<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934.

     For the fiscal year ended June 30, 2003

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

     For the transition period from ______ to ______.

                         Commission file number: 0-23521

                           Great Pee Dee Bancorp, Inc.
                 (Name of Small Business Issuer in Its Charter)

               Delaware                                56-2050592
               --------                                ----------
     (State or Other Jurisdiction of               (I.R.S. Employer
      Incorporation or Organization)             Identification Number)

           515 Market Street
        Cheraw, South Carolina                              29520
        ----------------------                              -----
     (Address of Principal Executive                      (Zip Code)
                Offices)

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

Securities registered under Section 12(g)
of the Exchange Act:                       Common Stock par value $.01 per share
                                           -------------------------------------
                                                    (Title of Class)

                                 (843) 537-7656
                                 --------------
                (Issuer's Telephone Number, Including Area Code)

         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

Yes [X]  No [ ]

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

         The Issuer's revenues for the fiscal year ended June 30, 2003 were $9.5
million.

         The aggregate market value of the voting stock held by nonaffiliates of
the Registrant, computed by reference to the average of the closing bid and ask
price of such stock on the Nasdaq National Market on August 31, 2003 was
approximately $19.7 million.

         The number of shares outstanding of the Issuer's Common Stock, the
issuer's only class of outstanding capital stock, as of June 30, 2003 was
1,763,615.
<PAGE>

         Documents Incorporated by Reference

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

I.       Portions of the Great Pee Dee Bancorp, Inc. Proxy Statement for the
         2003 Annual Meeting of Shareholders are incorporated by reference into
         certain items of Part III.
II.      Portions of the Great Pee Dee Bancorp, Inc. Annual Report for the 2003
         Annual Meeting of Shareholders are incorporated by reference into
         certain items of Part II.

<PAGE>

                                     PART I

Item 1.  Business

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

         The Company is a savings and loan holding company and the owner of all
of the issued and outstanding shares of capital stock of the Bank. At June 30,
2003 the assets of the Company consisted of its ownership of the capital stock
of the Bank, the loan to the ESOP, cash of $762,000, and investment securities
with a carrying value of $449,000. The Company also owns 100% of the outstanding
common stock of First Federal Investment Services, Inc., which offers
non-deposit investment products to retail customers. The Bank is a member of the
Federal Home Loan Bank ("FHLB") of Atlanta. At June 30, 2003, the Company had
consolidated total assets of $143.3 million, total deposits of $108.8 million,
and stockholders' equity of $26.0 million.

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

Lending Activities

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

<PAGE>

<TABLE>
<CAPTION>
                                                                        At June 30,
                                                     --------------------------------------------------
                                                              2003                        2002
                                                     -----------------------    -----------------------
                                                       Amount       Percent       Amount       Percent
                                                     ----------   ----------    ----------   ----------
                                                                   (Dollars in Thousands)
<S>                                                  <C>          <C>           <C>          <C>
Type of loan:
  Real estate loans:
  One- to four-family residential ................   $   63,845         59.1%   $   68,296         62.3%
  Commercial .....................................       20,625         19.1        10,924          9.9
  Construction ...................................        5,225          4.8        12,140         11.1
  Home improvement loans .........................        8,236          7.6         8,083          7.4
                                                     ----------   ----------    ----------   ----------
   Total real estate loans .......................       97,931         90.7        99,443         90.7

Other loans:
  Commercial .....................................        6,015          5.6         6,550          6.0
  Consumer .......................................        7,659          7.1         8,029          7.3
  Loans secured by deposits ......................          873          0.8           335          0.3
                                                     ----------   ----------    ----------   ----------
   Total other loans .............................       14,547         13.5        14,914         13.6

  Total loans ....................................      112,478        104.2       114,357        104.3

Less:
  Construction loans in process ..................        2,906          2.7         3,438          3.1
  Allowance for losses ...........................        1,416          1.3         1,066          1.0
  Deferred loan origination fees, net of costs ...          202          0.2           242          0.2
                                                     ----------   ----------    ----------   ----------
   Total, net ....................................   $  107,954        100.0%   $  109,611        100.0%
                                                     ==========   ==========    ==========   ==========
</TABLE>

         The following table sets forth certain information at June 30, 2003,
regarding the dollar amount of loans maturing in the loan portfolio based on the
earlier of their contractual terms to maturity or their repricing. Demand loans
having no stated schedule of repayments and no stated maturity and overdrafts
are reported as due in one year or less. This schedule does not reflect the
effects of possible prepayments or enforcement of due-on-sale clauses. The Bank
expects that prepayments will cause actual maturities to be shorter.

<TABLE>
<CAPTION>
                                                                                At June 30, 2003
                                                                     ------------------------------------
                                                        More Than    More Than
                                            1 Year      1 Year to    3 Years to   More Than
                                            or Less      3 Years       5 Years     5 Years        Total
                                           ----------   ----------   ----------   ----------   ----------
                                                                   (In Thousands)
<S>                                        <C>          <C>          <C>          <C>          <C>
Real estate loans:
     Adjustable ........................   $   32,072   $      860   $    4,333   $    3,201   $   40,446
     Fixed .............................        3,049        2,575        9,190       39,543       54,357
                                           ----------   ----------   ----------   ----------   ----------
         Total real estate loans .......       35,121        3,435       13,523       42,744       94,823

Other loans ............................        5,192        3,442        3,081        2,832       14,547
                                           ----------   ----------   ----------   ----------   ----------
     Total loans .......................   $   40,313   $    6,877   $   16,604   $   45,576      109,370
                                           ==========   ==========   ==========   ==========
Less:
   Allowance for loan losses ...........                                                            1,416
                                                                                               ----------
     Total .............................                                                       $  107,954
                                                                                               ==========
</TABLE>

         As of June 30, 2003, the dollar amount of all loans due after one year
that have fixed interest rates was $51.3 million. None of the Bank's loans with
floating or adjustable interest rates are shown as being due after one year.

