investments available for sale                                           |  | $    |           |   |      | $ | 6,048,603  |  
|                                                                                                                     |  |      |            |   |      |   |            |  



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



- 24 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE A - SIGNIFICANT ACCOUNTING POLICIES



Organization and Operations



On December 31, 1997, pursuant to a Plan of Conversion which was approved by its members and regulators, 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 real estate located in its primary market area 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.



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.



-25 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE A - SIGNIFICANT ACCOUNTING POLICIES (Continued)



Use of Estimates (Continued)



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. In connection with the determination of foreclosed real estate, management obtains independent
appraisals for significant properties.



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 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.



-26 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE A - 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 commercial and construction 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 residential loans for impairment disclosures, unless such loans are the subject of a restructuring
agreement.



-27 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE A - 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. Loan loss reserve allocation is provided when the loans are funded.



Rate Lock 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 have not been recognized in these consolidated financial statements.



Premises and Equipment



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



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



Real Estate Acquired In Settlement of Loans



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 reasonable selling costs. Losses arising from the acquisition of foreclosed properties are charged against the allowance for loan losses. Subsequent write
downs are provided by a charge to income through the allowance for losses on other real estate in the period in which the need arises.



-28 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE A - SIGNIFICANT ACCOUNTING POLICIES (Continued)



Intangible Assets



Substantially all of the Companys intangible assets were recorded in connection with its purchase in March of 2000 of a branch office
in Florence, South Carolina, and 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.



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 J. 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.



-29 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE A - 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 the sale of loans 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.



Stock Compensation Plans



SFAS No. 123, Accounting for Stock-Based Compensation, encourages but does not require that companies record compensation cost for stock-based employee
compensation plans at fair value. The Company has chosen to account for stock-based compensation plans using the intrinsic value method prescribed in Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees.
Under the intrinsic value based method, compensation cost is the excess, if any, of the quoted market price of the stock at grant date or other measurement date over the amount an employee must pay to acquire the stock. All of the Companys
stock options have no intrinsic value at grant date and, consequently, no compensation cost has been recognized for them.



An employer that continues to apply the intrinsic value accounting method rather than the fair value based method must disclose certain pro forma information. Under the
fair value based method, compensation cost is measured at the grant date of the option based on the value of the award and is recognized over the service period, which is usually the vesting period. As required by SFAS No. 123, disclosures are
presented below for the effect on the net income and net income per share for the years ended June 30, 2005 and 2004 that would result from the use of the fair value based method to measure compensation cost related to stock option grants. The
effects of applying the provisions of SFAS No. 123 are not necessarily indicative of future effects.



-30 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE A - SIGNIFICANT ACCOUNTING POLICIES (Continued)



Stock Compensation Plans (Continued)



|                                                                                                                                        |  |                                              |       |   |      |   |       |  
|--------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------- | ----- | - | ---- | - | ----- | -
|                                                                                                                                        |  | 2005                                         |       |   | 2004 |  
|                                                                                                                                        |  | (Amounts in thousands,except per share data) |      
|Net income:                                                                                                                             |  |                                              |       |   |      |   |       |  
|As reported                                                                                                                             |  | $                                            | 1,164 |   |      | $ | 1,248 |  
|Deduct: Total stock-based employee compensation expenses determined under fair value method for all amounts, net of related tax
effects |  |                                              | (118  | ) |      |   | (78   | )
|                                                                                                                                        |  |                                              |       |   |      |   |       |  
|Pro forma                                                                                                                               |  | $                                            | 1,046 |   |      | $ | 1,170 |  
|                                                                                                                                        |  |                                              |       |   |      |   |       |  
|Basic net income per share:                                                                                                             |  |                                              |       |   |      |   |       |  
|As reported                                                                                                                             |  | $                                            | 0.68  |   |      | $ | 0.74  |  
|Pro forma                                                                                                                               |  |                                              | 0.61  |   |      |   | 0.70  |  
|                                                                                                                                        |  |                                             
|Diluted net income per share:                                                                                                           |  |                                              |       |   |      |   |       |  
|As reported                                                                                                                             |  | $                                            | 0.68  |   |      | $ | 0.73  |  
|Pro forma                                                                                                                               |  |                                              | 0.61  |   |      |   | 0.68  |  



Earnings Per Common Share



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



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



|                                                                                                |  |                      |  |          
|----------------------------------------------------------------------------------------------- |  | -------------------- |  | ---------
|                                                                                                |  | Years Ended June 30,
|                                                                                                |  | 2005                 |  | 2004     
|Average number of common shares outstanding used to calculate basic earnings per common share   |  | 1,713,429            |  | 1,676,447
|                                                                                                |  |                     
|Effect of dilutive options                                                                      |  | 7,368                |  | 41,368   
|                                                                                                |  |                      |  |          
|Average number of common shares outstanding used to calculate diluted earnings per common share |  | 1,720,797            |  | 1,717,815
|                                                                                                |  |                      |  |          



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.



-31 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE A - SIGNIFICANT ACCOUNTING POLICIES (Continued)



Comprehensive Income (Continued)



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



|                                                                   |  |      |          |   |      |   |          |  
|------------------------------------------------------------------ |  | ---- | -------- | - | ---- | - | -------- | -
|                                                                   |  | 2005 |          |   | 2004 |  
|Unrealized holding gains (losses) on available-for-sale securities |  | $    | 534,689  |   |      | $ | (989,106 | )
|Tax effect                                                         |  |      | (199,112 | ) |      |   | 393,113  |  
|                                                                   |  |     
|Reclassification adjustment for gains realized in income           |  |      |         |   |      |   | (159,216 | )
|Tax effect                                                         |  |      |         |   |      |   | 63,209   |  
|                                                                   |  |      |          |   |      |   |          |  
|Net of tax amount                                                  |  | $    | 335,577  |   |      | $ | (692,000 | )
|                                                                   |  |      |          |   |      |   |          |  



Recent Accounting Pronouncements



In December 2004, the FASB issued SFAS No. 123(R), Accounting for
Stock-Based Compensation(SFAS No. 123(R)). SFAS No. 123(R) establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. This Statement focuses primarily on accounting for
transactions in which an entity obtains employee services in share-based payment transactions. SFAS No. 123(R) requires that the fair value of such equity instruments be recognized as an expense in the historical financial statements as services are
performed. Prior to SFAS No. 123(R), only certain pro forma disclosures of fair value were required. The provisions of this Statement are effective for the first interim reporting period in the Companys first fiscal year that begins after
December 15, 2005. Accordingly, the Company will adopt SFAS No. 123(R) commencing with the quarter beginning July 1, 2006. If the Company had included the cost of employee stock option compensation in its consolidated financial statements, the net
income for the fiscal years ended June 30, 2005 and 2004 would have decreased by approximately $118,000 and $78,000 for the fiscal years ended June 30, 2005 and 2004, respectively. Accordingly, the adoption of SFAS No. 123(R) is expected to have a
material effect on its consolidated financial statements.



