EXHIBIT 13

Great Pee Dee Bancorp, Inc. and Subsidiary

TABLE OF CONTENTS



|                                                        |  |         
|------------------------------------------------------- |  | --------
|                                                        |  | Page No.
|Selected Consolidated Financial and Other Data          |  | 1       
|                                                        | 
|Managements Discussion and Analysis                    |  | 2       
|                                                        | 
|Report of Independent Registered Public Accounting Firm |  | 17      
|                                                        | 
|Consolidated Financial Statements                       |  |         
|                                                        | 
|Consolidated Statements of Financial Condition          |  | 18      
|                                                        | 
|Consolidated Statements of Operations                   |  | 19      
|                                                        | 
|Consolidated Statements of Stockholders Equity         |  | 20      
|                                                        | 
|Consolidated Statements of Cash Flows                   |  | 21      
|                                                        | 
|Notes to Consolidated Financial Statements              |  | 23      
|                                                        | 
|General Corporate Information                           |  | 50      



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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,            |        
|                                                                        |  | 2006                                         |         |   | 2005 |   |         | 2004 |  |   | 2003    |   |  | 2002 |        
|                                                                        |  | (Dollars in thousands except per share data) |        
|Financial Condition Data:                                               |  |                                              |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Total assets                                                            |  | $                                            | 212,706 |   |      | $ | 195,746 |      |  | $ | 156,355 |   |  | $    | 143,326 |   |  | $ | 131,034 |  
|Investments(1)                                                          |  |                                              | 23,831  |   |      |   | 30,892  |      |  |   | 31,633  |   |  |      | 26,602  |   |  |   | 12,146  |  
|Loans receivable, net                                                   |  |                                              | 175,275 |   |      |   | 154,131 |      |  |   | 114,292 |   |  |      | 107,954 |   |  |   | 109,611 |  
|Loans held for sale                                                     |  |                                              | 958     |   |      |   | 1,116   |      |  |   | 1,310   |   |  |      | 2,056   |   |  |   | 3,072   |  
|Deposits                                                                |  |                                              | 151,339 |   |      |   | 136,573 |      |  |   | 108,945 |   |  |      | 108,812 |   |  |   | 88,090  |  
|Borrowings                                                              |  |                                              | 33,100  |   |      |   | 31,448  |      |  |   | 21,000  |   |  |      | 8,000   |   |  |   | 17,000  |  
|Stockholders equity                                                    |  |                                              | 26,540  |   |      |   | 26,256  |      |  |   | 26,051  |   |  |      | 26,043  |   |  |   | 25,569  |  
|                                                                        |  |                                              |         |   |     
|Operating Data:                                                         |  |                                              |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Interest income                                                         |  | $                                            | 12,906  |   |      | $ | 9,746   |      |  | $ | 8,312   |   |  | $    | 8,426   |   |  | $ | 8,637   |  
|Interest expense                                                        |  |                                              | 6,038   |   |      |   | 3,954   |      |  |   | 3,131   |   |  |      | 3,367   |   |  |   | 3,724   |  
|                                                                        |  |                                              |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net interest income                                                     |  |                                              | 6,868   |   |      |   | 5,792   |      |  |   | 5,181   |   |  |      | 5,059   |   |  |   | 4,913   |  
|Provision for loan losses                                               |  |                                              | 363     |   |      |   | 192     |      |  |   | 375     |   |  |      | 400     |   |  |   | 500     |  
|                                                                        |  |                                              |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net interest income after provision for loan losses                     |  |                                              | 6,505   |   |      |   | 5,600   |      |  |   | 4,806   |   |  |      | 4,659   |   |  |   | 4,413   |  
|Non-interest income                                                     |  |                                              | 789     |   |      |   | 941     |      |  |   | 1,274   |   |  |      | 1,080   |   |  |   | 826     |  
|Non-interest expense                                                    |  |                                              | 4,752   |   |      |   | 4,723   |      |  |   | 4,105   |   |  |      | 3,496   |   |  |   | 3,334   |  
|                                                                        |  |                                              |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Income before income taxes                                              |  |                                              | 2,542   |   |      |   | 1,818   |      |  |   | 1,975   |   |  |      | 2,243   |   |  |   | 1,905   |  
|Income tax expense                                                      |  |                                              | 943     |   |      |   | 654     |      |  |   | 727     |   |  |      | 833     |   |  |   | 703     |  
|                                                                        |  |                                              |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net income                                                              |  | $                                            | 1,599   |   |      | $ | 1,164   |      |  | $ | 1,248   |   |  | $    | 1,410   |   |  | $ | 1,202   |  
|                                                                        |  |                                              |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Per Common Share Data:                                                  |  |                                              |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net income, basic                                                       |  | $                                            | 0.93    |   |      | $ | 0.68    |      |  | $ | 0.74    |   |  | $    | 0.87    |   |  | $ | 0.74    |  
|Net income, diluted                                                     |  |                                              | 0.92    |   |      |   | 0.68    |      |  |   | 0.73    |   |  |      | 0.85    |   |  |   | 0.73    |  
|Regular cash dividends                                                  |  |                                              | 0.640   |   |      |   | 0.635   |      |  |   | 0.605   |   |  |      | 0.545   |   |  |   | 0.464   |  
|Dividend payment ratio                                                  |  |                                              | 68.82   | % |      |   | 93.38   | %    |  |   | 81.76   | % |  |      | 62.64   | % |  |   | 62.70   | %
|                                                                        |  |                                              |         |   |     
|Selected Other Data:                                                    |  |                                              |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Number of:                                                              |  |                                              |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Outstanding loans                                                       |  |                                              | 3,030   |   |      |   | 3,095   |      |  |   | 3,152   |   |  |      | 3,435   |   |  |   | 3,455   |  
|Deposit accounts                                                        |  |                                              | 6,725   |   |      |   | 6,582   |      |  |   | 6,180   |   |  |      | 5,793   |   |  |   | 6,262   |  
|Full-service offices                                                    |  |                                              | 3       |   |      |   | 3       |      |  |   | 3       |   |  |      | 2       |   |  |   | 2       |  
|Return on average assets                                                |  |                                              | 0.76    | % |      |   | 0.66    | %    |  |   | 0.81    | % |  |      | 1.01    | % |  |   | 0.98    | %
|Return on average equity                                                |  |                                              | 6.05    | % |      |   | 4.52    | %    |  |   | 4.80    | % |  |      | 5.49    | % |  |   | 4.74    | %
|Average equity to average assets                                        |  |                                              | 12.57   | % |      |   | 14.60   | %    |  |   | 16.94   | % |  |      | 18.32   | % |  |   | 20.58   | %
|Interest rate spread                                                    |  |                                              | 3.02    | % |      |   | 3.08    | %    |  |   | 3.11    | % |  |      | 3.24    | % |  |   | 3.52    | %
|Net yield on average interest-earning assets                            |  |                                              | 3.46    | % |      |   | 3.50    | %    |  |   | 3.55    | % |  |      | 3.79    | % |  |   | 4.18    | %
|Average interest-earning assets to average interest-bearing liabilities |  |                                              | 114.39  | % |      |   | 117.69  | %    |  |   | 120.57  | % |  |      | 121.96  | % |  |   | 120.78  | %
|Ratio of non-interest expense to average total assets                   |  |                                              | 2.26    | % |      |   | 2.67    | %    |  |   | 2.67    | % |  |      | 2.49    | % |  |   | 2.71    | %
|Non-performing assets to total assets                                   |  |                                              | 0.31    | % |      |   | 0.66    | %    |  |   | 1.70    | % |  |      | 1.60    | % |  |   | 0.86    | %
|Allowance for loan losses to non-performing loans at period end         |  |                                              | 342.45  | % |      |   | 144.03  | %    |  |   | 71.09   | % |  |      | 62.88   | % |  |   | 98.79   | %

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



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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 mutual to stock 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, 2006, approximately 92.7% 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.

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.



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis

Interest Rate Gap Analysis.As a part of its
interest rate risk management policy, the Company calculates an interest rate gap. Interest rate gap analysis is a common, though imperfect, measure of interest rate risk, which measures the relative dollar amounts of
interest-earning assets and interest-bearing liabilities which 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, 2006 |            
|                                                                            |  | 1 Year or Less                       |             |    | More Than 1 Year to 3 Years |   |             | More Than 3 Years to 5
Years |  |   | More Than 5 Years |    |  | Total |            
|INTEREST-EARNING ASSETS:                                                    |  |                                      |             |    |                             |   |             |                              |  |   |                   |    |  |       |             |   |  |   |             |  
|Loans receivable:                                                           |  |                                      |             |    |                             |   |             |                              |  |   |                   |    |  |       |             |   |  |   |             |  
|Real estate loans:                                                          |  |                                      |             |    |                             |   |             |                              |  |   |                   |    |  |       |             |   |  |   |             |  
|Adjustable rate                                                             |  | $                                    | 20,200,002  |    |                             | $ | 7,197,994   |                              |  | $ | 3,276,892         |    |  | $     | 33,143,361  |   |  | $ | 63,818,249  |  
|Fixed rate                                                                  |  |                                      | 14,397,502  |    |                             |   | 13,228,631  |                              |  |   | 17,321,339        |    |  |       | 55,665,663  |   |  |   | 100,613,135 |  
|Other loans                                                                 |  |                                      | 5,667,580   |    |                             |   | 2,390,765   |                              |  |   | 3,172,294         |    |  |       | 1,762,324   |   |  |   | 12,992,963  |  
|Loans held for sale                                                         |  |                                      | 958,150     |    |                             |   |            |                              |  |   |                  |    |  |       |            |   |  |   | 958,150     |  
|Interest-earning balances in other banks                                    |  |                                      | 488,193     |    |                             |   |            |                              |  |   |                  |    |  |       |            |   |  |   | 488,193     |  
|Federal funds sold                                                          |  |                                      | 858,000     |    |                             |   |            |                              |  |   |                  |    |  |       |            |   |  |   | 858,000     |  
|Investment securities available for sale                                    |  |                                      | 1,606,765   |    |                             |   | 3,991,077   |                              |  |   | 1,771,096         |    |  |       | 13,118,536  |   |  |   | 20,487,474  |  
|Restricted stock(1)                                                         |  |                                      |            |    |                             |   |            |                              |  |   |                  |    |  |       | 1,997,787   |   |  |   | 1,997,787   |  
|                                                                            |  |                                      |             |    |                             |   |             |                              |  |   |                   |    |  |       |             |   |  |   |             |  
|Total interest-earning assets                                               |  | $                                    | 44,176,192  |    |                             | $ | 26,808,467  |                              |  | $ | 25,541,621        |    |  | $     | 105,687,671 |   |  | $ | 202,213,951 |  
|                                                                            |  |                                      |             |    |                             |   |             |                              |  |   |                   |    |  |       |             |   |  |   |             |  
|INTEREST-BEARING LIABILITIES:                                               |  |                                      |             |    |                             |   |             |                              |  |   |                   |    |  |       |             |   |  |   |             |  
|Deposit accounts:                                                           |  |                                      |             |    |                             |   |             |                              |  |   |                   |    |  |       |             |   |  |   |             |  
|Demand                                                                      |  | $                                    | 29,503,464  |    |                             | $ |            |                              |  | $ |                  |    |  | $     |            |   |  | $ | 29,503,464  |  
|Time over $100,000                                                          |  |                                      | 48,068,042  |    |                             |   | 16,052,739  |                              |  |   | 737,054           |    |  |       |            |   |  |   | 64,857,835  |  
|Other time                                                                  |  |                                      | 34,958,407  |    |                             |   | 12,551,552  |                              |  |   | 555,453           |    |  |       | 71,249      |   |  |   | 48,136,661  |  
|Borrowings:                                                                 |  |                                      |             |    |                             |   |             |                              |  |   |                   |    |  |       |             |   |  |   |             |  
|Short-term                                                                  |  |                                      | 9,500,000   |    |                             |   |            |                              |  |   |                  |    |  |       |            |   |  |   | 9,500,000   |  
|Long-term                                                                   |  |                                      |            |    |                             |   | 15,000,000  |                              |  |   | 3,000,000         |    |  |       | 5,600,000   |   |  |   | 23,600,000  |  
|                                                                            |  |                                      |             |    |                             |   |             |                              |  |   |                   |    |  |       |             |   |  |   |             |  
|Total interest-bearing liabilities                                          |  | $                                    | 122,029,913 |    |                             | $ | 43,604,291  |                              |  | $ | 4,292,507         |    |  | $     | 5,671,249   |   |  | $ | 175,597,960 |  
|                                                                            |  |                                      |             |    |                             |   |             |                              |  |   |                   |    |  |       |             |   |  |   |             |  
|INTEREST SENSITIVITY GAP PER PERIOD                                         |  | $                                    | (77,853,721 | )  |                             | $ | (16,795,824 | )                            |  | $ | 21,249,114        |    |  | $     | 100,016,422 |   |  | $ | 26,615,991  |  
|CUMULATIVE INTEREST SENSITIVITY GAP                                         |  | $                                    | (77,853,721 | )  |                             | $ | (94,649,545 | )                            |  | $ | (73,400,431       | )  |  | $     | 26,615,991  |   |  | $ | 26,615,991  |  
|CUMULATIVE GAP AS A PERCENTAGE OF TOTAL INTEREST-EARNING ASSETS             |  |                                      | (38.50      | %) |                             |   | (46.81      | %)                           |  |   | (36.30            | %) |  |       | 13.16       | % |  |   | 13.16       | %
|CUMULATIVE RATIO OF INTEREST-EARNING ASSETS TO INTEREST-BEARING LIABILITIES |  |                                      | 36.20       | %  |                             |   | 42.86       | %                            |  |   | 56.80             | %  |  |       | 115.16      | % |  |   | 115.16      | %

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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, 2006 which are projected to re-price or mature in each of the future time periods shown. Except for the restricted stock, the amounts of assets and liabilities
shown which re-price or mature within a particular period were determined in accordance with the contractual terms of the assets or liabilities. Loans with adjustable rates are shown as being due at the end of the next upcoming adjustment period.
Interest-bearing liabilities with no contractual maturity, such as savings deposits and interest-bearing transaction accounts, are reflected in the earliest re-pricing period due to the contractual arrangements that give us the opportunity to vary
the rates paid on these deposits within a thirty-day or shorter period. Overnight federal funds are reflected at the earliest pricing interval due to the immediately available nature of the instruments. In making the gap computations, no assumptions
are made regarding interest-earning asset prepayment rates and interest-bearing liability reduction rates and the table does not reflect scheduled principal payments that will be received throughout the lives of the loans. As a result the interest
rate sensitivity of the Companys assets and liabilities illustrated in the preceding table would vary substantially if different assumptions were used or if actual experience differs from that indicated by such assumptions.