         One- to Four-Family Residential Loans. The Bank's primary lending
activity consists of the origination of one- to four-family residential mortgage
loans secured by property located in the primary market area. The Bank generally
originates

                                        2
<PAGE>

one- to four-family residential mortgage loans in amounts up to 95% of the
lesser of the appraised value or purchase price, with private mortgage insurance
required on loans with a loan-to-value ratio in excess of 80%. The Bank
originates and retains fixed rate loans which provide for the payment of
principal and interest for up to an 18-year period.

         The Bank also offers adjustable-rate mortgage ("ARM") loans. Until
recently, the interest rate on ARM loans was indexed to the cost of funds index
("COFI"), which reacts to changes in market interest rates more slowly than
other indices. Now, the interest rate on the Bank's ARM loans is indexed to the
one-year Treasury bill. A substantial portion of the ARM loans in the portfolio
at June 30, 2003 provide for maximum rate adjustments per year and over the life
of the loan of 1% and 5%, respectively. Residential ARMs are amortized for terms
up to 30 years.

         ARM loans decrease the risk associated with changes in interest rates
by periodically repricing, but involve other risks because as interest rates
increase, the underlying payments by the borrower increase, thus increasing the
potential for default by the borrower. At the same time, the marketability of
the underlying collateral may be adversely affected by higher interest rates.
Upward adjustment of the contractual interest rate is also limited by the
maximum periodic and lifetime interest rate adjustment permitted by the loan
documents, and, therefore, is potentially limited in effectiveness during
periods of rapidly rising interest rates. At June 30, 2003, approximately 46.7%
of one- to four-family residential loans had adjustable rates of interest.

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

         At June 30, 2003, approximately $63.8 million, or 59.1% of the
portfolio of loans, consisted of one- to four-family residential loans.
Approximately $1.4 million, or 1.4% of total real estate loans (which were
comprised of forty-four loans secured by one- to four-family properties), were
included in non-performing assets as of that date.

         Commercial Real Estate Loans. At June 30, 2003, $20.6 million, or 19.1%
of the total loan portfolio, consisted of commercial real estate loans.
Commercial real estate loans are secured by churches, office buildings, and
other commercial properties. The Bank generally originates fixed rate commercial
real estate loans with maximum terms of 15 years. The Bank also will originate
adjustable rate commercial real estate loans with terms of up to 30 years. The
interest rate on adjustable rate commercial real estate loans is indexed to the
one-year Treasury bill with maximum loan-to-value ratios of 80%. At June 30,
2003, the largest commercial loan had a principal balance of $2.6 million and
was secured by a country club. On June 30, 2003, there were 2 commercial real
estate loans totaling $71,000 included in nonperforming assets.

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

         Construction Loans. The Bank offers construction loans with respect to
residential and commercial real estate and, in certain cases, to builders or
developers constructing such properties on a speculative basis (i.e., before the
builder/developer obtains a commitment from a buyer). Funds are disbursed to
borrowers upon the successful completion of particular stages of construction.
Typically, loans made to builders who do not have a commitment for the sale of
the property under construction will be for a term of no more than six months.
Except for construction loans made on speculative basis, upon the successful
completion of construction the loan can be converted into permanent financing.
At June 30, 2003, $5.2 million, or 4.8% of the total loan portfolio, consisted
of construction loans. The largest construction loan had a principal balance of
$240,000 on June 30, 2003 and was secured by a house. None of the construction
loans were included in non-performing assets on that date.

                                        3
<PAGE>

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

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

         Home Improvement Loans. At June 30, 2003, home improvement loans
totaled $8.2 million, or 7.6% of total loans. Home improvement loans are
typically secured by second mortgages on the secured property. At June 30, 2003,
no home improvement loans were included in non-performing assets.

         Origination, Purchase and Sale of Loans. The Bank historically
originated mortgage loans pursuant to its own underwriting standards which did
not conform with the standard criteria of Freddie Mac or Fannie Mae because the
Bank did not require current property surveys in most cases. Recently, the Bank
began originating mortgage loans which conform to the standard criteria of
Freddie Mac and Fannie Mae, and thus can be sold in the secondary market after
origination.

         The Bank confines loan origination activities primarily to Chesterfield
County, Florence County, Marlboro County and the surrounding counties. Loan
originations are generated from referrals from existing customers, real estate
brokers, and advertising.

         The Bank's loan approval process is intended to assess the borrower's
ability to repay the loan, the viability of the loan and the adequacy of the
value of the property that will secure the loan. To assess the borrower's
ability to repay, the Bank studies the employment and credit history and
information on the historical and projected income and expenses of its
mortgagors. All mortgage loans are approved by the loan committee.

         The Bank generally requires appraisals on all real property securing
loans and requiring an attorney's opinion and a valid lien on mortgaged real
estate. Appraisals for all real property securing mortgage loans are performed
by independent appraisers who are state-licensed. The Bank requires fire and
extended coverage insurance in amounts at least equal to the principal amount of
the loan and also require flood insurance to protect the property securing its
interest if the property is in a flood plain. The Bank also generally requires
private mortgage insurance for all residential mortgage loans with loan-to-value
ratios of greater than 80%. The Bank requires escrow accounts for insurance
premiums and taxes for loans that require private mortgage insurance. Mr. Watts
and Mr. Long may approve loans up to $100,000. The Bank's Loan Committee may
approve loans up to $250,000 and any loan in excess of $250,000 must be approved
by the Board of Directors.

         Underwriting standards for home improvement loans are intended to
protect against some of the risks inherent in making home improvement loans.
Borrower paying habits and financial strengths are important considerations.

         One- to four-family residential loan originations to be held in the
Bank's loan portfolio totaled $15.6 million during the year ended June 30, 2003,
compared to $22.9 million during the year ended June 30, 2002. One-to four
family residential loans originated for sale in the secondary market aggregated
$17.4 million and $19.7 million for the years ended June 30, 2003 and 2002,
respectively.

                                        4
<PAGE>

Non Performing and Problem Assets

         After a mortgage loan becomes 30 days past due, the Bank delivers a
computer generated delinquency notice to the borrower. When loans become 60 days
past due, the Bank sends additional delinquency notices and make personal
contact by letter or telephone with the borrower to establish acceptable
repayment schedules. When a mortgage loan is 90 days delinquent, the Bank will
have either entered into a workout plan with the borrower or refer the matter to
the Bank's attorney for collection. Management is authorized to commence
foreclosure proceedings for any loan upon making a determination that it is
prudent to do so.