Reclassifications



Certain items were reclassified in the June 30, 2004 financial statements
to be consistent with the June 30, 2005 presentation. The reclassifications had no impact upon net income or stockholders equity as previously recorded.



-32 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE B - INVESTMENT SECURITIES



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



|                                   |  |               |            |                       |   |                        |  |           |           |  |   |           
|---------------------------------- |  | ------------- | ---------- | --------------------- | - | ---------------------- |  | --------- | --------- |  | - | ----------
|                                   |  | June 30, 2005
|                                   |  | Amortizedcost |            | Grossunrealizedgains  |   | Grossunrealizedlosses  |  | Fairvalue
|Securities available for sale:     |  |               |            |                       |   |                        |  |           |           |  |   |           
|Trust preferred securities         |  | $             | 500,868    |                       | $ |                       |  | $         | 33,625    |  | $ | 467,243   
|U. S. government agency securities |  |               | 10,300,000 |                       |   |                       |  |           | 99,313    |  |   | 10,200,687
|Municipal securities               |  |               | 747,692    |                       |   | 12,052                 |  |           | 1,865     |  |   | 757,879   
|Mortgage-backed securities         |  |               | 17,843,913 |                       |   |                       |  |           | 490,892   |  |   | 17,353,021
|                                   |  |               |            |                       |   |                        |  |           |           |  |   |           
|                                   |  | $             | 29,392,473 |                       | $ | 12,052                 |  | $         | 625,695   |  | $ | 28,778,830
|                                   |  |               |            |                       |   |                        |  |           |           |  |   |           
|                                   | 
|                                   |  | June 30, 2004
|                                   |  | Amortizedcost |            | Gross unrealizedgains |   | Gross unrealizedlosses |  | Fairvalue
|Securities available for sale:     |  |               |            |                       |   |                        |  |           |           |  |   |           
|Trust preferred securities         |  | $             | 484,167    |                       | $ |                       |  | $         | 18,317    |  | $ | 465,850   
|U. S. government agency securities |  |               | 6,300,000  |                       |   |                       |  |           | 103,281   |  |   | 6,196,719 
|Municipal securities               |  |               | 1,090,543  |                       |   | 11,184                 |  |           | 32,538    |  |   | 1,069,189 
|Mortgage-backed securities         |  |               | 21,120,451 |                       |   |                       |  |           | 1,005,380 |  |   | 20,115,071
|                                   |  |               |            |                       |   |                        |  |           |           |  |   |           
|                                   |  | $             | 28,995,161 |                       | $ | 11,184                 |  | $         | 1,159,516 |  | $ | 27,846,829
|                                   |  |               |            |                       |   |                        |  |           |           |  |   |           



The amortized cost and fair values of
debt securities available for sale at June 30, 2005 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                 |            | Fairvalue
|Due after one year through five years  |  | $                             | 12,876,264 |           | $ | 12,693,283
|Due after five years through ten years |  |                               | 7,324,600  |           |   | 7,159,863 
|Due after ten years                    |  |                               | 9,191,609  |           |   | 8,925,684 
|                                       |  |                               |            |           |   |           
|                                       |  | $                             | 29,392,473 |           | $ | 28,778,830
|                                       |  |                               |            |           |   |           



-33 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE B - INVESTMENT SECURITIES (Continued)



The fair value of securities with unrealized losses at June 30, 2005 is as follows:



|                                                                                    |  |                     |            |                     |   |                     |  |                  |            |  |   |        
|----------------------------------------------------------------------------------- |  | ------------------- | ---------- | ------------------- | - | ------------------- |  | ---------------- | ---------- |  | - | -------
|                                                                                    |  | Less than 12 Months |            | More than 12 Months
|                                                                                    |  | Estimatedfair value |            | Unrealizedlosses    |   | Estimatedfair value |  | Unrealizedlosses
|U.S. Government agency securities                                                   |  | $                   | 5,348,000  |                     | $ | 51,688              |  | $                | 3,852,375  |  | $ | 47,625 
|Mortgage backed securities                                                          |  |                     | 2,219,459  |                     |   | 81,804              |  |                  | 15,133,562 |  |   | 409,088
|Municipals                                                                          |  |                     | 273,136    |                     |   | 1,865               |  |                  |           |  |   |       
|Trust preferred securities                                                          |  |                     |           |                     |   |                    |  |                  | 467,243    |  |   | 33,625 
|                                                                                    |  |                     |            |                     |   |                     |  |                  |            |  |   |        
|Total                                                                               |  | $                   | 7,840,595  |                     | $ | 135,357             |  | $                | 19,453,180 |  | $ | 490,338
|                                                                                    |  |                     |            |                     |   |                     |  |                  |            |  |   |        
|                                                                                    |  |                    
|The fair value of securities with unrealized losses at June 30, 2004 is as follows: |  |                     |            |                     |   |                    
|                                                                                    |  |                    
|                                                                                    |  | Less than 12 Months |            | More than 12 Months
|                                                                                    |  | Estimatedfair value |            | Unrealizedlosses    |   | Estimatedfair value |  | Unrealizedlosses
|U.S. Government agency securities                                                   |  | $                   | 5,196,719  |                     | $ | 103,281             |  | $                |           |  | $ |       
|Mortgage backed securities                                                          |  |                     | 20,111,964 |                     |   | 1,005,380           |  |                  |           |  |   |       
|Municipals                                                                          |  |                     | 790,568    |                     |   | 32,538              |  |                  |           |  |   |       
|Trust preferred securities                                                          |  |                     | 295,994    |                     |   | 11,637              |  |                  | 93,320     |  |   | 6,680  
|                                                                                    |  |                     |            |                     |   |                     |  |                  |            |  |   |        
|Total                                                                               |  | $                   | 26,395,245 |                     | $ | 1,152,836           |  | $                | 93,320     |  | $ | 6,680  
|                                                                                    |  |                     |            |                     |   |                     |  |                  |            |  |   |        



Management of the Company believes all
unrealized losses as of June 30, 2005 and 2004 represent temporary impairment. The unrealized losses have resulted from temporary changes in the interest rate market and not as a result of credit deterioration of the underlying securities.



No sales occurred during the year ended June 30, 2005. Proceeds from sales of
available-for-sale securities during the year ended June 30, 2004 were $9,847,424 that resulted in gross realized gains of $211,193 and gross realized losses of $51,977. Securities with a carrying value of $7,200,000 and $1,380,007 and a fair value
of $7,123,014 and $1,153,820 at June 30, 2005 and 2004 respectively, were pledged to secure public monies on deposit as required by law.



During the fiscal year 2004, investment securities held to maturity with the carrying amount of $6,048,603 were transferred to the available for sale category. At the
date of transfer, the unrealized gain, net of taxes of $49,000 was recognized as accumulated other comprehensive income. Managements decision to reclassify the portfolio was made to more strategically align the Company for future growth, as
the bank is moving toward a more traditional community financial service bank and aligning the investment portfolio with the potential liquidity needs of this strategy. This is a one-time isolated event and should be viewed as such.