The Companys one-year interest sensitivity gap as a percentage of total interest-earning assets at June 30, 2006, was (38.5%). At June 30, 2006, the
Companys one- year, three-year and five-year cumulative interest sensitivity gaps as a percentage of total interest-earning assets were (46.81%), (36.30%) and 13.16%, 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, 2006, 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                                      |  | $                      | 20,232 |                 | $ | (9,542 | )                |  | (32 | )%
|Up 200 basis points                                      |  |                        | 23,450 |                 |   | (6,324 | )                |  | (21 | )%
|Up 100 basis points                                      |  |                        | 26,627 |                 |   | (3,147 | )                |  | (11 | )%
|Static (Includes certain unrecorded deposit intangibles) |  |                        | 29,774 |                 |   |       |                  |  |    | % 
|Down 100 basis points                                    |  |                        | 32,435 |                 |   | 2,661  |                  |  | 9   | % 
|Down 200 basis points                                    |  |                        | 34,520 |                 |   | 4,746  |                  |  | 16  | % 



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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 interest-bearing liability reductions, and should not be relied upon as indicative of actual results. Further, the
computations do not reflect any actions management may undertake in response to changes in interest rates. The table set forth above indicates that in the event of a 200 basis point increase in interest rates, Sentry would be expected to experience
a 21% decrease in NPV.

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

Net Interest Income

Net interest income
represents the difference between income derived from interest-earning assets and interest expense incurred on interest-bearing liabilities. Net interest income is affected by both (i) the difference between the rates of interest earned on
interest-earning assets and the rates paid on interest-bearing liabilities (interest rate spread) and (ii) the relative amounts of interest-earning assets and interest-bearing liabilities (net earning balance).



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis

The following table sets forth information relating
to average balances of the Companys assets and liabilities for the years ended June 30, 2006, 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 annual average balance of interest-earning assets or interest-bearing liabilities, respectively) as well as the net yield on interest-earning assets (which reflects the
impact of the net earning balance). Non-accruing loans were included in the computation of average balances.



|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                |  |   |          |   |             |   |       |                |      |   |          |   |             |   |  |   |       |  |      |  
|-------------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ------------------------ | - | ----------- | ------------------------ | ---- | -------------- |  | - | -------- | - | ----------- | - | ----- | -------------- | ---- | - | -------- | - | ----------- | - |  | - | ----- |  | ---- | -
|                                                                                 |  | Year Ended June 30, 2006 |         |   | Year Ended June 30, 2005 |   |             | Year Ended June 30, 2004 |     
|                                                                                 |  | AverageBalance           |         |   | Interest                 |   | AverageRate |                          |      | AverageBalance |  |   | Interest |   | AverageRate |   |       | AverageBalance |      |   | Interest |   | AverageRate |  
|                                                                                 |  | (Dollars in thousands)   |        
|Interest-earning assets:                                                         |  |                          |         |   |                          |   |             |                          |      |                |  |   |          |   |             |   |       |                |      |   |          |   |             |   |  |   |       |  |      |  
|Interest-earning balances                                                        |  | $                        | 1,948   |   |                          | $ | 85          |                          | 4.36 | %              |  | $ | 3,621    |   |             | $ | 86    |                | 2.38 | % |          | $ | 1,803       |   |  | $ | 27    |  | 1.50 | %
|Investments(1)                                                                   |  |                          | 26,466  |   |                          |   | 1,093       |                          | 4.13 | %              |  |   | 27,864   |   |             |   | 1,081 |                | 3.88 | % |          |   | 30,113      |   |  |   | 1,057 |  | 3.51 | %
|Loans(2)                                                                         |  |                          | 170,017 |   |                          |   | 11,728      |                          | 6.90 | %              |  |   | 134,018  |   |             |   | 8,579 |                | 6.40 | % |          |   | 114,182     |   |  |   | 7,228 |  | 6.33 | %
|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                |  |   |          |   |             |   |       |                |      |   |          |   |             |   |  |   |       |  |      |  
|Total interest-earning assets                                                    |  |                          | 198,431 |   |                          |   | 12,906      |                          | 6.50 | %              |  |   | 165,503  |   |             |   | 9,746 |                | 5.89 | % |          |   | 146,098     |   |  |   | 8,312 |  | 5.69 | %
|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                |  |   |          |   |             |   |       |                |      |   |          |   |             |   |  |   |       |  |      |  
|Other assets                                                                     |  |                          | 11,910  |   |                          |   |             |                          |      |                |  |   | 11,070   |   |             |   |       |                |      |   |          |   | 7,427       |   |  |   |       |  |      |  
|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                |  |   |          |   |             |   |       |                |      |   |          |   |             |   |  |   |       |  |      |  
|Total assets                                                                     |  | $                        | 210,341 |   |                          |   |             |                          |      |                |  | $ | 176,573  |   |             |   |       |                |      |   |          | $ | 153,525     |   |  |   |       |  |      |  
|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                |  |   |          |   |             |   |       |                |      |   |          |   |             |   |  |   |       |  |      |  
|Interest-bearing liabilities:                                                    |  |                          |         |   |                          |   |             |                          |      |                |  |   |          |   |             |   |       |                |      |   |          |   |             |   |  |   |       |  |      |  
|Deposits                                                                         |  | $                        | 139,972 |   |                          |   | 4,756       |                          | 3.40 | %              |  | $ | 116,141  |   |             |   | 3,170 |                | 2.73 | % |          | $ | 102,948     |   |  |   | 2,563 |  | 2.49 | %
|Borrowings                                                                       |  |                          | 33,500  |   |                          |   | 1,282       |                          | 3.83 | %              |  |   | 24,482   |   |             |   | 784   |                | 3.20 | % |          |   | 18,222      |   |  |   | 568   |  | 3.12 | %
|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                |  |   |          |   |             |   |       |                |      |   |          |   |             |   |  |   |       |  |      |  
|Total interest-bearing liabilities                                               |  |                          | 173,472 |   |                          |   | 6,038       |                          | 3.48 | %              |  |   | 140,623  |   |             |   | 3,954 |                | 2.81 | % |          |   | 121,170     |   |  |   | 3,131 |  | 2.58 | %
|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                |  |   |          |   |             |   |       |                |      |   |          |   |             |   |  |   |       |  |      |  
|Non-interest bearing deposits                                                    |  |                          | 7,845   |   |                          |   |             |                          |      |                |  |   | 7,445    |   |             |   |       |                |      |   |          |   | 5,860       |   |  |   |       |  |      |  
|Other liabilities                                                                |  |                          | 2,588   |   |                          |   |             |                          |      |                |  |   | 2,733    |   |             |   |       |                |      |   |          |   | 492         |   |  |   |       |  |      |  
|Stockholders equity                                                             |  |                          | 26,436  |   |                          |   |             |                          |      |                |  |   | 25,772   |   |             |   |       |                |      |   |          |   | 26,003      |   |  |   |       |  |      |  
|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                |  |   |          |   |             |   |       |                |      |   |          |   |             |   |  |   |       |  |      |  
|Total liabilities and stockholders equity                                       |  | $                        | 210,341 |   |                          |   |             |                          |      |                |  | $ | 176,573  |   |             |   |       |                |      |   |          | $ | 153,525     |   |  |   |       |  |      |  
|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                |  |   |          |   |             |   |       |                |      |   |          |   |             |   |  |   |       |  |      |  
|Net interest income and interest rate spread                                     |  |                          |         |   |                          | $ | 6,868       |                          | 3.02 | %              |  |   |          |   |             | $ | 5,792 |                | 3.08 | % |          |   |             |   |  | $ | 5,181 |  | 3.11 | %
|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                |  |   |          |   |             |   |       |                |      |   |          |   |             |   |  |   |       |  |      |  
|Net yield on average interest-earning assets                                     |  |                          |         |   |                          |   |             |                          | 3.46 | %              |  |   |          |   |             |   |       |                | 3.50 | % |          |   |             |   |  |   |       |  | 3.55 | %
|                                                                                 |  |                          |         |   |                          |   |             |                          |      |                |  |   |          |   |             |   |       |                |      |   |          |   |             |   |  |   |       |  |      |  
|Ratio of average interest-earning assets to average interest-bearing liabilities |  |                          | 114.39  | % |                          |   |             |                          |      |                |  |   | 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.
|--- | ------------------------------------------------------



- 6 -



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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, 2006 vs. 2005Increase (Decrease) Due To |       |   | Year Ended June 30, 2005 vs. 2004 Increase (Decrease) Due To
|                              |  | Volume                                                      |       |   | Rate                                                         |   |       | Total |  |   | Volume |   |  | Rate |       |   | Total
|                              |  | (Dollars in thousands)                                     
|Interest income:              |  |                                                             |       |   |                                                              |   |       |       |  |   |        |   |  |      |       |   |       |   |     |   |  |   |      
|Interest-earning balances     |  | $                                                           | (56   | ) |                                                              | $ | 55    |       |  | $ | (1     | ) |  | $    | 35    |   |       | $ | 24  |   |  | $ | 59   
|Investments                   |  |                                                             | (56   | ) |                                                              |   | 68    |       |  |   | 12     |   |  |      | (83   | ) |       |   | 107 |   |  |   | 24   
|Loans                         |  |                                                             | 2,304 |   |                                                              |   | 845   |       |  |   | 3,149  |   |  |      | 1,263 |   |       |   | 88  |   |  |   | 1,351
|                              |  |                                                             |       |   |                                                              |   |       |       |  |   |        |   |  |      |       |   |       |   |     |   |  |   |      
|Total interest income         |  |                                                             | 2,192 |   |                                                              |   | 968   |       |  |   | 3,160  |   |  |      | 1,215 |   |       |   | 219 |   |  |   | 1,434
|                              |  |                                                             |       |   |                                                              |   |       |       |  |   |        |   |  |      |       |   |       |   |     |   |  |   |      
|Interest expense:             |  |                                                             |       |   |                                                              |   |       |       |  |   |        |   |  |      |       |   |       |   |     |   |  |   |      
|Deposits                      |  |                                                             | 730   |   |                                                              |   | 856   |       |  |   | 1,586  |   |  |      | 344   |   |       |   | 263 |   |  |   | 607  
|Borrowings                    |  |                                                             | 317   |   |                                                              |   | 181   |       |  |   | 498    |   |  |      | 198   |   |       |   | 18  |   |  |   | 216  
|                              |  |                                                             |       |   |                                                              |   |       |       |  |   |        |   |  |      |       |   |       |   |     |   |  |   |      
|Total interest expense        |  |                                                             | 1,047 |   |                                                              |   | 1,037 |       |  |   | 2,084  |   |  |      | 542   |   |       |   | 281 |   |  |   | 823  
|                              |  |                                                             |       |   |                                                              |   |       |       |  |   |        |   |  |      |       |   |       |   |     |   |  |   |      
|Net interest income (expense) |  | $                                                           | 1,145 |   |                                                              | $ | (69   | )     |  | $ | 1,076  |   |  | $    | 673   |   |       | $ | (62 | ) |  | $ | 611  
|                              |  |                                                             |       |   |                                                              |   |       |       |  |   |        |   |  |      |       |   |       |   |     |   |  |   |      

Comparison of Financial Condition at June 30, 2006 and 2005

The Companys total assets increased by $17 million during the year ended June 30, 2006 from $195.7 million at June 30, 2005 to $212.7 million at
June 30, 2006. Funding for this growth was provided principally by an increase in customer certificates of deposits and borrowings from the Federal Home Loan Bank of Atlanta and federal funds purchased.

The increase in total assets was principally due to growth in loans. Loans increased $21.5 million from $155.7 million at June 30, 2005 to $177.2 million at
June 30, 2006. The loan portfolio is still predominately comprised of real estate loans. Commercial loans, including commercial real estate loans, increased from $53.6 million to $69.1 million during the year. Of this growth in loans, $11.1
million was the result of entering into participation agreements with other financial institutions. This growth was partially offset by the sale of approximately $11.1 million of Monthly Medium Cost of Funds SAIF Index loans during the first
calendar quarter of 2006. SAIF Index loans are adjustable rate mortgage loans tied to a lagging market index. These types of loans are no longer offered by the Bank and were priced significantly below market rate. Funding for loan growth was
provided by a combination of long-term FHLB borrowings and customer certificate of deposits.