         The Bank reviews mortgage loans on a regular basis and place such loans
on a non-accrual status when they are specifically determined to be impaired or
when they become 90 days delinquent. When loans are placed on a non-accrual
status, unpaid accrued interest is written off, and further income is recognized
only to the extent received.

         Nonperforming Assets. At June 30, 2003, $2.3 million, or 1.6% of total
assets, were nonperforming (nonperforming loans and non-accruing loans). At June
30, 2003, loans secured by real estate accounted for $2.0 million nonperforming
assets. The Bank had real estate owned ("REO") properties in the amount of
$36,000 as of June 30, 2003.

         The table below sets forth the amounts and categories of nonperforming
assets (nonperforming loans and foreclosed real estate) for the last two years.
It is the Bank's policy that all earned but uncollected interest on all loans be
reviewed monthly to determine if any portion thereof should be classified as
uncollectible for any loan past due in excess of 90 days. Delinquent loans that
are 90 days or more past due are considered nonperforming assets. During the
periods presented, the Bank did not have any troubled debt restructurings.

                                                      At June 30,
                                                ----------------------
                                                   2003         2002
                                                ---------    ---------
                                                (Dollars In Thousands)

Loans not accruing interest .................   $   2,252    $   1,079
Accruing loans 90 days or more past due .....          --           --
                                                ---------    ---------
   Total nonperforming loans ................       2,252        1,079
Foreclosed real estate ......................          36           50
                                                ---------    ---------
Total nonperforming assets ..................   $   2,288    $   1,129
                                                =========    =========
   Nonperforming assets to total assets .....        1.60%        0.86%
                                                =========    =========

         Classified Assets. Federal regulations and the Bank's asset
classification policy provide for the classification of loans and other assets
such as debt and equity securities considered by the OTS to be of lesser quality
as "substandard," "doubtful" or "loss" assets. An asset is considered
"substandard" if it is inadequately protected by the current net worth and
paying capacity of the obliger or of the collateral pledged, if any.
"Substandard" assets include those characterized by the "distinct possibility"
that the institution will sustain "some loss" if the deficiencies are not
corrected. Assets classified as "doubtful" have all of the weaknesses inherent
in those classified "substandard," with the added characteristic that the
weaknesses present make "collection or liquidation in full," on the basis of
currently existing facts, conditions, and values, "highly questionable and
improbable." Assets classified as "loss" are those considered "uncollectible"
and of such little value that their continuance as assets without the
establishment of a specific loss reserve is not warranted.

         An insured institution is required to establish general allowances for
loan losses in an amount deemed prudent by management for loans classified
substandard or doubtful, as well as for other problem loans. General allowances
represent loss allowances which have been established to recognize the inherent
risk associated with lending activities, but which, unlike specific allowances,
have not been allocated to particular problem assets. When an insured
institution classifies problem assets

                                        5
<PAGE>

as "loss," it is required either to establish a specific allowance for losses
equal to 100% of the amount of the asset so classified or to charge off such
amount. An institution's determination as to the classification of its assets
and the amount of its valuation allowances is subject to review by the OTS which
can order the establishment of additional general or specific loss allowances.

         At June 30, 2003, the aggregate amount of classified assets, and of
general and specific loss allowances, were as follows:

                                                             Loan Loss
                                                  Amount     Allowance
                                                ----------   ---------
                                                    (In Thousands)
Classified loans receivable:
  Substandard.................................  $    2,998   $     479
  Doubtful....................................         519         255
  Loss........................................          --          --
General loss allowance........................          --         682
                                                ----------   ---------
Total.........................................  $    3,517   $   1,416
                                                ==========   =========

         The Bank regularly reviews the loan portfolio to determine whether any
loans require classification in accordance with applicable regulations. Not all
classified assets constitute non-performing assets.

Allowance for Loan Losses

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

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

                                        6
<PAGE>

         Summary of Loan Loss Experience. The following table analyzes changes
in the allowance during the fiscal years ended June 30, 2003 and 2002.

<TABLE>
<CAPTION>
                                                                                   At June 30,
                                                                             ----------------------
                                                                                2003        2002
                                                                             ---------    ---------
                                                                             (Dollars In Thousands)
<S>                                                                          <C>          <C>
Balance at beginning of period ...........................................   $   1,066    $     570
                                                                             ---------    ---------
Loans charged off:
  Real estate ............................................................          15           --
  Other ..................................................................          37            4
                                                                             ---------    ---------
    Total loans charged-off ..............................................          52            4

Recoveries:
  Real estate ............................................................           2           --
  Other ..................................................................          --           --
                                                                             ---------    ---------
    Total recoveries .....................................................           2           --
                                                                             ---------    ---------
Net loans charged-off ....................................................          50            4
                                                                             ---------    ---------
Provision for loan losses ................................................         400          500
                                                                             ---------    ---------
Balance at end of period .................................................   $   1,416    $   1,066
                                                                             =========    =========
Ratio of net charge-offs to average loans outstanding during the period ..        0.04%        0.00%
                                                                             =========    =========
</TABLE>

         Allocation of Allowance for Loan Losses. The following table presents
an analysis of the allocation of allowance for loan losses at the dates
indicated. The allocation of the allowance to each category is not necessarily
indicative of future loss in any particular category and does not restrict the
use of the allowance to absorb losses in other categories.