-34 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE C - LOANS RECEIVABLE



Loans receivable consist of the following:



|                                             |  |      |             |      |   |            
|-------------------------------------------- |  | ---- | ----------- | ---- | - | -----------
|                                             |  | 2005 |             | 2004
|Type of loan:                                |  |      |             |      |   |            
|Real estate loans:                           |  |      |             |      |   |            
|1-to-4 family residential                    |  | $    | 68,488,473  |      | $ | 62,719,515 
|Commercial                                   |  |      | 43,527,712  |      |   | 23,898,103 
|Construction and land                        |  |      | 20,619,161  |      |   | 7,331,301  
|Home improvement loans                       |  |      | 8,670,073   |      |   | 8,197,324  
|                                             |  |      |             |      |   |            
|Total real estate loans                      |  |      | 141,305,419 |      |   | 102,146,243
|                                             |  |      |             |      |   |            
|Other loans:                                 |  |      |             |      |   |            
|Commercial                                   |  |      | 10,074,701  |      |   | 9,167,032  
|Consumer                                     |  |      | 4,292,148   |      |   | 4,444,019  
|Loans secured by deposits                    |  |      | 232,035     |      |   | 238,190    
|                                             |  |      |             |      |   |            
|Total other loans                            |  |      | 14,598,884  |      |   | 13,849,241 
|                                             |  |      |             |      |   |            
|Subtotal                                     |  |      | 155,904,302 |      |   | 115,995,484
|Less:                                        |  |      |             |      |   |            
|Deferred loan origination fees, net of costs |  |      | 179,947     |      |   | 171,399    
|                                             |  |      |             |      |   |            
|Total loans                                  |  | $    | 155,724,356 |      | $ | 115,824,085
|                                             |  |      |             |      |   |            



The
allowance for loan losses is summarized as follows:



|                             |  |      |           |   |      |   |           |  
|---------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                             |  | 2005 |           |   | 2004 |  
|Balance at beginning of year |  | $    | 1,531,874 |   |      | $ | 1,415,586 |  
|Provision for loan losses    |  |      | 192,000   |   |      |   | 375,000   |  
|Charge-offs                  |  |      | (188,877  | ) |      |   | (287,418  | )
|Recoveries                   |  |      | 58,226    |   |      |   | 28,706    |  
|                             |  |      |           |   |      |   |           |  
|Balance at end of year       |  | $    | 1,593,223 |   |      | $ | 1,531,874 |  
|                             |  |      |           |   |      |   |           |  



At June 30, 2005 and 2004, the
recorded investment in loans considered impaired in accordance with SFAS No. 114 totaled $1.1 million and $2.2 million, respectively, with corresponding valuation allowances of $220,000 and $450,000, respectively. For the years ended June 30, 2005
and 2004, the average recorded investment in impaired loans was approximately $1.4 million and $1.3 million, respectively. Interest income that was foregone on impaired loans for the years ended June 30, 2005, and 2004 amounted to approximately
$50,000 and $81,000, respectively.



Non-accrual loans at June 30, 2005 and 2004
were approximately $1.1 million and $2.2 million, respectively. No loans past due 90 days were accruing interest.



-35 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE C - 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:



|                               |  |      |           |      |   |          
|------------------------------ |  | ---- | --------- | ---- | - | ---------
|                               |  | 2005 |           | 2004
|Balance at beginning of year   |  | $    | 1,443,288 |      | $ | 1,084,765
|Net borrowings during the year |  |      | 1,903,752 |      |   | 358,523  
|                               |  |      |           |      |   |          
|Balance at end of year         |  | $    | 3,347,040 |      | $ | 1,443,288
|                               |  |      |           |      |   |          



NOTE D - PREMISES AND EQUIPMENT



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



|                          |  |      |            |   |      |   |            |  
|------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                          |  | 2005 |            |   | 2004 |  
|Land                      |  | $    | 485,687    |   |      | $ | 485,687    |  
|Building and improvements |  |      | 3,323,317  |   |      |   | 3,323,541  |  
|Furniture and equipment   |  |      | 1,784,104  |   |      |   | 1,655,859  |  
|                          |  |      |            |   |      |   |            |  
|                          |  |      | 5,593,108  |   |      |   | 5,465,087  |  
|Accumulated depreciation  |  |      | (1,494,620 | ) |      |   | (1,189,000 | )
|                          |  |      |            |   |      |   |            |  
|                          |  | $    | 4,098,488  |   |      | $ | 4,276,087  |  
|                          |  |      |            |   |      |   |            |  



Depreciation expense for the years
ended June 30, 2005 and 2004 amounted to $321,242 and $235,093, 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:



|           |  |   |        
|---------- |  | - | -------
|2006       |  | $ | 18,000 
|2007       |  |   | 24,000 
|2008       |  |   | 24,000 
|2009       |  |   | 24,000 
|2010       |  |   | 24,000 
|Thereafter |  |   | 189,000
|           |  |   |        
|           |  | $ | 303,000
|           |  |   |        



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, 2005 and 2004 was $18,000, respectively.



-36 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE E - INTANGIBLE ASSETS



The following is a summary of the gross carrying amount and accumulated amortization of amortized intangible assets as of June 30, 2005 and
2004:



|                                                  |  |                      |           |                         |   |                     |  |                         |           |  |   |        
|------------------------------------------------- |  | -------------------- | --------- | ----------------------- | - | ------------------- |  | ----------------------- | --------- |  | - | -------
|                                                  |  | 2005                 |           | 2004                   
|                                                  |  | Gross CarryingAmount |           | AccumulatedAmortization |   | GrossCarryingAmount |  | AccumulatedAmortization
|Deposit intangibles related to branch acquisition |  | $                    | 1,850,000 |                         | $ | 987,000             |  | $                       | 1,850,000 |  | $ | 802,000
|                                                  |  |                      |           |                         |   |                     |  |                         |           |  |   |        



The following table presents the
estimated amortization for intangible assets for each of the five 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
|2006 |  | $                            | 185,000
|2007 |  |                              | 185,000
|2008 |  |                              | 185,000
|2009 |  |                              | 185,000
|2010 |  |                              | 123,000
|     |  |                              |        
|     |  | $                            | 863,000
|     |  |                              |        