Total deposits increased by $14.8 million, with the majority
of funds contributed by local market certificate of deposit customers.



- 7 -



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis

During the year ended June 30, 2006, total
stockholders equity did not change significantly, as approximately $1.1 million of the $1.6 million in net income for 2006 was paid out in dividends. This represents $0.64 per share compared with $0.635 per share for the previous fiscal year.
At June 30, 2006 the Bank continued to exceed all applicable regulatory capital requirements.

Comparison of Results of
Operations for the Years Ended June 30, 2006 and 2005

Net Income. Net income for the year ended June 30, 2006, was $1.6 million, or
diluted net income per share of $0.92, as compared with net income of $1.2 million, or $0.68 per diluted share, for the year ended June 30, 2005.

Net
Interest Income. Net interest income for the year ended June 30, 2006 was $6.9 million as compared with $5.8 million during the year ended June 30, 2005, an increase of $1.1 million. Average total interest earning assets were $210.3
million in 2006 compared with $176.6 million during 2005 while the weighted average yield on those assets increased 61 basis points from 5.89% to 6.50% as a result of a sustained trend of higher interest rates during the 2006 fiscal year. This
upward trend in rates resulted in a significant increase in our loan portfolio yields. The Companys interest rate spread decreased from 3.08% for the year ended June 30, 2005, to 3.02% for the year ended June 30, 2006, as a result of
the repricing of interest bearing liabilities during the 2006 fiscal year. The recent increases in short term rates caused the weighted average cost of interest-bearing liabilities to increase by 67 basis points. The Companys net yield on
average interest-earnings assets decreased from 3.50% for fiscal 2005 to 3.46% for fiscal 2006.

Provision for Loan Losses.The provision for loan
losses was $363,000 for the year ended June 30, 2006 compared with $192,000 for the year ended June 30, 2005. The growth in loans receivable during the year ended June 30, 2006 of $21.5 million increased 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). Loans grew despite the sale of approximately $11.1 million dollars of Monthly Medium Cost of Funds
SAIF Index loans during the first calendar quarter of 2006. 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 year ended June 30, 2006, were $55,000 compared to the net charge-offs for the year ended June 30, 2005 of $131,000. The following table provides an analysis for loan losses for the years ended June 30, 2006 and
2005, respectively. Allowance for loan losses stood at $1.9 million at the 2006 fiscal year end. At June 30, 2006, non-accrual loans aggregated $555,000, compared to $1.1 million at June 30, 2005.



- 8 -



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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 last five years.



|                                                                                        |  |                             |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|--------------------------------------------------------------------------------------- |  | --------------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | - |  | ---- | ----- | - |  | - | ----- | -
|                                                                                        |  | For the Year Ended June 30, |      
|                                                                                        |  | 2006                        |       |   | 2005 |   |       | 2004 |  |   | 2003  |   |  | 2002 |      
|                                                                                        |  | (Dollars in thousands)      |      
|Balance at the beginning of the year                                                    |  | $                           | 1,593 |   |      | $ | 1,532 |      |  | $ | 1,416 |   |  | $    | 1,066 |   |  | $ | 570   |  
|                                                                                        |  |                             |       |   |     
|Charge-offs:                                                                            |  |                             |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Real estate mortgage                                                                    |  |                             | (7    | ) |      |   | (49   | )    |  |   | (205  | ) |  |      | (15   | ) |  |   |      |  
|Installment loans to individuals                                                        |  |                             | (78   | ) |      |   | (121  | )    |  |   | (85   | ) |  |      | (37   | ) |  |   | (4    | )
|                                                                                        |  |                             |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|                                                                                        |  |                             | (85   | ) |      |   | (170  | )    |  |   | (290  | ) |  |      | (52   | ) |  |   | (4    | )
|                                                                                        |  |                             |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Recoveries:                                                                             |  |                             |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Real estate mortgage                                                                    |  |                             | 1     |   |      |   | 23    |      |  |   | 28    |   |  |      | 2     |   |  |   |      |  
|Installment loans to individuals                                                        |  |                             | 29    |   |      |   | 16    |      |  |   | 3     |   |  |      |      |   |  |   |      |  
|                                                                                        |  |                             |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|                                                                                        |  |                             | 30    |   |      |   | 39    |      |  |   | 31    |   |  |      | 2     |   |  |   |      |  
|                                                                                        |  |                             |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Net charge-offs                                                                         |  |                             | (55   | ) |      |   | (131  | )    |  |   | (259  | ) |  |      | (50   | ) |  |   | (4    | )
|                                                                                        |  |                             |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Provision for loan losses                                                               |  |                             | 363   |   |      |   | 192   |      |  |   | 375   |   |  |      | 400   |   |  |   | 500   |  
|                                                                                        |  |                             |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Balance at end of year                                                                  |  | $                           | 1,901 |   |      | $ | 1,593 |      |  | $ | 1,532 |   |  | $    | 1,416 |   |  | $ | 1,066 |  
|                                                                                        |  |                             |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Ratio of net charge-offs during the period to average loans outstanding during the year |  |                             | 0.03  | % |      |   | 0.10  | %    |  |   | 0.23  | % |  |      | 0.04  | % |  |   | 0.00  | %

Non-Interest Income. Non-interest income decreased $152,000 from $941,000 in fiscal 2005 to $789,000 in fiscal
2006. Service fees and charges increased by $53,000 to $517,000, principally as a result of an increase in checking accounts during the fiscal year. Income from the Companys brokerage services increased significantly, from $212,000 to $317,000
for the years ended June 30, 2005 and 2006 respectively as a result of our two Investment Services professionals who facilitated our brokerage fee increase. Increases in non-interest income were offset by a loss of $144,000 on sale of
investment securities. Fiscal 2005 results included a gain of $91,000 from the sale of real-estate owned. Gross loans of $23.5 million were sold during fiscal 2006, resulting in gains of $95,000. The loans sold in 2006 included $11.1 million in low
yielding SAIF loans with a resulting loss of $39,000. This compares to loans sold of $11.6 million and gains of $165,000 the previous fiscal year.

Non-Interest Expenses. Non-interest expenses did not change significantly for the year ended June 30, 2006 when compared to the year ended June 30, 2005. Increases in occupancy and data processing costs of $24,000 and $83,000 were
partially offset by decreases in personnel and advertising costs of $39,000 and $44,000. Other non-interest expenses decreased $26,000 during the year ended June 30, 2006, due to decreases in other professional expenses related to the incentive
sales program.



- 9 -



---

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.



|                                                  |  |                             |        |   |      |   |        |      |  |   |       |   |  |      |       |   |  |   |       |  
|------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ----- | - |  | ---- | ----- | - |  | - | ----- | -
|                                                  |  | For the Year Ended June 30, |       
|                                                  |  | 2006                        |        |   | 2005 |   |        | 2004 |  |   | 2003  |   |  | 2002 |      
|                                                  |  | (Dollars in thousands)      |       
|Non-accrual loans                                 |  | $                           | 555    |   |      | $ | 1,106  |      |  | $ | 2,155 |   |  | $    | 2,252 |   |  | $ | 1,079 |  
|Restructured loans                                |  |                             |       |   |      |   |       |      |  |   |      |   |  |      |      |   |  |   |      |  
|                                                  |  |                             |        |   |      |   |        |      |  |   |       |   |  |      |       |   |  |   |       |  
|Total non-performing loans                        |  |                             | 555    |   |      |   | 1,106  |      |  |   | 2,155 |   |  |      | 2,252 |   |  |   | 1,079 |  
|Real estate owned                                 |  |                             | 110    |   |      |   | 183    |      |  |   | 510   |   |  |      | 36    |   |  |   | 50    |  
|                                                  |  |                             |        |   |      |   |        |      |  |   |       |   |  |      |       |   |  |   |       |  
|Total non-performing assets                       |  | $                           | 665    |   |      | $ | 1,289  |      |  | $ | 2,665 |   |  | $    | 2,288 |   |  | $ | 1,129 |  
|                                                  |  |                             |        |   |      |   |        |      |  |   |       |   |  |      |       |   |  |   |       |  
|Accruing loans past due 90 days or more           |  | $                           |       |   |      | $ |       |      |  | $ |      |   |  | $    |      |   |  | $ |      |  
|Allowance for loan losses                         |  |                             | 1,901  |   |      |   | 1,593  |      |  |   | 1,532 |   |  |      | 1,416 |   |  |   | 1,066 |  
|Non-performing loans to period end loans          |  |                             | 0.31   | % |      |   | 0.71   | %    |  |   | 1.86  | % |  |      | 2.06  | % |  |   | .97   | %
|Allowance for loan losses to period end loans     |  |                             | 1.07   | % |      |   | 1.02   | %    |  |   | 1.32  | % |  |      | 1.29  | % |  |   | .96   | %
|Allowance for loan losses to non-performing loans |  |                             | 342.45 | % |      |   | 144.03 | %    |  |   | 71.09 | % |  |      | 62.86 | % |  |   | 98.81 | %
|Non-performing assets to total assets             |  |                             | 0.31   | % |      |   | 0.66   | %    |  |   | 1.70  | % |  |      | 1.60  | % |  |   | .86   | %



- 10 -



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

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

Loans are also placed on non-accrual status in cases where it is
uncertain as to whether the borrower can satisfy the contractual terms of the loan agreement. Amounts received on non-accrual loans generally are applied first to interest and then to principal only after all past due interest has been collected.
Restructured loans are those for which concessions, including the reduction of interest rates below a rate otherwise available to that borrower or the deferral of interest or principal have been granted due to the borrowers weakened financial
condition. Interest is accrued on restructured loans at the restructured rates when it is anticipated that no loss of original principal will occur. Interest income on non-accrual loans that would have been recorded for the years ended June 30,
2006 and 2005 had the loans been current was approximately $30,000 and $50,000, respectively. No such interest income on non-accrual loans was included in interest income for the fiscal year ended June 30, 2006 or 2005.

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 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.



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis

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.

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

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



|                                     |  |                     |       |                                                |                     |   |        |                     |                                                |  |        |        |  |                                                |       |  |        |  
|------------------------------------ |  | ------------------- | ----- | ---------------------------------------------- | ------------------- | - | ------ | ------------------- | ---------------------------------------------- |  | ------ | ------ |  | ---------------------------------------------- | ----- |  | ------ | -
|                                     |  | As of June 30, 2006 |       |                                                | As of June 30, 2005 |   |        | As of June 30, 2004 |                                               
|                                     |  | Amount              |       | Percent of loans ineachcategory to total loans |                     |   | Amount |                     | Percent of loans ineachcategory to total loans |  |        | Amount |  | Percent of loans ineachcategory to total loans |      
|Commercial, Financial & Agricultural |  | $                   | 100   |                                                | 4.38                | % |        | $                   | 125                                            |  | 6.46   | %      |  | $                                              | 118   |  | 7.90   | %
|Real Estate - construction           |  |                     | 208   |                                                | 15.54               | % |        |                     | 59                                             |  | 13.23  | %      |  |                                                | 31    |  | 6.32   | %
|Real Estate - mortgage               |  |                     | 1,225 |                                                | 77.14               | % |        |                     | 1,019                                          |  | 77.41  | %      |  |                                                | 875   |  | 81.74  | %
|Installment loans to individuals     |  |                     | 89    |                                                | 2.63                | % |        |                     | 154                                            |  | 2.75   | %      |  |                                                | 167   |  | 3.83   | %
|Other                                |  |                     | 51    |                                                | 0.31                | % |        |                     | 33                                             |  | 0.15   | %      |  |                                                | 9     |  | 0.21   | %
|Unallocated                          |  |                     | 228   |                                                | N/A                 |   |        |                     | 203                                            |  | N/A    |        |  |                                                | 332   |  | N/A    |  
|                                     |  |                     |       |                                                |                     |   |        |                     |                                                |  |        |        |  |                                                |       |  |        |  
|                                     |  | $                   | 1,901 |                                                | 100.00              | % |        | $                   | 1,593                                          |  | 100.00 | %      |  | $                                              | 1,532 |  | 100.00 | %
|                                     |  |                     |       |                                                |                     |   |        |                     |                                                |  |        |        |  |                                                |       |  |        |  



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis



|                                     |  |                     |       |                                                |                     |   |        |   |                                                |  |        |  
|------------------------------------ |  | ------------------- | ----- | ---------------------------------------------- | ------------------- | - | ------ | - | ---------------------------------------------- |  | ------ | -
|                                     |  | As of June 30, 2003 |       |                                                | As of June 30, 2002 |  
|                                     |  | Amount              |       | Percent of loans ineachcategory to total loans |                     |   | Amount |   | Percent of loans ineachcategory to total loans | 
|Commercial, Financial & Agricultural |  | $                   | 339   |                                                | 5.50                | % |        | $ | 229                                            |  | 6.08   | %
|Real Estate  construction           |  |                     |      |                                                | 2.12                | % |        |   |                                               |  | 5.91   | %
|Real Estate  mortgage               |  |                     | 824   |                                                | 84.58               | % |        |   | 623                                            |  | 80.26  | %
|Installment loans to individuals     |  |                     | 86    |                                                | 7.00                | % |        |   | 81                                             |  | 7.45   | %
|Other                                |  |                     | 29    |                                                | .80                 | % |        |   |                                               |  | .30    | %
|Unallocated                          |  |                     | 138   |                                                | N/A                 |   |        |   | 133                                            |  | N/A    |  
|                                     |  |                     |       |                                                |                     |   |        |   |                                                |  |        |  
|                                     |  | $                   | 1,416 |                                                | 100.00              | % |        | $ | 1,066                                          |  | 100.00 | %
|                                     |  |                     |       |                                                |                     |   |        |   |                                                |  |        |  

Liquidity and Capital Resources

During the year ended June 30, 2006, Great Pee Dee paid total cash dividends of $0.64 per share or approximately $1.1 million. Although Great Pee Dee anticipates
that it will continue to declare cash dividends on a regular basis, 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, 2006, liquid assets (cash, interest-earning deposits, federal funds sold and investment securities) were approximately $25.2 million, which represents 16.7% of deposits. At that date, outstanding
loan commitments were $1.7 million, the un-disbursed portion of construction loans was $5.4 million and un-drawn lines of credit totaled $8.5 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 $18 million in brokered CDs at
June 30, 2006. Supplementing these liquidity sources, the Bank has available lines of credit from various correspondent banks to purchase federal funds on a short-term basis of approximately $8.1 million. As of June 30, 2006, no borrowings
were outstanding against these lines of credit. The Bank also has the ability to borrow up to $53.2 million from the FHLB of Atlanta. As of June 30, 2006, $33.1 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, 2006 and 2005, Sentry exceeded
all such requirements.