<TABLE>
<CAPTION>
                                                                         At June 30,
                                           -----------------------------------------------------------------------
                                                           2003                                2002
                                           ----------------------------------   ----------------------------------
                                                       Percent of    Percent                Percent of    Percent
                                           Amount of   Allowance     of Loans   Amount of   Allowance     of Loans
                                           Loan Loss    to Total     to Gross   Loan Loss    to Total     to Gross
                                           Allowance   Allowance      Loans     Allowance   Allowance      Loans
                                           ---------   ----------   ---------   ---------   ----------   ---------
                                                                   (Dollars in Thousands)
<S>                                        <C>         <C>          <C>         <C>         <C>          <C>
Real estate loans:
  One- to four-family residential ......   $     393         27.8%       56.8%  $     396         37.1%      59.7%

  Commercial ...........................         360         25.4        18.3         126         11.8        9.6
  Construction .........................          --           --         4.6          --           --       10.6
  Home improvement loans ...............          32          2.3         7.3          42          4.0        7.1
                                           ---------   ----------   ---------   ---------   ----------   --------
    Total real estate loans ............         785         55.4        87.1         564         52.9       87.0

Other loans:
  Commercial ...........................         340         24.0         5.3         230         21.5        5.7
  Consumer .............................         185         13.1         6.8         140         13.1        7.0
  Loans secured by deposits ............          --           --         0.8          --           --        0.3

Unallocated ............................         106          7.5          --         132         12.5         --
                                           ---------   ----------   ---------   ---------   ----------   --------
    Total allowance for loan losses ....   $   1,416        100.0%      100.0%  $   1,066        100.0%     100.0%
                                           =========   ==========   =========   =========   ==========   ========
</TABLE>

                                        7
<PAGE>

Investments

         The Company's investment portfolio consists of short-term U.S. Treasury
and federal agency securities, interest earning deposits in other financial
institutions, federal funds sold, and to a lesser extent mortgage back
securities, marketable equity securities and FHLB stock. At June 30, 2003,
approximately $26.6 million, or 18.6%, of total assets consisted of such
investments. The Bank had $3.6 million in interest-earning deposits and $3.8
million in federal funds sold as of that date.

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

                                                             At June 30,
                                                     ---------------------------
                                                         2003           2002
                                                     ------------   ------------
                                                            (In Thousands)
Securities available for sale:
  Marketable equity securities ...................   $        449   $        452

Securities held to maturity:
  U.S. government and agency securities ..........          8,100          3,600
Municipal securities .............................            948          1,269
Mortgage-backed securities .......................          9,016              8
                                                     ------------   ------------
    Total securities held to maturity ............         18,064          4,877

Interest-earning balances in other banks .........          3,580          2,487
Federal Funds sold ...............................          3,833          3,330
Federal Home Loan Bank Stock .....................            675          1,000
                                                     ------------   ------------
    Total investments ............................   $     26,601   $     12,146
                                                     ============   ============

         The following table provides costs, fair values, intervals of
maturities or repricings, and weighted average yields of our investment
portfolio at June 30, 2003:

<TABLE>
<CAPTION>
                                                      Amortized      Fair          Book
                                                         Cost        Value         Yield
                                                     ----------   ----------    ----------
<S>                                                  <C>          <C>           <C>
Securities available for sale:
  Marketable equity securities ...................          500          449          6.59%
                                                     ==========   ==========
Securities held to maturity:
  U.S. government and agency securities
   Due after one but within five years ...........        8,100        8,176          3.31%
                                                     ----------   ----------
Mortgage-backed securities
 Due after five but within ten years .............        9,016        9,088          3.82%
                                                     ----------   ----------

Municipal securities
  Due after one but within five years ............          524          532          4.40%
  Due after five but within ten years ............          424          425          4.00%
                                                     ----------   ----------
                                                            948          957          4.22%
                                                     ----------   ----------

    Total securities available for sale
      Due after one but within five years ........        8,624        8,708          3.38%
      Due after five but within ten years ........        9,440        9,513          3.83%
                                                     ----------   ----------
                                                     $   18,064   $   18,221          3.61%
                                                     ==========   ==========
</TABLE>

         At June 30, 2003, the market value of the Bank's investment securities
held to maturity totaled $18.2 million.

                                        8
<PAGE>

Sources of Funds

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

         Deposits. The Bank attracts deposits principally from within
Chesterfield, Marlboro and Florence Counties through the offering of a selection
of deposit instruments, including passbook accounts, checking accounts, money
market accounts, fixed term certificates of deposit, individual retirement
accounts and savings accounts. The Bank does not actively solicit or advertise
for deposits outside of Chesterfield, Marlboro and Florence Counties, and
substantially all of the depositors are residents of these Counties. Deposit
account terms vary, with the principal differences being the minimum balance
required, the amount of time the funds remain on deposit and the interest rate.
The Bank does not pay broker fees for any deposits received.

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

         The flow of deposits is influenced significantly by general economic
conditions, changes in money market and other prevailing interest rates and
competition. The variety of deposit accounts offered has allowed the Bank to be
competitive in obtaining funds and to respond with flexibility to changes in
consumer demand. The Bank has become more susceptible to short-term fluctuations
in deposit flows as customers have become more interest rate conscious. The Bank
manages the pricing of deposits in keeping with asset/liability management and
profitability objectives. Based on experience, the Bank believes that passbook
and MMDAs are relatively stable sources of deposits. However, the ability to
attract and maintain certificates of deposit, and the rates paid on these
deposits, have been and will continue to be significantly affected by market
conditions. At June 30, 2003, 59.3% of deposit accounts were certificate of
deposit accounts, of which $45.0 million have maturities of one year or less.

         Total deposits at June 30, 2003 were approximately $108.8 million,
compared to approximately $88.1 million at June 30, 2002. The Bank's deposit
base is somewhat dependent upon the manufacturing sector of the Bank's market
area. Although the manufacturing sector in the Bank's market area is relatively
diversified and not significantly dependent upon any industry, a loss of a
material portion of the manufacturing workforce could adversely affect the
ability to attract deposits due to the loss of personal income attributable to
the lost manufacturing jobs and the attendant loss in service industry jobs.

         Borrowings. The Bank focuses on generating high quality loans and then
seek the best source of funding from deposits, investments or borrowings. At
June 30, 2003, the Bank had borrowings of $8.0 million from the FHLB of Atlanta.
The Bank is eligible to borrow up to 65% of the outstanding balance of its
one-to four family residential mortgage loans, collateralized by these loans.
The Bank does not anticipate any difficulty in obtaining advances appropriate to
meet these requirements in the future.

                                        9
<PAGE>

         The following table sets forth the maximum month-end balance and
average balance of FHLB advances, for the periods indicated.

