SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D. C.

                                   FORM 10-KSB

                 Annual Report under Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                   For the Fiscal Year Ended December 31, 2003

                          COMMISSION FILE NO. 000-30001

                       DARLINGTON COUNTY BANCSHARES, INC.
                       ----------------------------------
             (Exact name or Registrant as specified in its charter)

       South Carolina                                     57-0805621
(State of other jurisdiction of                         (IRS Employer
 incorporation or organization)                       Identification No.)

                     202 CASHUA STREET, DARLINGTON, SC 29532
                     ----------------------------------------
           (Address of Principal Executive Office, Including Zip Code)

       Registrant's Telephone Number, Including Area Code: (843) 395-1956

         Securities Registered under Section 12(b) of the Exchange Act :
                                      NONE
                                      ----

         Securities Registered under Section 12(g) of the Exchange Act :
                          COMMON STOCK. $.01 PAR VALUE
                                (Title of Class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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  pursuant to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of Registrant's knowledge in definitive proxy or information statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [ X ]

The issuer's revenues for its most recent fiscal year were $2,133,533.

The aggregate  market value of the voting and  non-voting  common equity held by
nonaffiliates of the Registrant (135,472 shares) has not been determined.  As of
such date,  no  organized  trading  market  existed for the common  stock of the
Registrant. For the purpose of this response, officers, directors and holders of
5% or more of the  Registrant's  common stock are  considered  affiliates of the
Registrant at that date.

The number of shares  outstanding of the Registrant's  common stock, as of March
15, 2003: 158,000 shares of $.01 par value common stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  Registrant's  Proxy  Statement  for the 2004 Annual  Meeting of
Shareholders - Part III

         Transitional Small Business Disclosure Format Yes [ ] No [ X ]

<PAGE>

                           DARLINGTON BANCSHARES, INC.

                           FORWARD LOOKING STATEMENTS

From time to time,  Darlington  County  Bancshares,  Inc.  (the  "Company")  may
publish  forward-looking  statements  relating  to such  matters as  anticipated
financial  performance,  business  prospects,  technological  developments,  new
products and similar matters.  The Private  Securities  Litigation Reform Act of
1995 provides a safe harbor for forward-looking  statements.  In order to comply
with terms of the safe harbor, the Company notes that a variety of factors could
cause the Company's actual results and experience to differ  materially from the
anticipated   results  or  other   expectations   expressed  in  the   Company's
forward-looking  statements.  The risks and  uncertainties  that may  affect the
operations,  performances,  development  and results of the  Company's  business
include, but are not limited to, the following:

     o    risks from changes in economic and industry conditions;

     o    changes in interest rates;

     o    risks inherent in making loans including  repayment risks and value of
          collateral;

     o    dependence on senior management; and

     o    recently-enacted or proposed legislation.

Statements  contained  in this  filing  regarding  the demand for the  Company's
products and services,  changing economic conditions,  interest rates,  consumer
spending and numerous  other factors may be  forward-looking  statements and are
subject to uncertainties and risks. When relying on  forward-looking  statements
to make  decisions  with  respect  to the  Company,  investors  and  others  are
cautioned to consider these and other risks and uncertainties.

Such forward-looking  statements speak only of the date on which such statements
are made. We undertake no obligation to update any forward-looking  statement to
reflect  events  or  circumstances  that  occur  after  the date on  which  such
statement is made.  In addition,  certain  statements  in future  filings by the
Company with the  Securities and Exchange  Commission,  in press releases and in
oral and written  statements  made by or with the approval of the Company  which
are not statements of historical fact constitute forward-looking statements.

ITEM 1.  DESCRIPTION OF BUSINESS
                                     GENERAL

Darlington County Bancshares, Inc. was organized in July 1999 for the purpose of
being the holding  company for Darlington  County Bank (the "Bank").  On July 1,
1999,  pursuant  to a Plan of Merger  approved by the  stockholders,  all of the
outstanding  shares of common  stock of the Bank were  exchanged  for  shares of
common stock of the Company.  The Company presently engages in no other business
other  than that of owning  the  Bank,  has no  employees  and  operates  as one
business segment. The Company is subject to regulation by the Board of Governors
of the Federal Reserve System (the "Federal Reserve Board").

Prior to the organization of the Company, the Bank filed its periodic securities
- related reports with the Federal Deposit Insurance Corporation. Beginning July
1, 1999,  with the  formation of the bank holding  company,  the Company  became
subject to the  informational  requirements  of the  Securities  Exchange Act of
1934.

Darlington  County Bank was  incorporated  under the laws of South  Carolina and
began operations on March 10, 1986 as a community bank.

The Company's  principal  offices are located at 202 Cashua Street,  Darlington,
South Carolina 29532.  The Company's  telephone  number is (843)  395-1956.  The
Bank's sole branch is also located in this facility.