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis

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 2006, a $600,000 dividend was paid by the Bank to Great Pee Dee. At June 30, 2006, notification is required
by Office of Thrift Supervision for any payment of dividends from Sentry Bank & Trust to Great Pee Dee.

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 expected to be applicable to the Company under proposed rules for the fiscal year ending June 30, 2009. Implementation
is scheduled to begin during fiscal 2008 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 of America. The preparation of these consolidated financial statements requires the Company to make estimates and judgments
regarding uncertainties that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, the Company evaluates its estimates which are based upon historical experience and on other assumptions that are believed to
be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

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



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis

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

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

Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case
basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrowers prior payment record, and the amount of the shortfall in relation to
the principal and interest owed. Impairment is measured on a loan by loan basis 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.

Interest Income Recognition

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

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

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



- 15 -



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Great Pee Dee Bancorp, Inc. and Subsidiary

Managements Discussion and Analysis

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, 2006, 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, 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.



- 16 -



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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, 2006 and 2005 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, 2006 and 2005, 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, 2006



- 17 -



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

June 30, 2006 and 2005



|                                                                                           |  |      |             |   |      |   |             |  
|------------------------------------------------------------------------------------------ |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                           |  | 2006 |             |   | 2005 |  
|ASSETS                                                                                     |  |      |             |   |      |   |             |  
|Cash on hand and due from banks                                                            |  | $    | 3,354,586   |   |      | $ | 1,600,734   |  
|Interest-earning balances in other banks                                                   |  |      | 488,193     |   |      |   | 432,266     |  
|Federal funds sold                                                                         |  |      | 858,000     |   |      |   |            |  
|                                                                                           |  |      |             |   |      |   |             |  
|Cash and cash equivalents                                                                  |  |      | 4,700,779   |   |      |   | 2,033,000   |  
|                                                                                           |  |     
|Investment securities available for sale, at fair value (Note B)                           |  |      | 20,487,474  |   |      |   | 28,778,830  |  
|                                                                                           |  |     
|Loans (Note C)                                                                             |  |      | 177,175,621 |   |      |   | 155,724,356 |  
|Allowance for loan losses                                                                  |  |      | (1,901,034  | ) |      |   | (1,593,223  | )
|                                                                                           |  |      |             |   |      |   |             |  
|Net Loans                                                                                  |  |      | 175,274,587 |   |      |   | 154,131,133 |  
|                                                                                           |  |     
|Loans held for sale                                                                        |  |      | 958,150     |   |      |   | 1,115,600   |  
|Accrued interest receivable                                                                |  |      | 1,026,733   |   |      |   | 889,789     |  
|Restricted stock, at cost                                                                  |  |      | 1,997,787   |   |      |   | 1,680,787   |  
|Premises and equipment, net (Note D)                                                       |  |      | 5,017,468   |   |      |   | 4,098,488   |  
|Real estate acquired in settlement of loans                                                |  |      | 109,500     |   |      |   | 183,324     |  
|Intangible assets (Note E)                                                                 |  |      | 678,610     |   |      |   | 863,410     |  
|Other assets (Note J)                                                                      |  |      | 2,455,230   |   |      |   | 1,972,069   |  
|                                                                                           |  |      |             |   |      |   |             |  
|TOTAL ASSETS                                                                               |  | $    | 212,706,318 |   |      | $ | 195,746,430 |  
|                                                                                           |  |      |             |   |      |   |             |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                       |  |      |             |   |      |   |             |  
|                                                                                           |  |     
|LIABILITIES                                                                                |  |      |             |   |      |   |             |  
|Deposit accounts (Note F)                                                                  |  | $    | 151,339,258 |   |      | $ | 136,573,252 |  
|Short-term borrowings (Note G)                                                             |  |      | 9,500,000   |   |      |   | 8,448,000   |  
|Long-term borrowings (Note G)                                                              |  |      | 23,600,000  |   |      |   | 23,000,000  |  
|Accrued interest payable                                                                   |  |      | 287,356     |   |      |   | 190,734     |  
|Advance payments by borrowers for property taxes and insurance                             |  |      | 120,775     |   |      |   | 157,466     |  
|Accrued expenses and other liabilities                                                     |  |      | 1,319,337   |   |      |   | 1,120,503   |  
|                                                                                           |  |      |             |   |      |   |             |  
|TOTAL LIABILITIES                                                                          |  |      | 186,166,726 |   |      |   | 169,489,955 |  
|                                                                                           |  |      |             |   |      |   |             |  
|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                                                                 |  |      | 22,093,615  |   |      |   | 22,008,532  |  
|Unearned compensation (Note H)                                                             |  |      | (707,438    | ) |      |   | (872,774    | )
|Retained earnings, substantially restricted                                                |  |      | 11,746,235  |   |      |   | 11,242,041  |  
|Accumulated other comprehensive loss                                                       |  |      | (674,725    | ) |      |   | (387,823    | )
|Common stock in treasury, at cost (434,448 and 423,107 shares, respectively)               |  |      | (5,940,341  | ) |      |   | (5,755,747  | )
|                                                                                           |  |      |             |   |      |   |             |  
|TOTAL STOCKHOLDERS EQUITY                                                                 |  |      | 26,539,592  |   |      |   | 26,256,475  |  
|                                                                                           |  |      |             |   |      |   |             |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                 |  | $    | 212,706,318 |   |      | $ | 195,746,430 |  
|                                                                                           |  |      |             |   |      |   |             |  

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



- 18 -



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended June 30, 2006 and 2005



|                                                    |  |      |            |   |      |   |          
|--------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------
|                                                    |  | 2006 |            |   | 2005
|INTEREST INCOME                                     |  |      |            |   |      |   |          
|Loans                                               |  | $    | 11,727,494 |   |      | $ | 8,578,890
|Investments                                         |  |      | 1,093,238  |   |      |   | 1,080,925
|Deposits in other banks and federal funds sold      |  |      | 84,996     |   |      |   | 86,178   
|                                                    |  |      |            |   |      |   |          
|TOTAL INTEREST INCOME                               |  |      | 12,905,728 |   |      |   | 9,745,993
|                                                    |  |      |            |   |      |   |          
|INTEREST EXPENSE                                    |  |      |            |   |      |   |          
|Deposits (Note F)                                   |  |      | 4,755,585  |   |      |   | 3,169,322
|Short-term borrowings                               |  |      | 213,342    |   |      |   | 119,551  
|Long-term borrowings                                |  |      | 1,068,922  |   |      |   | 664,558  
|                                                    |  |      |            |   |      |   |          
|TOTAL INTEREST EXPENSE                              |  |      | 6,037,849  |   |      |   | 3,953,431
|                                                    |  |      |            |   |      |   |          
|NET INTEREST INCOME                                 |  |      | 6,867,879  |   |      |   | 5,792,562
|                                                    |  |     
|PROVISION FOR LOAN LOSSES (Note C)                  |  |      | 362,500    |   |      |   | 192,000  
|                                                    |  |      |            |   |      |   |          
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |  |      | 6,505,379  |   |      |   | 5,600,562
|                                                    |  |      |            |   |      |   |          
|NON-INTEREST INCOME                                 |  |      |            |   |      |   |          
|Service fees and charges                            |  |      | 516,863    |   |      |   | 463,728  
|Gain on sales of loans held for sale                |  |      | 94,721     |   |      |   | 164,688  
|Brokerage operations                                |  |      | 316,650    |   |      |   | 212,255  
|Loss on sale of investment securities               |  |      | (143,640   | ) |      |   |         
|Other                                               |  |      | 4,114      |   |      |   | 100,286  
|                                                    |  |      |            |   |      |   |          
|TOTAL NON-INTEREST INCOME                           |  |      | 788,708    |   |      |   | 940,957  
|                                                    |  |      |            |   |      |   |          
|NON-INTEREST EXPENSES                               |  |      |            |   |      |   |          
|Personnel costs                                     |  |      | 2,337,312  |   |      |   | 2,376,561
|Occupancy                                           |  |      | 577,286    |   |      |   | 552,548  
|Data processing                                     |  |      | 495,455    |   |      |   | 412,547  
|Amortization of intangibles                         |  |      | 184,800    |   |      |   | 184,800  
|Advertising                                         |  |      | 107,659    |   |      |   | 152,152  
|Stockholder relations cost                          |  |      | 229,265    |   |      |   | 198,680  
|Other                                               |  |      | 820,475    |   |      |   | 846,012  
|                                                    |  |      |            |   |      |   |          
|TOTAL NON-INTEREST EXPENSES                         |  |      | 4,752,252  |   |      |   | 4,723,300
|                                                    |  |      |            |   |      |   |          
|INCOME BEFORE INCOME TAXES                          |  |      | 2,541,835  |   |      |   | 1,818,219
|                                                    |  |     
|INCOME TAXES (Note J)                               |  |      | 942,984    |   |      |   | 654,525  
|                                                    |  |      |            |   |      |   |          
|NET INCOME                                          |  | $    | 1,598,851  |   |      | $ | 1,163,694
|                                                    |  |      |            |   |      |   |          
|EARNINGS PER COMMON SHARE (Note A)                  |  |      |            |   |      |   |          
|Basic                                               |  | $    | 0.93       |   |      | $ | 0.68     
|                                                    |  |      |            |   |      |   |          
|Diluted                                             |  | $    | 0.92       |   |      | $ | 0.68     
|                                                    |  |      |            |   |      |   |          
|WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (Note A) |  |      |            |   |      |   |          
|Basic                                               |  |      | 1,722,867  |   |      |   | 1,713,429
|Diluted                                             |  |      | 1,729,891  |   |      |   | 1,720,797