                                                  Year Ended June 30,
                                             -----------------------------
                                                 2003            2002
                                             -------------   -------------
Maximum Balance:
   FHLB advances...........................  $  28,394,000   $  20,000,000

Average Balance:
   FHLB advances...........................  $  12,115,000   $  16,754,000

         The following table presents certain information relating to the
maturities of FHLB of Atlanta borrowings at June 30, 2003.

          Maturing during the year                         Balance at June 30,
                ended June 30           Interest Rates            2003
         -------------------------      --------------     -------------------
                    2011                      3.97%          $    8,000,000

Additional Risk Factors

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

The Impact of Changes in Interest Rates

         The Bank's ability to make a profit, like that of most financial
institutions, substantially depends upon net interest income, which is the
difference between the interest income earned on interest earning assets (such
as mortgage loans) and the interest expense paid on interest-bearing liabilities
(such as deposits). Approximately 57.3% of our real estate loans have rates of
interest which are fixed for the term of the loan ("fixed rate"), while deposit
accounts have significantly shorter terms to maturity than real estate loans.
Because interest-earning assets generally have fixed rates of interest and have
longer effective maturities than interest-bearing liabilities, the yield on the
Bank's interest earning assets generally will adjust more slowly to changes in
interest rates than the cost of its interest-bearing liabilities. The slower
adjustment of interest earning assets as compared to interest-bearing
liabilities results in the Bank having a "negative gap." At June 30, 2003, our
one year interest rate gap was negative 28.3%. As a result, our net interest
income will be adversely affected by material and prolonged increases in
interest rates. In addition, rising interest rates may adversely affect our
earnings because there might be a lack of customer demand for loans. Changes in
interest rates also can affect the average life of loans and mortgage-backed
securities.

Reliance on Certificate of Deposit Accounts

         A significant percentage of our deposit accounts are certificates of
deposit rather than passbook or money market accounts. At June 30, 2003, $64.5
million, or 59.3% of our total deposits were certificate of deposit accounts.
$45.0 million of our certificates of deposit mature within one year.
Certificates of deposit can be a more interest rate sensitive source of funds
than passbook or money market accounts. In the event that interest rates
significantly increase, or if we do not offer competitive rates of interest on
its certificates of deposit, the Bank may experience a significant decrease in
its deposit accounts.

                                       10
<PAGE>

Competition

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

Geographic Concentration of our Loans

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

Financial Institution Regulation and Future of the Thrift Industry

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

REGULATION

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

Federal Regulation of Savings Institutions

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

         Loans to One Borrower. Federal savings banks generally may not make a
loan or extend credit to a single or related group of borrowers in excess of 15%
of unimpaired capital and surplus on an unsecured basis. An additional amount
may be lent, equal to 10% of unimpaired capital and surplus, if the loan is
secured by readily marketable collateral, which is defined to include certain
securities and bullion, but generally does not include real estate. As of June
30, 2003 the Bank was in compliance with its loans-to-one-borrower limitations.

                                       11
<PAGE>

         Qualified Thrift Lender Test. As a federal savings bank, the Bank is
required to satisfy a qualified thrift lender test whereby it must maintain at
least 65% of its "portfolio assets" in "qualified thrift investments" consisting
primarily of residential mortgages and related investments, including
mortgage-backed and related securities. "Portfolio assets" generally means total
assets less specified liquid assets up to 20% of total assets, goodwill and
other intangible assets, and the value of property used to conduct business. A
savings bank that fails the qualified thrift lender test must either convert to
a bank charter or operate under specified restrictions. As of June 30, 2003, the
Bank maintained approximately 76.0% of its portfolio assets in qualified thrift
investments and, therefore, met the qualified thrift lender test.

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

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

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

         Transactions with Related Parties. The Bank's authority to engage in
transactions with related parties or "affiliates" or to make loans to specified
insiders, is limited by Sections 23A and 23B of the Federal Reserve Act. The
term "affiliates" for these purposes generally means any company that controls
or is under common control with an institution, including the Company and its
non-savings institution subsidiaries. Section 23A limits the aggregate amount of
certain "covered" transactions with any individual affiliate to 10% of the
capital and surplus of the savings institution and also limits the aggregate
amount of covered transactions with all affiliates to 20% of the savings
institution's capital and surplus. Covered transactions with affiliates are
required to be secured by collateral in an amount and of a type described in
Section 23A and the purchase of low quality assets from affiliates is generally
prohibited. Section 23B provides that covered transactions with affiliates,
including loans and asset purchases, must be on terms and under circumstances,
including credit standards, that are substantially the same or at least as
favorable to the institution as those prevailing at the time for comparable
transactions with non-affiliated companies. In addition, savings institutions
are prohibited from lending to any affiliate that is engaged in activities that
are not permissible for bank holding companies and no savings institution may
purchase the securities of any affiliate other than a subsidiary.

                                       12
<PAGE>

         The Bank's authority to extend credit to executive officers, directors
and 10% stockholders, as well as entities controlled by these persons, is
currently governed by Sections 22(g) and 22(h) of the Federal Reserve Act, and
also by Regulation O. Among other things, these regulations generally require
these loans to be made on terms substantially the same as those offered to
unaffiliated individuals and do not involve more than the normal risk of
repayment. However, regulations permit executive officers and directors to
receive the same terms through benefit or compensation plans that are widely
available to other employees, as long as the director or executive officer is
not given preferential treatment compared to other participating employees.
Regulation O also places individual and aggregate limits on the amount of loans
the Bank may make to these persons based, in part, on the Bank's capital
position, and requires approval procedures to be followed. At June 30, 2003, the
Bank was in compliance with these regulations.

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

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

Capital Requirements.