NOTE F - DEPOSIT ACCOUNTS



A comparative summary of deposit accounts at June 30, 2005 and 2004
follows:



|                        |  |      |             |      |   |            
|----------------------- |  | ---- | ----------- | ---- | - | -----------
|                        |  | 2005 |             | 2004
|Demand accounts:        |  |      |             |      |   |            
|Non-interest bearing    |  | $    | 7,414,127   |      | $ | 6,810,812  
|Savings                 |  |      | 3,179,310   |      |   | 3,042,268  
|                        |  |     
|Money market and NOW    |  |      | 32,512,923  |      |   | 35,414,100 
|                        |  |      |             |      |   |            
|Total demand accounts   |  |      | 43,106,360  |      |   | 45,267,180 
|                        |  |     
|Certificates of deposit |  |      | 93,466,892  |      |   | 63,678,062 
|                        |  |      |             |      |   |            
|Total deposit accounts  |  | $    | 136,573,252 |      | $ | 108,945,242
|                        |  |      |             |      |   |            



-37 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE F - DEPOSIT ACCOUNTS (Continued)



A summary of certificate accounts by maturity as of June 30, 2005 follows:



|                                    |  |                   |            |                 |   |            |  |   |           
|----------------------------------- |  | ----------------- | ---------- | --------------- | - | ---------- |  | - | ----------
|                                    |  | Less than$100,000 |            | $100,000or more |   | Total     
|One year or less                    |  | $                 | 24,254,931 |                 | $ | 30,050,574 |  | $ | 54,305,505
|More than one year to three years   |  |                   | 14,036,957 |                 |   | 22,427,922 |  |   | 36,464,879
|More than three years to five years |  |                   | 1,055,176  |                 |   | 1,484,032  |  |   | 2,539,208 
|More than five years                |  |                   | 157,300    |                 |   |           |  |   | 157,300   
|                                    |  |                   |            |                 |   |            |  |   |           
|Total certificate accounts          |  | $                 | 39,504,364 |                 | $ | 53,962,528 |  | $ | 93,466,892
|                                    |  |                   |            |                 |   |            |  |   |           



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



|                               |  |      |           |      |   |           |  
|------------------------------ |  | ---- | --------- | ---- | - | --------- | -
|                               |  | 2005 |           | 2004 |  
|Savings accounts               |  | $    | 16,651    |      | $ | 15,819    |  
|Money market accounts and NOW  |  |      | 670,337   |      |   | 590,342   |  
|Certificates of deposit        |  |      | 2,482,334 |      |   | 1,957,134 |  
|                               |  |      |           |      |   |           |  
|                               |  |      | 3,169,322 |      |   | 2,563,295 |  
|Penalties for early withdrawal |  |      |          |      |   | (522      | )
|                               |  |      |           |      |   |           |  
|                               |  | $    | 3,169,322 |      | $ | 2,562,773 |  
|                               |  |      |           |      |   |           |  



NOTE G - BORROWINGS



The Bank had total short-term borrowings of $8,448,000 and $3,000,000 at June 30, 2005
and 2004 respectively. The borrowings consisted of advances from the Federal Home Loan Bank of Atlanta and federal funds purchased. The borrowings carried variable rates ranging from 3.28% to 3.47% at June 30, 2005 and a rate of 1.25% as of June 30,
2004.



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



|                                                           |  |             |            |      |   |           
|---------------------------------------------------------- |  | ----------- | ---------- | ---- | - | ----------
|                                                           |  | At June 30,
|                                                           |  | 2005        |            | 2004
|4.31% due on April 6, 2011, callable October 6, 2005       |  | $           | 5,000,000  |      | $ | 5,000,000 
|3.41% due on August 1, 2011, callable November 1, 2005     |  |             | 3,000,000  |      |   | 3,000,000 
|3.00% due on September 5, 2008, callable September 5, 2006 |  |             | 10,000,000 |      |   | 10,000,000
|2.84% due on January 13, 2015, callable January 13, 2006   |  |             | 5,000,000  |      |   |          
|                                                           |  |             |            |      |   |           
|                                                           |  | $           | 23,000,000 |      | $ | 18,000,000
|                                                           |  |             |            |      |   |           



At June 30, 2005, the Bank also had a
$20 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.



-38 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE H - EMPLOYEE AND DIRECTOR BENEFIT PLANS



Recognition and Retention Plan



At the Companys first annual meeting of stockholders held on January 7, 1999, the Companys stockholders approved the 1998 Recognition and Retention Plan (the
RRP). Under the RRP, 88,085 shares of common stock were reserved for issuance to key officers and directors. The Company recognizes compensation costs over the vesting period of the RRP shares granted as shares are earned, resulting in
the recognition costs of approximately $10,000 and $14,000 during the years ended June 30, 2005 and 2004, respectively. Within the Plan, 80,592 shares have been granted as of June 30, 2005.



Long Term Incentive Stock Benefit Plan



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. No options or shares were granted this fiscal year. Nine thousand of these shares were granted as stock awards in the fiscal year ended 2004,
leaving 79,388 options or shares that can be granted. The Company recognizes compensation costs over the vesting period of the shares granted as shares are earned, resulting in approximately $52,000 and $35,000 in compensation costs for years ended
June 30, 2005 and 2004, respectively.



Stock Option Plan



At the Companys annual meeting, held on January 7, 1999, the stockholders approved the
Great Pee Dee Bancorp, Inc. Stock Option Plan (the SOP). The SOP provides for the issuance to directors, officers and employees of the Bank options to purchase up to 242,233 shares of the Companys common stock. 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.



A summary of activity under the SOP is as follows:



|                                     |  |                                 |   |  |                     |   |                     |                              |       |                   |         |   |                              |   |      
|------------------------------------ |  | ------------------------------- | - |  | ------------------- | - | ------------------- | ---------------------------- | ----- | ----------------- | ------- | - | ---------------------------- | - | -----
|                                     |  |                                 |   |  | Outstanding Options |   | Exercisable Options
|                                     |  | SharesAvailable ForFutureGrants |   |  | NumberOutstanding   |   |                     | WeightedAverageExercisePrice |       | NumberOutstanding |         |   | WeightedAverageExercisePrice
|At June 30, 2003                     |  | 7,234                           |   |  | 211,151             |   |                     | $                            | 11.76 |                   | 191,817 |   |                              | $ | 11.71
|                                     |  |                                 |   |  |                    
|Shares received in cashless exercise |  | 46,112                          |   |  |                    |   |                     |                              |      |                   |        |   |                              |   |     
|Options granted                      |  | (46,112                         | ) |  | 46,112              |   |                     |                              | 17.14 |                   |        |   |                              |   |     
|Options vested                       |  |                                |   |  |                    |   |                     |                              |      |                   | 55,780  |   |                              |   | 16.29
|Options exercised                    |  |                                |   |  | (88,208             | ) |                     |                              | 11.21 |                   | (88,208 | ) |                              |   | 11.21
|                                     |  |                                 |   |  |                     |   |                     |                              |       |                   |         |   |                              |   |      
|At June 30, 2004                     |  | 7,234                           |   |  | 169,055             |   |                     |                              | 13.51 |                   | 159,389 |   |                              |   | 13.59
|                                     |  |                                 |   |  |                    
|Shares received in cashless exercise |  | 42,394                          |   |  |                    |   |                     |                              |      |                   |        |   |                              |   |     
|Options granted                      |  | (42,394                         | ) |  | 42,394              |   |                     |                              | 17.28 |                   |        |   |                              |   |     
|Options vested                       |  |                                |   |  |                    |   |                     |                              |      |                   | 52,060  |   |                              |   | 16.34
|Options exercised                    |  |                                |   |  | (84,389             | ) |                     |                              | 11.27 |                   | (84,389 | ) |                              |   | 11.27
|                                     |  |                                 |   |  |                     |   |                     |                              |       |                   |         |   |                              |   |      
|At June 30, 2005                     |  | 7,234                           |   |  | 127,060             |   |                     | $                            | 15.56 |                   | 127,060 |   |                              | $ | 15.56
|                                     |  |                                 |   |  |                     |   |                     |                              |       |                   |         |   |                              |   |      