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



- 19 -



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

Years Ended June 30, 2006 and 2005



|                                                                    |                        |           |             |         |   |  |                          |        |                            |   |            |                       |  |   |                   |   |  |                                      |            |   |                |   |          |                            |  |   |            |   |  |   |            |  
|------------------------------------------------------------------- | ---------------------- | --------- | ----------- | ------- | - |  | ------------------------ | ------ | -------------------------- | - | ---------- | --------------------- |  | - | ----------------- | - |  | ------------------------------------ | ---------- | - | -------------- | - | -------- | -------------------------- |  | - | ---------- | - |  | - | ---------- | -
|                                                                    |                        |           |             |         |   |  | Par valueof common
stock |        | Additional paid-in capital |   |            | Unearned compensation |  |   | Retained earnings |   |  | Accumulated other comprehensive loss |            |   | Treasury stock |   |          | Total stockholders equity | 
|                                                                    |                        |           |             |         |   |  |                          |       
|                                                                    | Shares of common stock |           |             |         |   |  |                          |        |                           
|                                                                    | Issued                 |           | In treasury |         |   |  |                          |        |                            |   |           
|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 |  
|Comprehensive income:                                               |                        |           |             |         |   |  |                          |        |                            |   |            |                       |  |   |                   |   |  |                                      |            |   |                |   |          |                            |  |   |            |   |  |   |            |  
|Net income                                                          |                        |          |             |        |   |  |                          |       |                            |   |           |                       |  |   |                  |   |  |                                      | 1,598,851  |   |                |   |         |                            |  |   |           |   |  |   | 1,598,851  |  
|Change in accumulated other comprehensive loss, net of income taxes |                        |          |             |        |   |  |                          |       |                            |   |           |                       |  |   |                  |   |  |                                      |           |   |                |   | (286,902 | )                          |  |   |           |   |  |   | (286,902   | )
|                                                                    |                        |           |             |         |   |  |                          |        |                            |   |            |                       |  |   |                   |   |  |                                      |            |   |                |   |          |                            |  |   |            |   |  |   |            |  
|Total comprehensive income                                          |                        |           |             |         |   |  |                          |        |                            |   |            |                       |  |   |                   |   |  |                                      |            |   |                |   |          |                            |  |   |            |   |  |   | 1,311,949  |  
|                                                                    |                        |           |             |         |   |  |                          |        |                            |   |            |                       |  |   |                   |   |  |                                      |            |   |                |   |          |                            |  |   |            |   |  |   |            |  
|Purchase of treasury stock                                          |                        |          |             | 12,886  |   |  |                          |       |                            |   |           |                       |  |   |                  |   |  |                                      |           |   |                |   |         |                            |  |   | (200,319   | ) |  |   | (200,319   | )
|Exercise of stock options                                           |                        |          |             | (1,545  | ) |  |                          |       |                            |   | (9,600     | )                     |  |   |                  |   |  |                                      |           |   |                |   |         |                            |  |   | 15,725     |   |  |   | 6,125      |  
|RRP and incentive shares earned                                     |                        |          |             |        |   |  |                          |       |                            |   |           |                       |  |   | 50,131            |   |  |                                      |           |   |                |   |         |                            |  |   |           |   |  |   | 50,131     |  
|Release of ESOP shares                                              |                        |          |             |        |   |  |                          |       |                            |   | 87,940     |                       |  |   | 115,205           |   |  |                                      |           |   |                |   |         |                            |  |   |           |   |  |   | 203,145    |  
|Tax benefit of stock option exercise                                |                        |          |             |        |   |  |                          |       |                            |   | 6,743      |                       |  |   |                  |   |  |                                      |           |   |                |   |         |                            |  |   |           |   |  |   | 6,743      |  
|Cash dividends paid ($0.64 per share)                               |                        |          |             |        |   |  |                          |       |                            |   |           |                       |  |   |                  |   |  |                                      | (1,094,657 | ) |                |   |         |                            |  |   |           |   |  |   | (1,094,657 | )
|                                                                    |                        |           |             |         |   |  |                          |        |                            |   |            |                       |  |   |                   |   |  |                                      |            |   |                |   |          |                            |  |   |            |   |  |   |            |  
|Balance at June 30, 2006                                            |                        | 2,224,617 |             | 434,448 |   |  | $                        | 22,246 |                            | $ | 22,093,615 |                       |  | $ | (707,438          | ) |  | $                                    | 11,746,235 |   |                | $ | (674,725 | )                          |  | $ | (5,940,341 | ) |  | $ | 26,539,592 |  
|                                                                    |                        |           |             |         |   |  |                          |        |                            |   |            |                       |  |   |                   |   |  |                                      |            |   |                |   |          |                            |  |   |            |   |  |   |            |  

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



- 20 -



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended June 30, 2006 and 2005



|                                                                                      |  |      |             |   |      |   |             |  
|------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                      |  | 2006 |             |   | 2005 |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                  |  |      |             |   |      |   |             |  
|Net income                                                                            |  | $    | 1,598,851   |   |      | $ | 1,163,694   |  
|Adjustments to reconcile net income to net cash provided by operating activities:     |  |      |             |   |      |   |             |  
|Depreciation                                                                          |  |      | 324,759     |   |      |   | 321,242     |  
|Amortization of intangibles                                                           |  |      | 184,800     |   |      |   | 184,800     |  
|Provision for loan losses                                                             |  |      | 362,500     |   |      |   | 192,000     |  
|Gain on sale of foreclosed real estate                                                |  |      | (1,428      | ) |      |   | (90,781     | )
|Loss on sale of investment securities                                                 |  |      | 143,640     |   |      |   |            |  
|Gain on sale of loans held for sale                                                   |  |      | (94,721     | ) |      |   | (164,688    | )
|Deferred income taxes                                                                 |  |      | (166,058    | ) |      |   | 44,997      |  
|ESOP contribution expense                                                             |  |      | 203,145     |   |      |   | 211,678     |  
|Vesting of recognition and retention and incentive plans                              |  |      | 50,131      |   |      |   | 62,380      |  
|Proceeds from sales of loans held for sale                                            |  |      | 23,505,769  |   |      |   | 11,592,576  |  
|Originations of loans held for sale                                                   |  |      | (12,066,598 | ) |      |   | (11,233,068 | )
|Change in assets and liabilities:                                                     |  |      |             |   |      |   |             |  
|Increase in accrued interest receivable                                               |  |      | (136,944    | ) |      |   | (311,353    | )
|Increase in other assets                                                              |  |      | (138,459    | ) |      |   | (725,955    | )
|Increase in accrued interest payable                                                  |  |      | 96,622      |   |      |   | 100,148     |  
|Increase in accrued expenses and other liabilities                                    |  |      | 198,834     |   |      |   | 969,299     |  
|                                                                                      |  |      |             |   |      |   |             |  
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                             |  |      | 14,064,843  |   |      |   | 2,316,969   |  
|                                                                                      |  |      |             |   |      |   |             |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                  |  |      |             |   |      |   |             |  
|Purchases of available for sale investments                                           |  |      | (289,205    | ) |      |   | (6,473,469  | )
|Proceeds from maturities, calls and sales of available for sale investment securities |  |      | 7,971,375   |   |      |   | 6,076,157   |  
|Proceeds from the sale of land                                                        |  |      | 150,000     |   |      |   |            |  
|Purchase of restricted stock                                                          |  |      | (317,000    | ) |      |   | (556,487    | )
|Redemption of restricted stock                                                        |  |      |            |   |      |   |            |  
|Net increase in loans                                                                 |  |      | (32,840,129 | ) |      |   | (39,767,455 | )
|Purchase of premises and equipment                                                    |  |      | (1,393,739  | ) |      |   | (143,643    | )
|Proceeds from sale of real estate acquired in settlement of loans                     |  |      | 222,428     |   |      |   | 153,541     |  
|                                                                                      |  |      |             |   |      |   |             |  
|NET CASH USED BY INVESTING ACTIVITIES                                                 |  |      | (26,496,270 | ) |      |   | (40,711,356 | )
|                                                                                      |  |      |             |   |      |   |             |  

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



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended June 30, 2006 and 2005



|                                                                                                                     |  |      |            |   |      |   |            |  
|-------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                                                                     |  | 2006 |            |   | 2005 |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                                                                 |  |      |            |   |      |   |            |  
|Net decrease in demand accounts                                                                                      |  | $    | (4,761,598 | ) |      | $ | (2,160,820 | )
|Net increase in certificates of deposit                                                                              |  |      | 19,527,604 |   |      |   | 29,788,830 |  
|Increase (decrease) in advance payments by borrowers for taxes and insurance                                         |  |      | (36,692    | ) |      |   | 40,269     |  
|Net increase in short-term borrowings                                                                                |  |      | 1,052,000  |   |      |   | 5,448,000  |  
|Proceeds from long-term borrowings                                                                                   |  |      | 600,000    |   |      |   | 5,000,000  |  
|Purchase of treasury stock                                                                                           |  |      | (200,319   | ) |      |   | (807,209   | )
|Proceeds from exercise of stock options                                                                              |  |      | 6,125      |   |      |   | 218,461    |  
|Tax benefit from exercise of non-qualified stock options                                                             |  |      | 6,743      |   |      |   | 104,812    |  
|Cash dividends paid                                                                                                  |  |      | (1,094,657 | ) |      |   | (1,084,022 | )
|                                                                                                                     |  |      |            |   |      |   |            |  
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                                                            |  |      | 15,099,206 |   |      |   | 36,548,321 |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                                 |  |      | 2,667,779  |   |      |   | (1,846,066 | )
|CASH AND CASH EQUIVALENTS, BEGINNING                                                                                 |  |      | 2,033,000  |   |      |   | 3,879,066  |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|CASH AND CASH EQUIVALENTS, ENDING                                                                                    |  | $    | 4,700,779  |   |      | $ | 2,033,000  |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                                                                    |  |      |            |   |      |   |            |  
|Cash paid during the year for:                                                                                       |  |      |            |   |      |   |            |  
|Interest                                                                                                             |  | $    | 5,941,227  |   |      | $ | 3,853,283  |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|Income taxes                                                                                                         |  | $    | 986,500    |   |      | $ | 304,000    |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES                                                 |  |      |            |   |      |   |            |  
|Loans receivable transferred to real estate acquired in settlement of loans                                          |  | $    | 362,026    |   |      | $ | 256,417    |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|Loans receivable originated to finance the sale of foreclosed real estate sold                                       |  | $    | 214,850    |   |      | $ | 519,884    |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|Net unrealized gain (loss) on investment securities available for sale, net of deferred income tax expense (benefit) |  | $    | (286,902   | ) |      | $ | 335,577    |  
|                                                                                                                     |  |      |            |   |      |   |            |  
|Reclassification of loans to loans held for sale                                                                     |  | $    | 11,187,000 |   |      | $ |           |  
|                                                                                                                     |  |      |            |   |      |   |            |  

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



- 22 -



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006 and 2005

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.



- 23 -



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006 and 2005

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.

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.



- 24 -



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006 and 2005

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.



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006 and 2005

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. This includes our most recent purchase of land for the construction of a new branch office facility in Florence, South Carolina.

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 estimated selling costs. Losses arising at the time of acquisition of foreclosed properties are charged against the allowance for loan losses. Subsequent gains and losses are provided by a charge to income in the period in which the
need arises.



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006 and 2005

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, ending June 30, 2010.

Income Taxes

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

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

A deferred tax liability is not recognized for portions of the allowance for loan losses for income
tax purposes in excess of the financial statement balance, as described in Note 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.



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006 and 2005

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 loans held for sale are recognized at the time of sale to a
third-party and the loan is derecognized. See the policy note on loans held for sale for additional information. Investment services revenue is recognized monthly based upon commission remittances from our clearing broker.

Advertising Expense

Advertising and
public relations costs are generally expensed as incurred. External costs incurred in producing media advertising are expensed the first time the advertising takes place. External costs relating to direct mailing costs are expensed in the period in
which the direct mailings are sent. Advertising and public relations costs of $107,659 and $152,152 were included in the Companys results of operations for 2006 and 2005, respectively.

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, 2006 and 2005 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.



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006 and 2005

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock Compensation Plans (Continued)

The following table illustrates the effect on net income and earnings per share
as if the Company had applied the fair value recognition provisions of Financial Accounting Standards Board (FASB) SFAS No. 123 Accounting for Stock-Based Compensation,to stock-based employee compensation.



|                                                                                                                                        |  |                                              |       |   |      |   |       |  
|--------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------- | ----- | - | ---- | - | ----- | -
|                                                                                                                                        |  | 2006                                         |       |   | 2005 |  
|                                                                                                                                        |  | (Amounts in thousands,except per share data) |      
|Net income:                                                                                                                             |  |                                              |       |   |      |   |       |  
|As reported                                                                                                                             |  | $                                            | 1,599 |   |      | $ | 1,164 |  
|Deduct: Total stock-based employee compensation expenses determined under fair value method for all amounts, net of related tax
effects |  |                                              | (3    | ) |      |   | (118  | )
|                                                                                                                                        |  |                                              |       |   |      |   |       |  
|Pro forma                                                                                                                               |  | $                                            | 1,596 |   |      | $ | 1,046 |  
|                                                                                                                                        |  |                                              |       |   |      |   |       |  
|Basic net income per share:                                                                                                             |  |                                              |       |   |      |   |       |  
|As reported                                                                                                                             |  | $                                            | 0.93  |   |      | $ | 0.68  |  
|Pro forma                                                                                                                               |  |                                              | 0.93  |   |      |   | 0.61  |  
|                                                                                                                                        |  |                                             
|Diluted net income per share:                                                                                                           |  |                                              |       |   |      |   |       |  
|As reported                                                                                                                             |  | $                                            | 0.92  |   |      | $ | 0.68  |  
|Pro forma                                                                                                                               |  |                                              | 0.92  |   |      |   | 0.61  |  

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. Anti-dilutive options have
been excluded form the computation. 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,
|                                                                                                |  | 2006                 |  | 2005     
|Average number of common shares outstanding used to calculate basic earnings per common share   |  | 1,722,867            |  | 1,713,429
|Effect of dilutive options                                                                      |  | 7,024                |  | 7,368    
|                                                                                                |  |                      |  |          
|Average number of common shares outstanding used to calculate diluted earnings per common share |  | 1,729,891            |  | 1,720,797
|                                                                                                |  |                      |  |          



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006 and 2005

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Comprehensive Income

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

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



|                                                                   |  |      |          |   |      |   |          |  
|------------------------------------------------------------------ |  | ---- | -------- | - | ---- | - | -------- | -
|                                                                   |  | 2006 |          |   | 2005 |  
|Unrealized holding gains (losses) on available-for-sale securities |  | $    | (609,185 | ) |      | $ | 534,689  |  
|Tax effect                                                         |  |      | 233,763  |   |      |   | (199,112 | )
|                                                                   |  |     
|Reclassification adjustment for losses realized in income          |  |      | 143,640  |   |      |   |         |  
|Tax effect                                                         |  |      | (55,120  | ) |      |   |         |  
|                                                                   |  |      |          |   |      |   |          |  
|Net of tax amount                                                  |  | $    | (286,902 | ) |      | $ | 335,577  |  
|                                                                   |  |      |          |   |      |   |          |  

Recent Accounting Pronouncements

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

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



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006 and 2005

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements (Continued)

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

In December 2004, the FASB issued SFAS No. 123(R), Share Based Payment(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 from employees. 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 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. SFAS No. 123(R) allows for adoption using either the modified prospective or modified retrospective methods. Accordingly,
the Company anticipates using the modified prospective method when it adopts 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, 2006 and 2005 would have decreased by approximately $3,000 and $118,000 for the fiscal years ended June 30, 2006 and 2005, respectively. Accordingly, the adoption of
SFAS No. 123(R) is not expected to have a material effect on its consolidated financial statements.