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

         The risk-based capital standard for savings institutions requires the
maintenance of Tier 1 (core) and total capital (which is defined as core capital
and supplementary capital) to risk-weighted assets of at least 4% and 8%,
respectively. In determining the amount of risk-weighted assets, all assets,
including certain off-balance sheet assets, are multiplied by a risk-weight
factor of 0% to 100%, assigned by the Office of Thrift Supervision capital
regulation based on the risks believed inherent in the type of asset. Core (Tier
1) capital is defined as common stockholders' equity (including retained
earnings), certain noncumulative perpetual preferred stock and related surplus
and minority interests in equity accounts of consolidated subsidiaries less
intangibles other than certain mortgage servicing rights and credit card
relationships. The components of supplementary capital currently include
cumulative preferred stock, long-term perpetual preferred stock,

                                       13
<PAGE>

mandatory convertible securities, subordinated debt and intermediate preferred
stock, the allowance for loan and lease losses limited to a maximum of 1.25% of
risk-weighted assets and up to 45% of unrealized gains on available-for-sale
equity securities with readily determinable fair market values. Overall, the
amount of supplementary capital included as part of total capital cannot exceed
100% of core capital.

         The capital regulations also incorporate an interest rate risk
component. Savings institutions with "above normal" interest rate risk exposure
are subject to a deduction from total capital for purposes of calculating their
risk-based capital requirements. For the present time, the Office of Thrift
Supervision has deferred implementation of the interest rate risk capital
charge. At June 30, 2003, the Bank met each of its capital requirements.

Prompt Corrective Regulatory Action

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

Insurance of Deposit Accounts

         The Federal Deposit Insurance Corporation has adopted a risk-based
deposit insurance assessment system. The Federal Deposit Insurance Corporation
assigns an institution to one of three capital categories based on the
institution's financial information, as of the reporting period ending seven
months before the assessment period, and one of three supervisory subcategories
within each capital group. The three capital categories are well capitalized,
adequately capitalized and undercapitalized. The supervisory subgroup to which
an institution is assigned is based on a supervisory evaluation provided to the
Federal Deposit Insurance Corporation by the institution's primary federal
regulator and information which the Federal Deposit Insurance Corporation
determines to be relevant to the institution's financial condition and the risk
posed to the deposit insurance funds. An institution's assessment rate depends
on the capital category and supervisory category to which it is assigned. The
Federal Deposit Insurance Corporation is authorized to raise the assessment
rates. The Federal Deposit Insurance Corporation has exercised this authority
several times in the past and may raise insurance premiums in the future. If
this type of action is taken by the Federal Deposit Insurance Corporation, it
could have an adverse effect on the earnings of the Bank.

                                       14
<PAGE>

Federal Home Loan Bank System

         The Bank is a member of the Federal Home Loan Bank System, which
consists of 12 regional Federal Home Loan Banks. The Federal Home Loan Bank
System provides a central credit facility primarily for member institutions. The
Bank, as a member of the Federal Home Loan Bank of Atlanta, is required to
acquire and hold shares of capital stock in that Federal Home Loan Bank in an
amount at least equal to 1% of the aggregate principal amount of its unpaid
residential mortgage loans and similar obligations at the beginning of each
year, or 1/20 of its borrowings from the Federal Home Loan Bank, whichever is
greater. As of June 30, 2003, the Bank was in compliance with this requirement.
The Federal Home Loan Banks are required to provide funds for the resolution of
insolvent thrifts and to contribute funds for affordable housing programs. These
requirements could reduce the amount of dividends that the Federal Home Loan
Banks pay to their members and could also result in the Federal Home Loan Banks
imposing a higher rate of interest on advances to their members.

Federal Reserve System

         The Federal Reserve Board regulations require savings institutions to
maintain noninterest-earning reserves against their transaction accounts, such
as negotiable order of withdrawal and regular checking accounts. At June 30,
2003, the Bank was in compliance with these reserve requirements. The balances
maintained to meet the reserve requirements imposed by the Federal Reserve Board
may be used to satisfy liquidity requirements imposed by the Office of Thrift
Supervision.

The USA PATRIOT Act

         In response to the events of September 11th, the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001, or the USA PATRIOT Act, was signed into law on
October 26, 2001. The USA PATRIOT Act gives the federal government new powers to
address terrorist threats through enhanced domestic security measures, expanded
surveillance powers, increased information sharing, and broadened anti-money
laundering requirements. By way of amendments to the Bank Secrecy Act, Title III
of the USA PATRIOT Act takes measures intended to encourage information sharing
among bank regulatory agencies and law enforcement bodies. Further, certain
provisions of Title III impose affirmative obligations on a broad range of
financial institutions, including banks, thrifts, brokers, dealers, credit
unions, money transfer agents and parties registered under the Commodity
Exchange Act.

         Among other requirements, Title III of the USA PATRIOT Act imposes the
following requirements with respect to financial institutions:

..        Pursuant to Section 352, all financial institutions must establish
         anti-money laundering programs that include, at minimum: (i) internal
         policies, procedures, and controls; (ii) specific designation of an
         anti-money laundering compliance officer; (iii) ongoing employee
         training programs; and (iv) an independent audit function to test the
         anti-money laundering program.

..        Section 326 of the Act authorizes the Secretary of the Department of
         Treasury, in conjunction with other bank regulators, to issue
         regulations that provide for minimum standards with respect to customer
         identification at the time new accounts are opened. On July 23, 2002,
         the Office of Thrift Supervision and the other federal bank regulators
         jointly issued proposed rules to implement Section 326. The proposed
         rules require financial institutions to establish a program specifying
         procedures for obtaining identifying information from customers seeking
         to open new accounts. This identifying information would be essentially
         the same information currently obtained by most financial institutions
         for individual customers.

..        Section 312 of the Act requires financial institutions that establish,
         maintain, administer, or manage private banking accounts or
         correspondence accounts in the United States for non-United States
         persons or their representatives (including foreign individuals
         visiting the United States) to establish appropriate, specific, and,
         where necessary, enhanced due diligence policies, procedures, and
         controls designed to detect and report money laundering.

                                       15
<PAGE>

..        Effective December 25, 2001, financial institutions are prohibited from
         establishing, maintaining, administering or managing correspondent
         accounts for foreign shell banks (foreign banks that do not have a
         physical presence in any country), and will be subject to certain
         record keeping obligations with respect to correspondent accounts of
         foreign banks.

..        Bank regulators are directed to consider a holding company's
         effectiveness in combating money laundering when ruling on Federal
         Reserve Act and Bank Merger Act applications.