-39 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE H - EMPLOYEE AND DIRECTOR BENEFIT PLANS (Continued)



Stock Option Plan (Continued)



At June 30, 2005, options outstanding had a weighted-average remaining term of four years.
Total options outstanding at June 30, 2005 included 31,284 options exercisable at a range of $9.55 to $12.25 per share, 26,878 options exercisable at a range of $14.13 to $16.50 per share, and 68,898 options exercisable as a range of $17.45 to
$18.00 per share. No expense has been recognized in connection with the grant or exercise of these options. At June 30, 2005, authorized shares of common stock reserved for future grants of options totaled 7,234.



The fair value of options granted was estimated to be $2.18 for options granted in the year
ended June 30, 2005 and $2.10 for options granted in the year ended June 30, 2004. These amounts were estimated on the date of grant using the Black-Scholes Option Pricing Model using the following assumptions for the years ended June 30, 2005 and
2004, respectively: a risk-free interest rate of 3.0% and 2.0%, a dividend yield of 3.7% and 3.3%, an expected life of 2 years, and a volatility ratio of 26%.



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 ten years in quarterly installments of principal and interest. Interest is based upon the prime rate and will be adjusted annually. Dividends, if any, paid on shares held by the ESOP may
be used to reduce the loan. Dividends paid on unallocated shares held by the ESOP are not reported as dividends in the 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, 2005, the outstanding balance of the note is $803,699 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 $211,678 and $222,485 has been incurred in connection with the ESOP during the years ended June 30, 2005 and 2004, respectively. The expense includes, in addition to the cash contribution necessary to fund
the ESOP, $88,000 and $94,000 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, 2005
and 2004, respectively. The Bank has credited this amount to additional paid-in capital for the years then ended.



At June 30, 2005, 86,373 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 $1.5 million at June 30, 2005.



-40 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE H - EMPLOYEE AND DIRECTOR BENEFIT PLANS (Continued)



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. Expenses for this plan for the years ended June 30, 2005 and 2004 were approximately $0 and $41,000,
respectively. The expense in 2004 represents the fair value of 2,773 shares contributed to the deferred compensation plan.



Directors Deferred Compensation Plan



On March 25, 2002, the board approved a deferred compensation plan for directors whereby members of the board may make elective deferrals in lieu of receiving a portion
of the compensation to which they otherwise would be entitled. This plan is not entitled to favorable tax treatment under current law. Related deferred income tax benefits are included in the accompanying consolidated financial statements. Expenses
for this plan totaled $18,000 and $30,000 for the years ended June 30, 2005 and 2004, respectively.



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, 2005 and 2004 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 $27,039 and $18,169 for the years ended June 30, 2005 and 2004, respectively.



NOTE I - STOCK REPURCHASES



The Companys Board of Directors has adopted stock repurchase plans under which the
Company is authorized to repurchase shares of its outstanding common stock in the open market or in privately negotiated transactions at times deemed appropriate. Under such plans, the Company has repurchased a total of 761,063 shares of its common
stock at an aggregate cost of $9.5 million. Treasury shares have been used for various purposes, including grants under the RRP, shares issued under the deferred compensation plan, 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, 2005, 423,107 shares were held as treasury stock.



-41 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE J - INCOME TAXES



The components of income tax expense are as follows for the years ended June 30, 2005 and 2004:



|                                |  |      |         |      |   |        
|------------------------------- |  | ---- | ------- | ---- | - | -------
|                                |  | 2005 |         | 2004
|Current tax expense:            |  |      |         |      |   |        
|Federal                         |  | $    | 509,430 |      | $ | 591,452
|State                           |  |      | 100,098 |      |   | 101,091
|                                |  |      |         |      |   |        
|                                |  |      | 609,528 |      |   | 692,543
|                                |  |      |         |      |   |        
|Deferred tax expense (benefit): |  |      |         |      |   |        
|Federal                         |  |      | 37,885  |      |   | 28,852 
|State                           |  |      | 7,112   |      |   | 5,417  
|                                |  |      |         |      |   |        
|                                |  |      | 44,997  |      |   | 34,269 
|                                |  |      |         |      |   |        
|Provision for income taxes      |  | $    | 654,525 |      | $ | 726,812
|                                |  |      |         |      |   |        



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, 2005 and 2004:



|                                             |  |      |         |   |      |   |         |  
|-------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                             |  | 2005 |         |   | 2004 |  
|Income tax at federal statutory rate         |  | $    | 618,194 |   |      | $ | 671,592 |  
|State income tax, net of federal tax benefit |  |      | 70,759  |   |      |   | 68,186  |  
|Tax exempt interest income                   |  |      | (24,882 | ) |      |   | (11,357 | )
|ESOP                                         |  |      | 13,018  |   |      |   | (597    | )
|Other                                        |  |      | (22,564 | ) |      |   | (1,012  | )
|                                             |  |      |         |   |      |   |         |  
|Provision for income taxes                   |  | $    | 654,525 |   |      | $ | 726,812 |  
|                                             |  |      |         |   |      |   |         |  



Deferred tax assets and liabilities
arising from temporary differences at June 30, 2005 and 2004 are summarized as follows:



|                                      |  |      |           |   |      |   |           |  
|------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                                      |  | 2005 |           |   | 2004 |  
|Deferred tax assets relating to:      |  |      |           |   |      |   |           |  
|Deferred compensation                 |  | $    | 113,510   |   |      | $ | 106,296   |  
|Allowance for loan losses             |  |      | 604,787   |   |      |   | 581,499   |  
|Unrealized securities losses          |  |      | 225,820   |   |      |   | 424,932   |  
|Amortization of intangibles           |  |      | 172,765   |   |      |   | 158,340   |  
|Uncollected interest                  |  |      |          |   |      |   | 30,972    |  
|                                      |  |      |           |   |      |   |           |  
|Total deferred tax assets             |  |      | 1,116,882 |   |      |   | 1,302,039 |  
|                                      |  |      |           |   |      |   |           |  
|Deferred tax liabilities relating to: |  |      |           |   |      |   |           |  
|Premises and equipment                |  |      | (190,604  | ) |      |   | (151,352  | )
|FHLB stock dividends                  |  |      | (47,439   | ) |      |   | (51,630   | )
|Prepaid expenses                      |  |      | (16,676   | ) |      |   |          |  
|                                      |  |      |           |   |      |   |           |  
|Total deferred tax liabilities        |  |      | (254,719  | ) |      |   | (202,982  | )
|                                      |  |      |           |   |      |   |           |  
|Net deferred tax asset                |  | $    | 862,163   |   |      | $ | 1,099,057 |  
|                                      |  |      |           |   |      |   |           |  



The net deferred tax asset is
presented in other assets.