In April 2005, the Securities and Exchange
Commissions Office of the Chief Accountant and its Division of Corporation Finance issued Staff Accounting Bulletin (SAB) No.107 to provide guidance regarding the application of SFAS No.123(R). SAB No. 107 provides
interpretive guidance related to the interaction between SFAS No.123(R) and certain SEC rules and regulations, as well as the staffs views regarding the valuation of share-based payment arrangements for public companies. SAB No. 107 also
reminds public companies of the importance of including disclosures within filings made with the SEC relating to the accounting for share-based payment transactions, particularly during the transition to SFAS No.123(R). This SAB is effective
concurrently with SFAS 123(R).



- 31 -



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006 and 2005

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements (Continued)

In March 2004, the FASB issued Emerging Issues Task Force
(EITF) Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments. EITF 03-01 provided guidance for evaluation whether an investment is other-than-temporarily
impaired and requires certain disclosures with respect to these investments. In September 2004, the Financial Accounting Standards Board (FASB) issued a FASB Staff Position (FSP EITF 03-1-b) to delay the requirement to record
impairment losses. The guidance also included accounting considerations subsequent to the recognition of an other-than-temporary impairment and requirements for disclosures about unrealized losses that have not been recognized as
other-than-temporary impairments. In November 2005, the FASB issued FSP FAS 115-1 and FAS 124-1 which addresses the determination as to when an investment is considered impaired. This FSP nullifies certain requirements of EITF 03-01 and supersedes
EITF Topic No. D-44, Recognition of Other-Than-Temporary Impairment upon the Planned Sale of a Security Whose Cost Exceeds Fair Value. This FSP is to be applied to reporting periods beginning after December 15, 2005. The
Company adopted FSP on January 1, 2006.

In December 2005, the FASB issued FSP SOP 94-6-1, Terms of Loan Products that May Give Rise to a
Concentration of Credit Risk. The disclosure guidance in this FSP is effective for interim and annual periods ending after December 19, 2005. The FSP states that the terms of certain loan products may increase a reporting
entitys exposure to credit risk and thereby may result in a concentration of credit risk as that term is used in SFAS No. 107, either as an individual product type or as a group of products with similar features. SFAS No. 107
requires disclosures about each significant concentration, including information about the (shared) activity, region, or economic characteristic that identifies the concentration. The FSP suggests possible shared characteristics on which
significant concentrations may be determined which include, but are not limited to: borrowers subject to significant payment increases, loans with terms that permit negative amortization and loans with high loan-to-value ratios. This FSP requires
entities to provide the disclosures required by SFAS No. 107 for loan products that are determined to represent a concentration of credit risk in accordance with the guidance of this FSP for all periods presented. The Company adopted this
disclosure standard effective June 30, 2006.

In May 2005, the FASB issued SFAS No. 154,Accounting Changes and Error Corrections 
a replacement of APB Opinion No. 20 and FASB Statement No. 3. SFAS No. 154 establishes retrospective application as the required method for reporting a change in accounting principle, unless it is impracticable, in which
case the changes should be applied to the latest practicable date presented. SFAS No. 154 also requires that a correction of an error be reported as a prior period adjustment by restating prior period financial statements. SFAS No. 154 is
effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.

In June 2006, the FASB issued FASB
Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes,an interpretation of FASB Statement No. 109. FIN 48 addresses the recognition and measurement of certain tax positions taken in the financial
statements of a business enterprise. It also includes certain financial statement disclosures around uncertain tax positions. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company has not yet evaluated the impact
of FIN 48 on its consolidated financial statements.



- 32 -



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006 and 2005

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Reclassifications

Certain items were reclassified in the June 30, 2005 financial statements to be
consistent with the June 30, 2006 presentation. The reclassifications had no impact upon net income or stockholders equity as previously recorded.

NOTE B - INVESTMENT SECURITIES

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



|                                   |  |               |            |                      |   |                       |  |            |           |  |   |           
|---------------------------------- |  | ------------- | ---------- | -------------------- | - | --------------------- |  | ---------- | --------- |  | - | ----------
|                                   |  | June 30, 2006
|                                   |  | Amortizedcost |            | Grossunrealizedgains |   | Grossunrealizedlosses |  | Fair value
|Securities available for sale:     |  |               |            |                      |   |                       |  |            |           |  |   |           
|Trust preferred securities         |  | $             | 519,421    |                      | $ | 160                   |  | $          | 25,154    |  | $ | 494,427   
|U. S. government agency securities |  |               | 5,400,000  |                      |   |                      |  |            | 116,344   |  |   | 5,283,656 
|Municipal securities               |  |               | 1,020,692  |                      |   |                      |  |            | 13,140    |  |   | 1,007,552 
|Mortgage-backed securities         |  |               | 14,626,549 |                      |   |                      |  |            | 924,710   |  |   | 13,701,839
|                                   |  |               |            |                      |   |                       |  |            |           |  |   |           
|                                   |  | $             | 21,566,662 |                      | $ | 160                   |  | $          | 1,079,348 |  | $ | 20,487,474
|                                   |  |               |            |                      |   |                       |  |            |           |  |   |           
|                                   | 
|                                   |  | June 30, 2005
|                                   |  | Amortizedcost |            | Grossunrealizedgains |   | Grossunrealizedlosses |  | Fair value
|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
|                                   |  |               |            |                      |   |                       |  |            |           |  |   |           

The amortized cost and fair values of debt securities available for sale at June 30, 2006 by contractual
maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



|                                       |  |                               |            |            |   |           
|-------------------------------------- |  | ----------------------------- | ---------- | ---------- | - | ----------
|                                       |  | Securities Available-for-Sale
|                                       |  | Amortizedcost                 |            | Fair value
|Due in one year or less                |  | $                             | 1,619,421  |            | $ | 1,606,765 
|Due after one year through five years  |  |                               | 5,998,617  |            |   | 5,762,173 
|Due after five years through ten years |  |                               | 5,851,028  |            |   | 5,537,219 
|Due after ten years                    |  |                               | 8,097,596  |            |   | 7,581,317 
|                                       |  |                               |            |            |   |           
|                                       |  | $                             | 21,566,662 |            | $ | 20,487,474
|                                       |  |                               |            |            |   |           



- 33 -



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GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006 and 2005

NOTE B - INVESTMENT SECURITIES (Continued)

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



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

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    |   | Estimated fair 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
|                                  |  |                     |           |                     |   |                      |  |                  |            |  |   |        

Management of the Company believes all unrealized losses as of June 30, 2006 and 2005 represent temporary
impairment. Approximately 96.8% of the unrealized losses, or 10 individual securities, consisted of securities in a continuous loss position for 12 months or more as of June 30, 2006. The Company has the ability and intends to hold these
securities until recovery. The Company believes, based on industry analysis reports and credit ratings, that the deterioration in value is attributable to changes in market interest rates and not in credit quality of the issuer and therefore, these
losses are not considered other-than-temporary.

Proceeds from sales of available-for-sale securities during the year ended June 30, 2006 were
$4,756,360 that resulted in gross realized losses of $143,640. No sales occurred during the year ended June 30, 2005. Securities with a par of $11,400,000 and $7,200,000 and a fair value of $10,909,302 and $7,123,014 at June 30, 2006 and
2005 respectively, were pledged to secure public monies on deposit as required by law.



- 34 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006 and 2005

NOTE C - LOANS RECEIVABLE

Loans receivable consist of the following:



|                                                        |  |      |             |   |      |   |             |  
|------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                        |  | 2006 |             |   | 2005 |  
|Type of loan:                                           |  |      |             |   |      |   |             |  
|Real estate loans:                                      |  |      |             |   |      |   |             |  
|1-to-4 family residential                               |  | $    | 65,417,553  |   |      | $ | 68,488,473  |  
|Commercial                                              |  |      | 61,345,237  |   |      |   | 43,527,712  |  
|Construction and land                                   |  |      | 27,570,247  |   |      |   | 20,619,161  |  
|Home improvement loans                                  |  |      | 10,098,347  |   |      |   | 8,670,073   |  
|                                                        |  |      |             |   |      |   |             |  
|Total real estate loans                                 |  |      | 164,431,384 |   |      |   | 141,305,419 |  
|                                                        |  |      |             |   |      |   |             |  
|Other loans:                                            |  |      |             |   |      |   |             |  
|Commercial                                              |  |      | 7,769,767   |   |      |   | 10,074,701  |  
|Consumer                                                |  |      | 4,669,864   |   |      |   | 4,292,148   |  
|Loans secured by deposits                               |  |      | 553,332     |   |      |   | 232,035     |  
|                                                        |  |      |             |   |      |   |             |  
|Total other loans                                       |  |      | 12,992,963  |   |      |   | 14,598,884  |  
|                                                        |  |      |             |   |      |   |             |  
|Subtotal                                                |  |      | 177,424,347 |   |      |   | 155,904,303 |  
|Less:                                                   |  |      |             |   |      |   |             |  
|Deferred loan origination fees, net of costs            |  |      | 248,726     |   |      |   | 179,947     |  
|                                                        |  |      |             |   |      |   |             |  
|Total loans                                             |  | $    | 177,175,621 |   |      | $ | 155,724,356 |  
|                                                        |  |      |             |   |      |   |             |  
|                                                        |  |     
|The allowance for loan losses is summarized as follows: |  |      |             |   |      |   |             |  
|                                                        |  |     
|                                                        |  | 2006 |             |   | 2005 |  
|Balance at beginning of year                            |  | $    | 1,593,223   |   |      | $ | 1,531,874   |  
|Provision for loan losses                               |  |      | 362,500     |   |      |   | 192,000     |  
|Charge-offs                                             |  |      | (85,475     | ) |      |   | (169,877    | )
|Recoveries                                              |  |      | 30,786      |   |      |   | 39,226      |  
|                                                        |  |      |             |   |      |   |             |  
|Balance at end of year                                  |  | $    | 1,901,034   |   |      | $ | 1,593,223   |  
|                                                        |  |      |             |   |      |   |             |  

At June 30, 2006 and 2005, the recorded investment in loans considered impaired in accordance with SFAS
No. 114 totaled $555,000 and $1.1 million, respectively, with corresponding valuation allowances of $54,000 and $220,000, respectively. For the years ended June 30, 2006 and 2005, the average recorded investment in impaired loans was
approximately $964,000 and $1.4 million, respectively. Interest income that was foregone on impaired loans for the years ended June 30, 2006, and 2005 amounted to approximately $32,000 and $50,000, respectively.

Non-accrual loans at June 30, 2006 and 2005 were approximately $555,000 and $1.1 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, 2006
and 2005

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:



|                               |  |      |           |      |   |          
|------------------------------ |  | ---- | --------- | ---- | - | ---------
|                               |  | 2006 |           | 2005
|Balance at beginning of year   |  | $    | 3,347,040 |      | $ | 1,443,288
|Net borrowings during the year |  |      | 91,694    |      |   | 1,903,752
|                               |  |      |           |      |   |          
|Balance at end of year         |  | $    | 3,438,734 |      | $ | 3,347,040
|                               |  |      |           |      |   |          

NOTE D - PREMISES AND EQUIPMENT

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



|                          |  |      |            |   |      |   |            |  
|------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                          |  | 2006 |            |   | 2005 |  
|Land                      |  | $    | 1,591,670  |   |      | $ | 485,687    |  
|Building and improvements |  |      | 3,331,692  |   |      |   | 3,323,317  |  
|Furniture and equipment   |  |      | 1,863,835  |   |      |   | 1,784,104  |  
|                          |  |      |            |   |      |   |            |  
|                          |  |      | 6,787,197  |   |      |   | 5,593,108  |  
|Accumulated depreciation  |  |      | (1,769,729 | ) |      |   | (1,494,620 | )
|                          |  |      |            |   |      |   |            |  
|                          |  | $    | 5,017,468  |   |      | $ | 4,098,488  |  
|                          |  |      |            |   |      |   |            |  

Depreciation expense for the years ended June 30, 2006 and 2005 amounted to
$324,759 and $321,242, 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:



|           |  |   |        
|---------- |  | - | -------
|2007       |  | $ | 22,500 
|2008       |  |   | 24,000 
|2009       |  |   | 24,000 
|2010       |  |   | 24,000 
|2011       |  |   | 24,000 
|Thereafter |  |   | 171,000
|           |  |   |        
|           |  | $ | 289,500
|           |  |   |        

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, 2006 and 2005 was $18,000 and $18,000, respectively.