..        The federal banking agencies have begun to propose and implement
         regulations pursuant to the USA PATRIOT Act. These proposed and interim
         regulations would require financial institutions to adopt the policies
         and procedures contemplated by the USA PATRIOT Act.

Holding Company Regulation

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

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

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

         The Office of Thrift Supervision has proposed new rules which would
require savings and loan holding companies to notify the Office of Thrift
Supervision prior to engaging in transactions which (i) when combined with other
debt transactions engaged in during a 12-month period, would increase the
holding company's consolidated debt by 5% or more; (ii) when combined with other
asset acquisitions engaged in during a 12-month period, would result in asset
acquisitions of greater than 15% of the holding company's consolidated assets;
or (iii) when combined with any other transactions engaged in during a 12-month
period, would reduce the holding company's consolidated tangible capital to
consolidated tangible assets by 10% or more. The Office of Thrift Supervision
has proposed to exempt from this rule holding companies whose consolidated
tangible capital exceeds 10% following the transactions.

         The Office of Thrift Supervision has also proposed new rules which
would codify the manner in which the Office of Thrift Supervision reviews the
capital adequacy of savings and loan holding companies and determines when a
holding company must maintain additional capital. The Office of Thrift
Supervision is not currently proposing to establish uniform capital adequacy
guidelines for all savings and loan holding companies.

         The Company and the Bank are unable to predict whether or when these
proposed regulations will be adopted, and what effect, if any, the adoption of
these regulations would have on their business.

                                       16
<PAGE>

Sarbanes-Oxley Act of 2002

         On July 30, 2002, the President signed into law the Sarbanes-Oxley Act
of 2002 (the "Act"), which implemented legislative reforms intended to address
corporate and accounting fraud. In addition to the establishment of a new
accounting oversight board that will enforce auditing, quality control and
independence standards and will be funded by fees from all publicly traded
companies, the Act places certain restrictions on the scope of services that may
be provided by accounting firms to their public company audit clients. Any
non-audit services being provided to a public company audit client will require
preapproval by the company's audit committee. In addition, the Act makes certain
changes to the requirements for partner rotation after a period of time. The Act
requires chief executive officers and chief financial officers, or their
equivalent, to certify to the accuracy of periodic reports filed with the
Securities and Exchange Commission, subject to civil and criminal penalties if
they knowingly or willingly violate this certification requirement. In addition,
under the Act, counsel will be required to report evidence of a material
violation of the securities laws or a breach of fiduciary duty by a company to
its chief executive officer or its chief legal officer, and, if such officer
does not appropriately respond, to report such evidence to the audit committee
or other similar committee of the board of directors or the board itself.

         Under the Act, longer prison terms will apply to corporate executives
who violate federal securities laws; the period during which certain types of
suits can be brought against a company or its officers is extended; and bonuses
issued to top executives prior to restatement of a company's financial
statements are now subject to disgorgement if such restatement was due to
corporate misconduct. Executives are also prohibited from insider trading during
retirement plan "blackout" periods, and loans to company executives (other than
loans by financial institutions permitted by federal rules and regulations) are
restricted. In addition, a provision directs that civil penalties levied by the
Securities and Exchange Commission as a result of any judicial or administrative
action under the Act be deposited to a fund for the benefit of harmed investors.
The Federal Accounts for Investor Restitution provision also requires the
Securities and Exchange Commission to develop methods of improving collection
rates. The legislation accelerates the time frame for disclosures by public
companies, as they must immediately disclose any material changes in their
financial condition or operations. Directors and executive officers must also
provide information for most changes in beneficial ownership in a company's
securities within two business days of the change.

         The Act also increases the oversight of, and codifies certain
requirements relating to audit committees of public companies and how they
interact with the company's "registered public accounting firm." Audit Committee
members must be independent and are absolutely barred from accepting consulting,
advisory or other compensatory fees from the public company. In addition,
companies must disclose whether at least one member of the committee is a
"financial expert" (as such term will be defined by the Securities and Exchange
Commission) and if not, why not. Under the Act, a company's registered public
accounting firm will be prohibited from performing statutorily mandated audit
services for a company if such company's chief executive officer, chief
financial officer, comptroller, chief accounting officer or any person serving
in equivalent positions had been employed by such firm and participated in the
audit of such company during the one-year period preceding the audit initiation
date. The Act prohibits any officer or director of a company or any other person
acting under their direction from taking any action to fraudulently influence,
coerce, manipulate or mislead any independent accountant engaged in the audit of
the company's financial statements for the purpose of rendering the financial
statements materially misleading. The Act also requires the Securities and
Exchange Commission to prescribe rules requiring inclusion of any internal
control report and assessment by management in the annual report to
shareholders. The Act requires the company's registered public accounting firm
that issues the audit report to attest to and report on management's assessment
of the company's internal controls.

         Although the Company anticipates that it will incur additional expense
in complying with the provisions of the Sarbanes-Oxley Act and the resulting
regulations, management does not expect that such compliance will have a
material impact on the Company's results of operations or financial condition.

                                       17
<PAGE>

Federal Securities Laws

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

Item 2.  Properties

         (a)    The Company currently conducts its business through 2 full
service banking offices. The following table sets forth the Company's offices as
of June 30, 2003:

<TABLE>
<CAPTION>
                                              Leased         Original
                                                or              Year         Date of Lease
Location          Owned                      Acquired        Leased or        Expiration
--------          -----                   --------------     ---------      --------------
<S>                                       <C>                   <C>         <C>
515 Market Street                              Owned            1981              --
Cheraw, South Carolina 29520

452 Second Loop Road                      Building Owned        2002              --
Florence, South Carolina 29504             Land Leased          2002        September 2041
</TABLE>

Item 3.  Legal Proceedings

         None.

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

         Not applicable.

                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Shareholder Matters

         Information included in Great Pee Dee Bancorp, Inc.'s 2003 Annual
Report to Shareholders is herein incorporated by reference.

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

         Information included in Great Pee Dee Bancorp, Inc.'s 2003 Annual
Report to Shareholders is herein incorporated by reference.