-42 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE J - INCOME TAXES (Continued)



Retained earnings at June 30, 2005, includes approximately $1.7 million for which no deferred income tax liability has been recognized. This
amount represents an allocation of income to bad debt deductions for income tax purposes only. Reductions of the amount so allocated for purposes other than tax bad debt losses or adjustments arising from 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 K - REGULATORY MATTERS



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



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, 2005, that the Bank meets all capital adequacy requirements to which it is subject.



As of June 30, 2005, 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, 2005 and
2004 are presented in the following table.



-43 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE K - REGULATORY MATTERS (Continued)



|                                                     |  |        |        |       |                                |   |                        |                                                                       |        |  |      |        |  |       |        |  |       |  
|---------------------------------------------------- |  | ------ | ------ | ----- | ------------------------------ | - | ---------------------- | --------------------------------------------------------------------- | ------ |  | ---- | ------ |  | ----- | ------ |  | ----- | -
|                                                     |  | Actual |        |       | Minimum For CapitalRequirement |   |                        | Minimum To Be WellCapitalized UnderPrompt CorrectiveAction Provisions |       
|                                                     |  | Amount |        | Ratio |                                |   | Amount                 |                                                                       | Ratio  |  |      | Amount |  | Ratio |       
|                                                     |  |        |        |       |                                |   | (Dollars in Thousands) |                                                                       |        |  |      |        | 
|June 30, 2005:                                       |  |        |        |       |                                |   |                        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Total Risk Weighted Capital to Risk Weighted Assets: |  |        |        |       |                                |   |                        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Consolidated                                         |  | $      | 27,348 |       | 21.35                          | % |                        | $                                                                     | 10,245 |  | 8.00 | %      |  | $     | N/A    |  | N/A   |  
|Sentry                                               |  |        | 25,443 |       | 20.03                          | % |                        |                                                                       | 10,163 |  | 8.00 | %      |  |       | 12,704 |  | 10.00 | %
|                                                     |  |        |        |       |                                |  
|Tier 1 Capital to Risk Weighted Assets:              |  |        |        |       |                                |   |                        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Consolidated                                         |  | $      | 25,760 |       | 20.11                          | % |                        | $                                                                     | 5,122  |  | 4.00 | %      |  | $     | N/A    |  | N/A   |  
|Sentry                                               |  |        | 23,855 |       | 18.78                          | % |                        |                                                                       | 5,082  |  | 4.00 | %      |  |       | 7,623  |  | 6.00  | %
|                                                     |  |        |        |       |                                |  
|Tier 1 Capital to Adjusted Total Assets:             |  |        |        |       |                                |   |                        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Consolidated                                         |  | $      | 25,760 |       | 13.13                          | % |                        | $                                                                     | 7,846  |  | 4.00 | %      |  | $     | N/A    |  | N/A   |  
|Sentry                                               |  |        | 23,855 |       | 12.28                          | % |                        |                                                                       | 7,769  |  | 4.00 | %      |  |       | 9,711  |  | 5.00  | %
|                                                     |  |        |        |       |                                |  
|Tangible Capital to Adjusted Total Assets:           |  |        |        |       |                                |   |                        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Consolidated                                         |  | $      | 25,760 |       | 13.13                          | % |                        | $                                                                     | 2,942  |  | 1.50 | %      |  | $     | N/A    |  | N/A   |  
|Sentry                                               |  |        | 23,855 |       | 12.28                          | % |                        |                                                                       | 2,913  |  | 1.50 | %      |  |       | N/A    |  | N/A   |  
|                                                     |  |        |        |       |                                |  
|June 30, 2004:                                       |  |        |        |       |                                |   |                        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Total Risk Weighted Capital to Risk Weighted Assets: |  |        |        |       |                                |   |                        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Consolidated                                         |  | $      | 26,971 |       | 26.65                          | % |                        | $                                                                     | 8,097  |  | 8.00 | %      |  | $     | N/A    |  | N/A   |  
|Sentry                                               |  |        | 23,508 |       | 23.52                          | % |                        |                                                                       | 7,996  |  | 8.00 | %      |  |       | 9,995  |  | 10.00 | %
|                                                     |  |        |        |       |                                |  
|Tier 1 Capital to Risk Weighted Assets:              |  |        |        |       |                                |   |                        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Consolidated                                         |  | $      | 25,726 |       | 25.42                          | % |                        | $                                                                     | 4,048  |  | 4.00 | %      |  | $     | N/A    |  | N/A   |  
|Sentry                                               |  |        | 22,263 |       | 23.52                          | % |                        |                                                                       | 3,998  |  | 4.00 | %      |  |       | 5,997  |  | 6.00  | %
|                                                     |  |        |        |       |                                |  
|Tier 1 Capital to Adjusted Total Assets:             |  |        |        |       |                                |   |                        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Consolidated                                         |  | $      | 25,726 |       | 16.19                          | % |                        | $                                                                     | 6,356  |  | 4.00 | %      |  | $     | N/A    |  | N/A   |  
|Sentry                                               |  |        | 22,263 |       | 14.33                          | % |                        |                                                                       | 6,230  |  | 4.00 | %      |  |       | 7,767  |  | 5.00  | %
|                                                     |  |        |        |       |                                |  
|Tangible Capital to Adjusted Total Assets:           |  |        |        |       |                                |   |                        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Consolidated                                         |  | $      | 25,726 |       | 16.19                          | % |                        | $                                                                     | 2,383  |  | 1.50 | %      |  | $     | N/A    |  | N/A   |  
|Sentry                                               |  |        | 22,263 |       | 14.33                          | % |                        |                                                                       | 2,330  |  | 1.50 | %      |  |       | N/A    |  | N/A   |  



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 2005, no dividends were paid by the Bank to Great Pee Dee. At June 30, 2005, prior approval is required by Office of Thrift
Supervision for any payment of dividends from Sentry Bank & Trust to Great Pee Dee.