- 36 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006
and 2005

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, 2006 and 2005:



|                                                  |  |                     |           |                         |   |                     |  |                         |           |  |   |        
|------------------------------------------------- |  | ------------------- | --------- | ----------------------- | - | ------------------- |  | ----------------------- | --------- |  | - | -------
|                                                  |  | 2006                |           | 2005                   
|                                                  |  | GrossCarryingAmount |           | AccumulatedAmortization |   | GrossCarryingAmount |  | AccumulatedAmortization
|Deposit intangibles related to branch acquisition |  | $                   | 1,850,000 |                         | $ | 1,171,000           |  | $                       | 1,850,000 |  | $ | 987,000
|                                                  |  |                     |           |                         |   |                     |  |                         |           |  |   |        

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
|2007 |  | $                            | 185,000
|2008 |  |                              | 185,000
|2009 |  |                              | 185,000
|2010 |  |                              | 124,000
|     |  |                              |        
|     |  | $                            | 679,000
|     |  |                              |        

NOTE F - DEPOSIT ACCOUNTS

A comparative summary of deposit accounts at June 30, 2006 and 2005 follows:



|                        |  |      |             |      |   |            
|----------------------- |  | ---- | ----------- | ---- | - | -----------
|                        |  | 2006 |             | 2005
|Demand accounts:        |  |      |             |      |   |            
|Non-interest bearing    |  | $    | 8,841,298   |      | $ | 7,414,127  
|Savings                 |  |      | 2,865,257   |      |   | 3,179,310  
|                        |  |     
|Money market and NOW    |  |      | 26,638,207  |      |   | 32,512,923 
|                        |  |      |             |      |   |            
|Total demand accounts   |  |      | 38,344,762  |      |   | 43,106,360 
|                        |  |     
|Certificates of deposit |  |      | 112,994,496 |      |   | 93,466,892 
|                        |  |      |             |      |   |            
|Total deposit accounts  |  | $    | 151,339,258 |      | $ | 136,573,252
|                        |  |      |             |      |   |            



- 37 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006
and 2005

NOTE F - DEPOSIT ACCOUNTS (Continued)

A summary of certificate accounts by maturity as of June 30, 2006 follows:



|                                    |  |                    |            |                  |   |            |  |   |            
|----------------------------------- |  | ------------------ | ---------- | ---------------- | - | ---------- |  | - | -----------
|                                    |  | Less than $100,000 |            | $100,000 or more |   | Total     
|One year or less                    |  | $                  | 34,958,407 |                  | $ | 48,068,042 |  | $ | 83,026,449 
|More than one year to three years   |  |                    | 12,551,552 |                  |   | 16,052,739 |  |   | 28,604,291 
|More than three years to five years |  |                    | 555,453    |                  |   | 737,054    |  |   | 1,292,507  
|More than five years                |  |                    | 71,249     |                  |   |           |  |   | 71,249     
|                                    |  |                    |            |                  |   |            |  |   |            
|Total certificate accounts          |  | $                  | 48,136,661 |                  | $ | 64,857,835 |  | $ | 112,994,496
|                                    |  |                    |            |                  |   |            |  |   |            

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



|                               |  |      |           |   |      |   |           |  
|------------------------------ |  | ---- | --------- | - | ---- | - | --------- | -
|                               |  | 2006 |           |   | 2005 |  
|Savings accounts               |  | $    | 21,668    |   |      | $ | 16,651    |  
|Money market accounts and NOW  |  |      | 669,166   |   |      |   | 670,337   |  
|Certificates of deposit        |  |      | 4,084,107 |   |      |   | 2,489,828 |  
|                               |  |      |           |   |      |   |           |  
|                               |  |      | 4,774,941 |   |      |   | 3,176,816 |  
|Penalties for early withdrawal |  |      | (19,356   | ) |      |   | (7,494    | )
|                               |  |      |           |   |      |   |           |  
|                               |  | $    | 4,755,585 |   |      | $ | 3,169,322 |  
|                               |  |      |           |   |      |   |           |  

NOTE G - BORROWINGS

The Bank had total short-term borrowings of $9,500,000 and $8,448,000 at June 30, 2006 and 2005, respectively. The borrowings consisted of advances from the Federal Home Loan Bank of Atlanta. The borrowings carried variable rates
ranging from 3.97% to 5.45% at June 30, 2006 and rates ranging from 3.28% to 3.47% as of June 30, 2005.

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



|                                                           |  |             |            |      |   |           
|---------------------------------------------------------- |  | ----------- | ---------- | ---- | - | ----------
|                                                           |  | At June 30,
|                                                           |  | 2006        |            | 2005
|4.31% due on April 6, 2011, callable October 6, 2005       |  | $           |           |      | $ | 5,000,000 
|3.41% due on August 1, 2011, callable November 1, 2005     |  |             |           |      |   | 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 
|3.66% due on August 10, 2015, callable August 10, 2007     |  |             | 5,600,000  |      |   |          
|5.09% due on August 10, 2007                               |  |             | 5,000,000  |      |   |          
|5.15% due on August 01, 2011                               |  |             | 3,000,000  |      |   |          
|                                                           |  |             |            |      |   |           
|                                                           |  | $           | 23,600,000 |      | $ | 23,000,000
|                                                           |  |             |            |      |   |           

At June 30, 2006, the Bank has a $53.2 million available credit line from the Federal Home Loan Bank. All
advances are secured by a blanket-floating lien on the Banks 1-to-4 family residential mortgage loans. As of June 30, 2006 and 2005, the Bank had borrowed $33.1 million and $31.5 million, respectively, on this line.

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



- 38 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006
and 2005

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 $0 and $10,000 during the years ended
June 30, 2006 and 2005, respectively. Within the Plan, 81,392 shares have been granted as of June 30, 2006.

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 $50,000 and $52,000 in compensation costs for years ended
June 30, 2006 and 2005, 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, 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
|                                     |  |                                 |   |                     |                  
|Shares received in cashless exercise |  | 2,239                           |   |                     |                  |   |  |                              |      |                   |        |   |                              |   |     
|Options granted                      |  | (2,239                          | ) |                     | 2,239             |   |  |                              | 16.00 |                   |        |   |                              |   |     
|Options vested                       |  |                                |   |                     |                  |   |  |                              |      |                   | 2,239   |   |                              |   | 16.00
|Options exercised                    |  |                                |   |                     | (3,784            | ) |  |                              | 11.09 |                   | (3,784  | ) |                              |   | 11.09
|                                     |  |                                 |   |                     |                   |   |  |                              |       |                   |         |   |                              |   |      
|At June 30, 2006                     |  | 7,234                           |   |                     | 125,515           |   |  | $                            | 15.70 |                   | 125,515 |   |                              | $ | 15.70
|                                     |  |                                 |   |                     |                   |   |  |                              |       |                   |         |   |                              |   |      



- 39 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006
and 2005

NOTE H - EMPLOYEE AND DIRECTOR BENEFIT PLANS (Continued)

Stock Option Plan (Continued)

At
June 30, 2006, options outstanding had a weighted-average remaining term of three years. Total options outstanding at June 30, 2006 included 27,500 options exercisable at a range of $9.55 to $12.25 per share, 29,117 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, 2006, authorized shares of
common stock reserved for future grants of options totaled 7,234.

The fair value of options granted was estimated to be $2.15 for options granted in the
year ended June 30, 2006 and $2.18 for options granted in the year ended June 30, 2005. 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, 2006 and 2005, respectively: a risk-free interest rate of 5.0% and 3.0%, a dividend yield of 1.25% and 1.28%, an expected life of 2 years, and a volatility ratio of 25% and 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, 2006, the outstanding balance of the note is $688,494 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 $203,145 and $211,678 has been incurred in connection with the ESOP during the years ended June 30, 2006 and 2005, respectively. The expense includes, in
addition to the cash contribution necessary to fund the ESOP, $88,000 and $88,000 which represents the difference between the fair market value of the shares which have been released or committed to be released to participants and the cost of these
shares to the ESOP for the years ended June 30, 2006 and 2005, respectively. The Bank has credited this amount to additional paid-in capital for the years then ended.

At June 30, 2006, 81,244 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 $1.3 million at June 30, 2006.



- 40 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006
and 2005

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. There
were no expenses associated with the plan for the years ended June 30, 2006 and 2005.

Directors Deferred
Compensation Plan

The Bank has a deferred compensation plan for directors whereby members of the board may make elective deferrals in lieu of receiving
a portion of the compensation to which they otherwise would be entitled. This plan is not entitled to favorable tax treatment under current law. Related deferred income tax benefits are included in the accompanying consolidated financial statements.
Expenses for this plan totaled $14,000 and $18,000 for the years ended June 30, 2006 and 2005, 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, 2006 and 2005 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 $27,096 and $27,039 for the years ended June 30, 2006 and 2005, 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. 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, 2006, 434,448 shares were held as treasury stock.



- 41 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006
and 2005

NOTE J - INCOME TAXES

The components of income tax expense are as follows for the years ended June 30, 2006 and 2005:



|                                |  |      |           |   |      |   |        
|------------------------------- |  | ---- | --------- | - | ---- | - | -------
|                                |  | 2006 |           |   | 2005
|Current tax expense:            |  |      |           |   |      |   |        
|Federal                         |  | $    | 950,413   |   |      | $ | 509,430
|State                           |  |      | 158,629   |   |      |   | 100,098
|                                |  |      |           |   |      |   |        
|                                |  |      | 1,109,042 |   |      |   | 609,528
|                                |  |      |           |   |      |   |        
|Deferred tax expense (benefit): |  |      |           |   |      |   |        
|Federal                         |  |      | (139,810  | ) |      |   | 37,885 
|State                           |  |      | (26,248   | ) |      |   | 7,112  
|                                |  |      |           |   |      |   |        
|                                |  |      | (166,058  | ) |      |   | 44,997 
|                                |  |      |           |   |      |   |        
|Provision for income taxes      |  | $    | 942,984   |   |      | $ | 654,525
|                                |  |      |           |   |      |   |        

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, 2006 and 2005:



|                                             |  |      |         |   |      |   |         |  
|-------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                             |  | 2006 |         |   | 2005 |  
|Income tax at federal statutory rate         |  | $    | 864,224 |   |      | $ | 618,194 |  
|State income tax, net of federal tax benefit |  |      | 87,372  |   |      |   | 70,759  |  
|Tax exempt interest income                   |  |      | (28,239 | ) |      |   | (24,882 | )
|ESOP                                         |  |      | 14,333  |   |      |   | 13,018  |  
|Other                                        |  |      | 5,294   |   |      |   | (22,564 | )
|                                             |  |      |         |   |      |   |         |  
|Provision for income taxes                   |  | $    | 942,984 |   |      | $ | 654,525 |  
|                                             |  |      |         |   |      |   |         |  

Deferred tax assets and liabilities arising from temporary differences at June 30, 2006 and 2005 are
summarized as follows:



|                                      |  |      |           |   |      |   |           |  
|------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                                      |  | 2006 |           |   | 2005 |  
|Deferred tax assets relating to:      |  |      |           |   |      |   |           |  
|Deferred compensation                 |  | $    | 106,296   |   |      | $ | 113,510   |  
|Allowance for loan losses             |  |      | 721,633   |   |      |   | 604,787   |  
|Unrealized securities losses          |  |      | 409,796   |   |      |   | 225,820   |  
|Amortization of intangibles           |  |      | 189,694   |   |      |   | 172,765   |  
|                                      |  |      |           |   |      |   |           |  
|Total deferred tax assets             |  |      | 1,427,419 |   |      |   | 1,116,882 |  
|                                      |  |      |           |   |      |   |           |  
|Deferred tax liabilities relating to: |  |      |           |   |      |   |           |  
|Premises and equipment                |  |      | (191,644  | ) |      |   | (190,604  | )
|FHLB stock dividends                  |  |      | (9,010    | ) |      |   | (47,439   | )
|Prepaid expenses                      |  |      | (21,783   | ) |      |   | (16,676   | )
|                                      |  |      |           |   |      |   |           |  
|Total deferred tax liabilities        |  |      | (222,437  | ) |      |   | (254,719  | )
|                                      |  |      |           |   |      |   |           |  
|Net deferred tax asset                |  | $    | 1,204,982 |   |      | $ | 862,163   |  
|                                      |  |      |           |   |      |   |           |  

Deferred tax asset represent the future tax benefit of deductible differences and, if it is more likely that not
that a tax asset will not be realized, a valuation allowance is required to reduce the recorded deferred tax assets to net realizable value. Management has determined that it is more likely than not that the entire deferred tax asset at
June 30, 2006 will be realized, and accordingly, has not established a valuation allowance. Net deferred tax assets are included in other assets.



- 42 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006 and 2005

NOTE J - INCOME TAXES (Continued)

Retained earnings at June 30,
2006, includes approximately $1.5 million for which no deferred income tax liability has been recognized. This amount represents an allocation of income to bad debt deductions for income tax purposes only. Reductions of the amount so allocated for
purposes other than tax bad debt losses or adjustments arising from carry back of net operating losses would create income for tax purposes only, which would be subject to the then current corporate income tax rate.

NOTE 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, 2006, that the Bank meets all capital adequacy requirements to which it is subject.

As of June 30, 2006, 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, 2006 and 2005 are presented in the following table.