Item 7.  Financial Statements

         Information included in Great Pee Dee Bancorp, Inc.'s 2003 Annual
Report to Shareholders is herein incorporated by reference.

                                       18
<PAGE>

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

         Not applicable.

Item 8A. Controls and Procedures

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

         There were no significant changes made in our internal controls during
the period covered by this report or, to our knowledge, in other factors that
could significantly affect these controls subsequent to the date of their
evaluation.

                                    PART III

Item 9.  Directors and Officers of the Registrant

         Information included in Great Pee Dee Bancorp, Inc.'s Proxy Statement
for its 2003 Annual Meeting of Shareholders is incorporated herein by reference.

Item 10. Executive Compensation

         Information included in Great Pee Dee Bancorp, Inc.'s Proxy Statement
for its 2003 Annual Meeting of Shareholders is incorporated herein by reference.

Item 11. Security Ownership of Certain Beneficial Owners and Management

         The Company does not have any equity compensation program that was not
approved by stockholders, other than its employee stock ownership plan.

         Set forth below is certain information as of June 30, 2003 regarding
equity compensation plans under which equity securities of the Company are
authorized for issuance.

<TABLE>
<CAPTION>
                                 Number of securities to be
                                   issued upon exercise of                                 Number of securities
 Equity compensation plans         outstanding options and         Weighted average       remaining available for
 approved by stockholders                 rights                   exercise price          issuance under plan
-----------------------------------------------------------------------------------------------------------------
<S>                                        <C>                      <C>                           <C>
Stock Option Plan                          211,151                      11.76                      7,234
-----------------------------------------------------------------------------------------------------------------
Recognition and Retention Plan               2,200(1)               Not Applicable                 7,482
-----------------------------------------------------------------------------------------------------------------
                                           213,351                    $ 11.76                     14,716
=================================================================================================================
</TABLE>

         (1)   Represents shares that have been granted but have not yet vested.

                                       19
<PAGE>

         Information included in Great Pee Dee Bancorp, Inc.'s Proxy Statement
for its 2003 Annual Meeting of Shareholders is incorporated herein by reference.

Item 12. Certain Relationships and Related Transactions

         Information included in Great Pee Dee Bancorp, Inc.'s Proxy Statement
for its 2003 Annual Meeting of Shareholders is incorporated herein by reference.

                                     PART IV

Item 13. Exhibits and Reports on Form 8-K

         (a)      The following documents appear in sections of the Registrants
                  2003 Annual Report to Shareholders under the same caption, and
                  are incorporated herein by reference. No other sections of the
                  2003 Annual Report to Shareholders are incorporated herein by
                  this reference.

         (8)      Report to Shareholders
         (9)      Selected Financial and Other Data
         (10)     Managements Discussion and Analysis of Financial Condition and
                  Results of Operations
         (11)     Independent Auditors' Report (12) Consolidated Financial
                  Statements
                  (i)      Consolidated Statements of Financial Condition
                  (ii)     Consolidated Statements of Operations
                  (iii)    Consolidated Statements of Stockholders' Equity
                  (iv)     Consolidated Statements of Cash Flows
                  (v)      Notes to Consolidated Financial Statements
         (13)     Corporate Information
         (b)      The following exhibits are filed as part of this report.
         3.1      Certificate of Incorporation of Great Pee Dee Bancorp, Inc.*
         3.2      Bylaws of Great Pee Dee Bancorp, Inc.*
         4.0      Stock Certificate of Great Pee Dee Bancorp, Inc.*
         10.1     Employee Agreement for Herbert W. Watts*
         10.2     Great Pee Dee Bancorp, Inc. Employee Stock Ownership Plan and
                  Trust*
         10.3     Employee Agreement for John S. Long**
         13       Great Pee Dee Bancorp, Inc. 2003 Annual Report to Shareholders
         21       Subsidiary List
         23       Consent of Dixon, Odom PLLC
         31.1     Certification of Chief Executive Officer pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002
         31.2     Certification of Chief Financial Officer pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002
         32       Certification pursuant to 18 U.S.C. Section 1350, as adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

         (c)      Reports on Form 8-K - None.

                                       20
<PAGE>

*        Incorporated herein by reference into this document from the Exhibits
         to Form SB-2 Registration Statement, initially filed on September 26,
         1997, Registration No. 333-36489.
**       Incorporated herein by reference into this document from the Exhibits
         to the Annual Report on Form 10-KSB, filed on September 27, 2001.

                                       21
<PAGE>

                                   SIGNATURES

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

                           GREAT PEE DEE BANCORP, INC.

Date: September 26, 2003               By: /s/ Herbert W. Watts
                                           -------------------------------------
                                           Herbert W. Watts
                                           President and Chief Executive Officer

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

By: /s/ Herbert W. Watts                        By: /s/ Johnnie L. Craft
    ----------------------------------              ----------------------------
    Herbert W. Watts, President, Chief              Johnnie L. Craft, Secretary
      Executive Officer and Director                        and Treasurer
      (Principal Executive Officer)                   (Principal Financial and
                                                          Accounting Officer)

Date:  September 26, 2003                       Date:  September 26, 2003



By:  /s/ Robert M. Bennett                      By:  /s/ William R. Butler
     ----------------------------------              ---------------------------
     Robert M. Bennett, Jr., Director                William R. Butler,
                                                         Director

Date:  September 26, 2003                       Date:  September 26, 2003



By: /s/ James C. Crawford, III                  By:  /s/ Henry P. Duvall, IV
    ----------------------------------               ---------------------------
    James C. Crawford, III, Chairman                 Henry P. Duvall, IV,
                                                          Director

Date:  September 26, 2003                       Date:  September 26, 2003



By: /s/ H. Malloy Evans, Jr.                    By:  /s/ John S. Long
    ----------------------------------               ---------------------------
    H. Malloy Evans, Jr., Director                   John S. Long, Director,
                                                       Vice President and
                                                      Chief Operating Officer

Date:  September 26, 2003                       Date:  September 26, 2003



By: /s/ Cornelius B. Young
    ----------------------------------          Date:  September 26, 2003
    Cornelius B. Young, Director

                                       22