-44 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



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



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



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



A
summary of the approximate contract amount of the Banks exposure to off-balance sheet risk as of June 30, 2005 is as follows (in thousands):



|                                                                    |  |   |       
|------------------------------------------------------------------- |  | - | ------
|Financial instruments whose contract amounts represent credit risk: |  |   |       
|Commitments to extend credit                                        |  | $ | 9,282 
|Undisbursed construction loans in process                           |  |   | 13,380
|Lines of credit                                                     |  |   | 4,376 
|Letters of credit                                                   |  |   | 86    
|                                                                    |  |   |       
|                                                                    |  | $ | 27,124
|                                                                    |  |   |       



At June 30, 2005, the Bank had loan
commitments outstanding of approximately $9.3 million, including loans of approximately $7.3 million to be originated at fixed interest rates ranging from 5.875% to 7.125%. 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 M - 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, advances from Federal Home Loan Bank, and commitments. Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial
instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Banks entire holdings of a particular financial instrument. Because no active market readily exists for a portion of
the Banks financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are
subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.



-45 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



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



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



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



Loans
Held for Sale



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



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.



-46 -



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



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



Financial Instruments with Off-Balance Sheet Risk



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



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, 2005 and 2004:



|                                                               |  |                |             |                      |   |                |  |                      |             |  |   |            
|-------------------------------------------------------------- |  | -------------- | ----------- | -------------------- | - | -------------- |  | -------------------- | ----------- |  | - | -----------
|                                                               |  | 2005           |             | 2004                
|                                                               |  | Carryingamount |             | Estimated fair value |   | Carryingamount |  | Estimated fair value
|Financial assets:                                              |  |                |             |                      |   |                |  |                      |             |  |   |            
|Cash, interest-earning balances, federal funds sold            |  | $              | 2,033,000   |                      | $ | 2,033,000      |  | $                    | 3,879,066   |  | $ | 3,879,066  
|Investment securities                                          |  |                | 28,778,830  |                      |   | 28,778,830     |  |                      | 27,846,829  |  |   | 27,846,829 
|Loans receivable, net                                          |  |                | 154,131,133 |                      |   | 154,709,852    |  |                      | 114,292,211 |  |   | 117,608,000
|Loans held for sale                                            |  |                | 1,115,600   |                      |   | 1,115,600      |  |                      | 1,310,420   |  |   | 1,310,420  
|Accrued interest receivable                                    |  |                | 889,789     |                      |   | 889,789        |  |                      | 578,436     |  |   | 578,436    
|Restricted stock, at cost                                      |  |                | 1,680,787   |                      |   | 1,680,787      |  |                      | 1,124,300   |  |   | 1,124,300  
|                                                               |  |                |             |                     
|Financial liabilities:                                         |  |                |             |                      |   |                |  |                      |             |  |   |            
|Deposits                                                       |  |                | 136,573,252 |                      |   | 136,165,862    |  |                      | 108,945,242 |  |   | 110,218,803
|Short-term borrowings                                          |  |                | 8,448,000   |                      |   | 8,448,000      |  |                      | 3,000,000   |  |   | 3,000,000  
|Long-term borrowings                                           |  |                | 23,000,000  |                      |   | 23,071,000     |  |                      | 18,000,000  |  |   | 18,013,000 
|Accrued interest payable                                       |  |                | 190,734     |                      |   | 190,734        |  |                      | 90,586      |  |   | 90,586     
|Advance payments by borrowers for property taxes and insurance |  |                | 157,466     |                      |   | 157,466        |  |                      | 117,197     |  |   | 117,197    



NOTE N - 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.



-47 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE O - PARENT COMPANY FINANCIAL DATA



Following are condensed financial statements of Great Pee Dee as of and for the years ended June 30, 2005 and 2004:



Condensed Statements of Financial Condition

As of June 30, 2005 and 2004



|                                           |  |      |            |   |      |   |            |  
|------------------------------------------ |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                           |  | 2005 |            |   | 2004 |  
|Assets:                                    |  |      |            |   |      |   |            |  
|Cash on hand and in banks                  |  | $    | 1,292,335  |   |      | $ | 2,889,354  |  
|Investment securities, available for sale  |  |      | 467,242    |   |      |   | 465,850    |  
|Investment in subsidiary                   |  |      | 24,351,303 |   |      |   | 22,598,573 |  
|Accrued interest receivable                |  |      | 4,565      |   |      |   | 5,792      |  
|Other assets                               |  |      | 304,777    |   |      |   | 205,993    |  
|                                           |  |      |            |   |      |   |            |  
|Total assets                               |  | $    | 26,420,222 |   |      | $ | 26,165,562 |  
|                                           |  |      |            |   |      |   |            |  
|Liabilities:                               |  |      |            |   |      |   |            |  
|Other liabilities                          |  | $    | 163,747    |   |      | $ | 114,458    |  
|                                           |  |      |            |   |      |   |            |  
|Stockholders equity:                      |  |      |            |   |      |   |            |  
|Common stock                               |  |      | 22,246     |   |      |   | 22,246     |  
|Additional paid-in capital                 |  |      | 22,008,532 |   |      |   | 21,982,899 |  
|Unearned compensation                      |  |      | (872,774   | ) |      |   | (1,058,586 | )
|Retained earnings                          |  |      | 11,242,041 |   |      |   | 11,162,369 |  
|Accumulated other comprehensive loss       |  |      | (387,823   | ) |      |   | (723,400   | )
|Treasury stock                             |  |      | (5,755,747 | ) |      |   | (5,334,424 | )
|                                           |  |      |            |   |      |   |            |  
|                                           |  |      | 26,256,475 |   |      |   | 26,051,104 |  
|                                           |  |      |            |   |      |   |            |  
|Total liabilities and stockholders equity |  | $    | 26,420,222 |   |      | $ | 26,165,562 |  
|                                           |  |      |            |   |      |   |            |  



Condensed Statements
of Operations

Years Ended June 30, 2005 and 2004



|                                                 |  |      |           |   |      |   |           |  
|------------------------------------------------ |  | ---- | --------- | - | ---- | - | --------- | -
|                                                 |  | 2005 |           |   | 2004 |  
|Equity in undistributed earnings of subsidiaries |  | $    | 1,230,539 |   |      | $ | 1,365,589 |  
|Interest and other income                        |  |      | 118,323   |   |      |   | 132,454   |  
|Loss on sale of securities                       |  |      |          |   |      |   | (51,977   | )
|Operating expenses                               |  |      | (222,822  | ) |      |   | (232,795  | )
|Income taxes                                     |  |      | 37,654    |   |      |   | 35,188    |  
|                                                 |  |      |           |   |      |   |           |  
|Net income                                       |  | $    | 1,163,694 |   |      | $ | 1,248,459 |  
|                                                 |  |      |           |   |      |   |           |  



-48 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005
and 2004



NOTE O - PARENT COMPANY FINANCIAL DATA (Continued)