- 43 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006 and 2005

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, 2006:                                       |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Total Risk Weighted Capital to Risk Weighted Assets: |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Consolidated                                         |  | $                      | 28,436 |       | 17.71                          | % |        | $                                                                     | 12,843 |  | 8.00 | %      |  | $     | N/A    |  | N/A   |  
|Sentry                                               |  |                        | 27,100 |       | 16.97                          | % |        |                                                                       | 12,773 |  | 8.00 | %      |  |       | 15,966 |  | 10.00 | %
|                                                     |  |                        |        |       |                                |  
|Tier 1 Capital to Risk Weighted Assets:              |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Consolidated                                         |  | $                      | 26,535 |       | 16.53                          | % |        | $                                                                     | 6,421  |  | 4.00 | %      |  | $     | N/A    |  | N/A   |  
|Sentry                                               |  |                        | 25,199 |       | 15.78                          | % |        |                                                                       | 6,386  |  | 4.00 | %      |  |       | 9,580  |  | 6.00  | %
|                                                     |  |                        |        |       |                                |  
|Tier 1 Capital to Adjusted Total Assets:             |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Consolidated                                         |  | $                      | 26,535 |       | 12.48                          | % |        | $                                                                     | 8,508  |  | 4.00 | %      |  | $     | N/A    |  | N/A   |  
|Sentry                                               |  |                        | 25,199 |       | 11.90                          | % |        |                                                                       | 8,472  |  | 4.00 | %      |  |       | 10,590 |  | 5.00  | %
|                                                     |  |                        |        |       |                                |  
|Tangible Capital to Adjusted Total Assets:           |  |                        |        |       |                                |   |        |                                                                       |        |  |      |        |  |       |        |  |       |  
|Consolidated                                         |  | $                      | 26,535 |       | 12.48                          | % |        | $                                                                     | 3,190  |  | 1.50 | %      |  | $     | N/A    |  | N/A   |  
|Sentry                                               |  |                        | 25,199 |       | 11.90                          | % |        |                                                                       | 3,177  |  | 1.50 | %      |  |       | N/A    |  | N/A   |  
|                                                     |  |                        |        |       |                                |  
|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   |  

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 2006, a $600,000 dividend was paid by the Bank to Great Pee Dee. At June 30, 2006, notification 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, 2006 and 2005

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

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

The Bank makes loans to individuals and small businesses for various personal and commercial purposes primarily Chesterfield County, Marlboro County, Florence County and
other surrounding counties. The Banks underwriting policies require such loans to be made at no greater than 80% loan-to-value based upon appraised values unless private mortgage insurance is obtained. These loans are secured by the underlying
properties. The Banks loan portfolio is not concentrated in loans to any single borrower or a relatively small number of borrowers. Additionally, Management is not aware of any concentrations of loans to classes of borrowers or industries that
would be similarly affected by economic conditions.

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

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

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

A summary of the approximate contract amount of the Banks exposure to off-balance sheet risk as of June 30, 2006 is as follows (in thousands):



|                                                                    |  |   |       
|------------------------------------------------------------------- |  | - | ------
|Financial instruments whose contract amounts represent credit risk: |  |   |       
|Commitments to extend credit                                        |  | $ | 1,734 
|Undisbursed construction loans in process                           |  |   | 5,440 
|Lines of credit                                                     |  |   | 8,455 
|Letters of credit                                                   |  |   | 164   
|                                                                    |  |   |       
|                                                                    |  | $ | 15,793
|                                                                    |  |   |       



- 45 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006 and 2005

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

At June 30, 2006, the Bank had loan commitments outstanding of approximately $1.7 million, at fixed interest rates ranging from 7.00% to 9.50%. 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.

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

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

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

Investment Securities

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

Loans

The fair value of loans
is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Loans Held for Sale

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



- 46 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006 and 2005

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

Restricted Stock

Restricted stock is comprised primarily of FHLB stock. The fair value for
FHLB stock is its carrying value, since this is the amount for which it could be redeemed. There is no active market for this stock and the Bank is required to maintain a minimum balance based on a formula derived by the FHLB.

Deposit Liabilities

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

Short and Long-Term Borrowings

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

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

The
carrying amounts of these items approximate fair values.

Financial Instruments with Off-Balance Sheet Risk

With regard to financial instruments with off-balance sheet risk discussed in Note 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, 2006 and 2005:



|                                                               |  |                |             |                      |   |                |  |                      |             |  |   |            
|-------------------------------------------------------------- |  | -------------- | ----------- | -------------------- | - | -------------- |  | -------------------- | ----------- |  | - | -----------
|                                                               |  | 2006           |             | 2005                
|                                                               |  | Carryingamount |             | Estimated fair value |   | Carryingamount |  | Estimated fair value
|Financial assets:                                              |  |                |             |                      |   |                |  |                      |             |  |   |            
|Cash, interest-earning balances, federal funds sold            |  | $              | 4,700,779   |                      | $ | 4,700,779      |  | $                    | 2,033,000   |  | $ | 2,033,000  
|Investment securities                                          |  |                | 20,487,474  |                      |   | 20,487,474     |  |                      | 28,778,830  |  |   | 28,778,830 
|Loans receivable, net                                          |  |                | 175,274,587 |                      |   | 174,634,585    |  |                      | 154,131,133 |  |   | 154,709,852
|Loans held for sale                                            |  |                | 958,150     |                      |   | 958,150        |  |                      | 1,115,600   |  |   | 1,115,600  
|Accrued interest receivable                                    |  |                | 1,026,733   |                      |   | 1,026,733      |  |                      | 889,789     |  |   | 889,789    
|Restricted stock, at cost                                      |  |                | 1,997,787   |                      |   | 1,997,787      |  |                      | 1,680,787   |  |   | 1,680,787  
|                                                               |  |                |             |                     
|Financial liabilities:                                         |  |                |             |                      |   |                |  |                      |             |  |   |            
|Deposits                                                       |  |                | 151,339,258 |                      |   | 149,825,865    |  |                      | 136,573,252 |  |   | 136,165,862
|Short-term borrowings                                          |  |                | 9,500,000   |                      |   | 9,500,000      |  |                      | 8,448,000   |  |   | 8,448,000  
|Long-term borrowings                                           |  |                | 23,600,000  |                      |   | 23,781,538     |  |                      | 23,000,000  |  |   | 23,071,000 
|Accrued interest payable                                       |  |                | 287,356     |                      |   | 287,356        |  |                      | 190,734     |  |   | 190,734    
|Advance payments by borrowers for property taxes and insurance |  |                | 120,775     |                      |   | 120,775        |  |                      | 157,466     |  |   | 157,466    



- 47 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006 and 2005

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.

NOTE O -
PARENT COMPANY FINANCIAL DATA

Following are condensed financial statements of Great Pee Dee as of and for the years ended June 30, 2006 and 2005:

Condensed Statements of Financial Condition

As of June 30, 2006 and 2005



|                                           |  |      |            |   |      |   |            |  
|------------------------------------------ |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                           |  | 2006 |            |   | 2005 |  
|Assets:                                    |  |      |            |   |      |   |            |  
|Cash on hand and in banks                  |  | $    | 663,810    |   |      | $ | 1,292,335  |  
|Investment securities, available for sale  |  |      | 494,427    |   |      |   | 467,242    |  
|Investment in subsidiary                   |  |      | 25,218,232 |   |      |   | 24,351,303 |  
|Accrued interest receivable                |  |      | 3,521      |   |      |   | 4,565      |  
|Other assets                               |  |      | 342,164    |   |      |   | 304,777    |  
|                                           |  |      |            |   |      |   |            |  
|Total assets                               |  | $    | 26,722,154 |   |      | $ | 26,420,222 |  
|                                           |  |      |            |   |      |   |            |  
|Liabilities:                               |  |      |            |   |      |   |            |  
|Other liabilities                          |  | $    | 182,562    |   |      | $ | 163,747    |  
|                                           |  |      |            |   |      |   |            |  
|Stockholders equity:                      |  |      |            |   |      |   |            |  
|Common stock                               |  |      | 22,246     |   |      |   | 22,246     |  
|Additional paid-in capital                 |  |      | 22,093,615 |   |      |   | 22,008,532 |  
|Unearned compensation                      |  |      | (707,438   | ) |      |   | (872,774   | )
|Retained earnings                          |  |      | 11,746,235 |   |      |   | 11,242,041 |  
|Accumulated other comprehensive loss       |  |      | (674,725   | ) |      |   | (387,823   | )
|Treasury stock                             |  |      | (5,940,341 | ) |      |   | (5,755,747 | )
|                                           |  |      |            |   |      |   |            |  
|                                           |  |      | 26,539,592 |   |      |   | 26,256,475 |  
|                                           |  |      |            |   |      |   |            |  
|Total liabilities and stockholders equity |  | $    | 26,722,154 |   |      | $ | 26,420,222 |  
|                                           |  |      |            |   |      |   |            |  



- 48 -



---

GREAT PEE DEE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2006 and 2005

NOTE O - PARENT COMPANY FINANCIAL DATA (Continued)

Condensed Statements of Operations

Years Ended June 30, 2006 and 2005



|                                                                                         |  |      |            |   |      |   |            |  
|---------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                                         |  | 2006 |            |   | 2005 |  
|Equity in undistributed earnings of subsidiary                                           |  | $    | 1,052,081  |   |      | $ | 1,230,539  |  
|Distributed earnings of subsidiary                                                       |  |      | 600,000    |   |      |   |           |  
|Interest and other income                                                                |  |      | 85,418     |   |      |   | 118,323    |  
|Operating expenses                                                                       |  |      | (172,528   | ) |      |   | (222,822   | )
|Income taxes                                                                             |  |      | 33,880     |   |      |   | 37,654     |  
|                                                                                         |  |      |            |   |      |   |            |  
|Net income                                                                               |  | $    | 1,598,851  |   |      | $ | 1,163,694  |  
|                                                                                         |  |      |            |   |      |   |            |  
|                                                                                        
|Condensed Statements of Cash Flows Years Ended June 30, 2006 and 2005                    | 
|                                                                                         |  |     
|                                                                                         |  | 2006 |            |   | 2005 |  
|Cash flows from operating activities:                                                    |  |      |            |   |      |   |            |  
|Net income                                                                               |  | $    | 1,598,851  |   |      | $ | 1,163,694  |  
|Adjustments to reconcile net income to net cash provided (used) by operating activities: |  |      |            |   |      |   |            |  
|Equity in undistributed earnings of subsidiary                                           |  |      | (1,052,081 | ) |      |   | (1,230,539 | )
|Unearned compensation                                                                    |  |      | 87,940     |   |      |   | 88,246     |  
|Other                                                                                    |  |      | (121,035   | ) |      |   | (52,380    | )
|                                                                                         |  |      |            |   |      |   |            |  
|Net cash provided (used) by operating activities                                         |  |      | 513,675    |   |      |   | (30,979    | )
|                                                                                         |  |      |            |   |      |   |            |  
|Cash flows from investing activities:                                                    |  |      |            |   |      |   |            |  
|Purchase of securities available for sale                                                |  |      | (18,554    | ) |      |   | (66,701    | )
|Proceeds from sale and maturities of securities available for sale                       |  |      | 50,000     |   |      |   | 50,000     |  
|Collection of loan to ESOP                                                               |  |      | 115,205    |   |      |   | 123,431    |  
|Net cash provided by investing activities                                                |  |      | 146,651    |   |      |   | 106,730    |  
|                                                                                         |  |      |            |   |      |   |            |  
|Cash flows from financing activities:                                                    |  |      |            |   |      |   |            |  
|Purchase of treasury stock                                                               |  |      | (200,319   | ) |      |   | (807,209   | )
|Proceeds from option exercise                                                            |  |      | 6,125      |   |      |   | 218,461    |  
|Cash dividends paid                                                                      |  |      | (1,094,657 | ) |      |   | (1,084,022 | )
|                                                                                         |  |      |            |   |      |   |            |  
|Net cash used by financing activities                                                    |  |      | (1,288,851 | ) |      |   | (1,672,770 | )
|                                                                                         |  |      |            |   |      |   |            |  
|Net decrease in cash and cash equivalents                                                |  |      | (628,525   | ) |      |   | (1,597,019 | )
|Cash and cash equivalents, beginning                                                     |  |      | 1,292,335  |   |      |   | 2,889,354  |  
|                                                                                         |  |      |            |   |      |   |            |  
|Cash and cash equivalents, ending                                                        |  | $    | 663,810    |   |      | $ | 1,292,335  |  
|                                                                                         |  |      |            |   |      |   |            |  



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GREAT PEE DEE BANCORP, INC.

GENERAL CORPORATE INFORMATION



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



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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 Registered Public Accounting Firm

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 AM on October 11, 2006, 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 1,790,169 shares of common stock outstanding, which were held by approximately 316
stockholders of record (excluding shares held in street name) on June 30, 2006. The Companys common stock is quoted on the NASDAQ Global 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, 2006 and 2005.



|                                  |  |             |       |          |   |           |  |   |     
|--------------------------------- |  | ----------- | ----- | -------- | - | --------- |  | - | ----
|                                  |  | Stock Price |       | Dividend
|                                  |  | High        |       | Low      |   | per share
|For the year ended June 30, 2006: |  |             |       |          |   |           |  |   |     
|First quarter                     |  | $           | 16.25 |          | $ | 14.95     |  | $ | .160
|Second quarter                    |  |             | 16.40 |          |   | 14.36     |  |   | .160
|Third quarter                     |  |             | 16.84 |          |   | 15.08     |  |   | .160
|Fourth quarter                    |  |             | 15.83 |          |   | 14.86     |  |   | .160
|                                  |  |             |      
|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

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 John S Long, President and CEO, Great Pee Dee Bancorp, Inc., 901 Chesterfield Highway, Cheraw, SC, 29520.



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