Condensed Statements of Cash Flows

Years Ended June 30, 2005 and 2004



|                                                                                         |  |      |            |   |      |   |            |  
|---------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                                         |  | 2005 |            |   | 2004 |  
|Cash flows from operating activities:                                                    |  |      |            |   |      |   |            |  
|Net income                                                                               |  | $    | 1,163,694  |   |      | $ | 1,248,459  |  
|Adjustments to reconcile net income to net cash provided (used) by operating activities: |  |      |            |   |      |   |            |  
|Equity in income of subsidiary                                                           |  |      | (1,230,539 | ) |      |   | (1,365,589 | )
|Unearned compensation                                                                    |  |      | 88,246     |   |      |   | 93,703     |  
|Other                                                                                    |  |      | (52,380    | ) |      |   | 63,910     |  
|                                                                                         |  |      |            |   |      |   |            |  
|Net cash provided (used) by operating activities                                         |  |      | (30,979    | ) |      |   | 40,483     |  
|                                                                                         |  |      |            |   |      |   |            |  
|Cash flows from investing activities:                                                    |  |      |            |   |      |   |            |  
|Purchase of securities available for sale                                                |  |      | (66,701    | ) |      |   | (387,500   | )
|Proceeds from sale and maturities of securities available for sale                       |  |      | 50,000     |   |      |   | 273,004    |  
|Collection of loan to ESOP                                                               |  |      | 123,431    |   |      |   | 128,782    |  
|Cash dividends received from subsidiary                                                  |  |      |           |   |      |   | 3,000,000  |  
|                                                                                         |  |      |            |   |      |   |            |  
|Net cash provided by investing activities                                                |  |      | 106,730    |   |      |   | 3,014,286  |  
|                                                                                         |  |      |            |   |      |   |            |  
|Cash flows from financing activities:                                                    |  |      |            |   |      |   |            |  
|Purchase of treasury stock                                                               |  |      | (807,209   | ) |      |   | (96,732    | )
|Proceeds from option exercise                                                            |  |      | 218,461    |   |      |   | 198,561    |  
|Cash dividends paid                                                                      |  |      | (1,084,022 | ) |      |   | (1,028,794 | )
|                                                                                         |  |      |            |   |      |   |            |  
|Net cash used by financing activities                                                    |  |      | (1,672,770 | ) |      |   | (926,965   | )
|                                                                                         |  |      |            |   |      |   |            |  
|Net increase (decrease) in cash and cash equivalents                                     |  |      | (1,597,019 | ) |      |   | 2,127,804  |  
|                                                                                         |  |     
|Cash and cash equivalents, beginning                                                     |  |      | 2,889,354  |   |      |   | 761,550    |  
|                                                                                         |  |      |            |   |      |   |            |  
|Cash and cash equivalents, ending                                                        |  | $    | 1,292,335  |   |      | $ | 2,889,354  |  
|                                                                                         |  |      |            |   |      |   |            |  



-49 -



---

GREAT PEE DEE BANCORP, INC.

GENERAL CORPORATE INFORMATION



Executive Officers



|                            |  |                                       |  |                                                 
|--------------------------- |  | ------------------------------------- |  | ------------------------------------------------
|                            |  | James C. Crawford, III                |  |                                                 
|                            |  | Chairman                              |  |                                                 
|                            |  |                                      
|John S. Long                |  | Herbert W. Watts                      |  | John M. Digby                                   
|Executive Vice President    |  | President and Chief Executive Officer |  | Chief Financial Officer, Secretary and Treasurer
|                            |  |                                      
|                            |  | Directors                             |  |                                                 
|                            |  |                                      
|Robert M. Bennett, Jr.      |  | William R. Butler                     |  | James C. Crawford, III,                         
|Vice President              |  | Owner, P & H Pharmacy                 |  | Chairman                                        
|Bennett Motor Co.           |  |                                       |  | President and CEO,                              
|                            |  |                                       |  | B.C. Moore & Sons Inc.                          
|                            |  |                                      
|Henry P. Duvall, IV         |  | H. Malloy Evans                       |  | John S. Long                                    
|Retired Corporate Executive |  | President and CEO                     |  | President and CEO                               
|                            |  | Cheraw Yarn Mills                     |  | Sentry Bank & Trust                             
|                            |  | Herbert W. Watts                      |  |                                                 
|                            |  | President and CEO                     |  |                                                 
|                            |  | Great Pee Dee Bancorp, Inc.           |  |                                                 



-50 -



---

GREAT PEE DEE BANCORP, INC.

GENERAL CORPORATE INFORMATION



Stock Transfer Agent



Registrar and Transfer Company

10 Commerce Drive

Cranford, New Jersey 07016



Special Legal Counsel



Luse Gorman Pomerenk & Schick

5335 Wisconsin Ave. N.W., Suite 400

Washington, DC 20015



Independent Auditors



Dixon Hughes PLLC

Suite 516

6525 Morrison Boulevard

Charlotte, NC 28211



Office Locations



Main Office

901 Chesterfield Highway

Cheraw, SC 29520



Branch Office

515 Market Street

Cheraw, SC 29520



Branch Office

452 Second Loop Road

Florence, SC 29505



Annual Meeting



The annual meeting of stockholders of Great Pee Dee Bancorp, Inc. will be held at 11:00 a.m. on October 12, 2005, at the Sentry Bank & Trust Main Office, 901
Chesterfield Highway, Cheraw, SC.



Market for Common
Stock



The Companys stock began trading on December 31, 1997.
There are 1,801,510 shares of common stock outstanding, which were held by approximately 334 stockholders of record (excluding shares held in street name) on June 30, 2005. The Companys common stock is quoted on the NASDAQ National Market
under the symbol PEDE. The following table reflects the stock trading and dividend payment frequency of the Company for the years ended June 30, 2005 and 2004.



|                                  |  |             |       |          |   |           |  |   |     
|--------------------------------- |  | ----------- | ----- | -------- | - | --------- |  | - | ----
|                                  |  | Stock Price |       | Dividend
|                                  |  | High        |       | Low      |   | per share
|For the year ended June 30, 2005: |  |             |       |          |   |           |  |   |     
|First quarter                     |  | $           | 16.00 |          | $ | 15.05     |  | $ | .155
|Second quarter                    |  |             | 15.60 |          |   | 14.99     |  |   | .160
|Third quarter                     |  |             | 18.50 |          |   | 14.75     |  |   | .160
|Fourth quarter                    |  |             | 16.50 |          |   | 13.90     |  |   | .160
|                                  |  |             |      
|For the year ended June 30, 2004: |  |             |       |          |   |           |  |   |     
|First quarter                     |  | $           | 16.63 |          | $ | 14.35     |  | $ | .140
|Second quarter                    |  |             | 18.06 |          |   | 16.49     |  |   | .155
|Third quarter                     |  |             | 18.00 |          |   | 16.00     |  |   | .155
|Fourth quarter                    |  |             | 16.59 |          |   | 15.16     |  |   | .155



Form 10-KSB



A copy of the Form 10-KSB as filed with the Securities and Exchange
Commission will be furnished without charge to the Companys stockholders for the Companys most recent fiscal year upon written request to Herbert W. Watts, President, Great Pee Dee Bancorp, Inc., 901 Chesterfield Highway, Cheraw, SC,
29520.



-51 -