The Bank  provides a variety of  services  and  products to small  business  and
individual  customers.  The  Bank's  services  include  checking  accounts,  NOW
accounts, certificates of deposit, money market accounts, savings accounts, real
estate loans,  overdraft protection,  lines of credit, and personal and business
use loans. The Bank has no material  concentration of deposits from one customer
or group of customers.  No significant portion of loans is concentrated within a
single industry or group of related  industries.  There are no material seasonal
factors that would have an adverse effect on the Bank.

The  Company's  significant  accounting  policies  are included  throughout  the
following  discussion  and  are  summarized  in  Note  1 of the  Company's  2003
consolidated financial statements.

                                      -1-
<PAGE>

                       DARLINGTON COUNTY BANCSHARES, INC.

The  Bank  serves  its  customers  from  one  location.  It  primarily  services
individuals and small businesses in the South Carolina midlands region.

The Bank  competes with one other  community  bank and a credit union as well as
three other major banks. In Darlington  County,  such  competitors  have broader
geographical markets and higher lending limits than the Bank and may, therefore,
make more effective use of media  advertising,  support  services and electronic
technology than can the Bank.

Competition between commercial banks and thrift  institutions  (savings and loan
associations  and  credit  unions)  has been  intensified  significantly  by the
elimination of many previous distinctions between the various types of financial
institutions   and  the  expanded  powers  and  increased   activity  of  thrift
institutions  in areas of banking which  previously  had been the sole domain of
commercial  banks. The Company believes that recent  legislation,  together with
other  regulatory  changes by the primary  regulators  of the various  financial
institutions,  has  resulted  in  the  almost  total  elimination  of  practical
distinctions  between a commercial  bank and thrift  institution.  Consequently,
competition  among financial  institutions  of all types is virtually  unlimited
with respect to legal ability and authority to provide most financial services.

                               NET INTEREST INCOME

AVERAGE BALANCES, INCOME AND EXPENSES AND RATES. The following tables set forth,
for the periods  indicated,  certain  information  related to the Bank's average
balance sheet and its average yields on assets and average costs of liabilities.
Such yields are derived by dividing  income or expense by the average balance of
the  corresponding  assets  or  liabilities  and are  then  annualized.  Average
balances  have been  derived  from the daily  balances  throughout  the  periods
indicated:

<TABLE>
<CAPTION>
AVERAGE BALANCES, INCOME AND EXPENSES AND RATES
                                                                   FOR THE YEAR ENDED
                                           -----------------------------------------------------------------------
                                                 DECEMBER 31, 2003                       DECEMBER 31, 2002
                                           -------------------------------      ----------------------------------
                                           AVERAGE    INCOME/      YIELD/       AVERAGE      INCOME/        YIELD/
(Dollars in thousands)                     BALANCE    EXPENSE       RATE        BALANCE      EXPENSE         RATE
                                           -------    -------      ------       -------      -------        ------
ASSETS:
<S>                                      <C>        <C>              <C>     <C>          <C>               <C>
   Earning Assets:
     Loans (1)                           $   19,883  $   1,454       7.31%   $    18,468  $     1,428       7.73%
     Securities, taxable                      7,771        276       3.55          7,566          340       4.49
     Securities, nontaxable                     416         21       5.04            667           29       4.35
     Federal funds sold and other             2,991         31       1.04          1,822           29       1.59
                                         ----------  ---------     ------    -----------  -----------     ------
       Total earning assets                  31,061      1,782       5.74         28,523        1,826       6.40
                                         ----------  ---------     ------    -----------  -----------     ------
   Cash and due from banks                    1,057                                1,064
   Premises and equipment                       973                                1,035
   Other, less reserve for loan losses          190                                  208
                                         ----------                          -----------
       Total assets                      $   33,281                          $    30,830
                                         ==========                          ===========

LIABILITIES:
   Interest-Bearing Liabilities:
     Savings deposits                    $    2,305  $      25       1.08%   $     2,351  $        41       1.74%
     Time deposits                            6,109        121       1.98          7,680          209       2.72
     NOW and money market                    15,851        228       1.44         12,120          219       1.81
                                         ----------  ---------     ------    -----------  -----------     ------
       Total interest-bearing liabilities    24,265        374       1.54         22,151          469       2.12
                                         ----------  ---------     ------    -----------  -----------     ------
   Demand deposits                            5,012                                4,789
   Accrued interest and other liabilities       148                                  143
   Stockholders' equity                       3,856                                3,747
                                         ----------                          -----------
       Total liabilities and shareholders'
           equity                        $   33,281                          $    30,830
                                         ==========                          ===========
Net interest spread                                                  4.20%                                  4.28%
Net interest income                                 $    1,408                            $     1,357
                                                                                          ===========
Net interest margin                                                  4.53%                                  4.76%
</TABLE>

(1)  The  effect  of loans  in  nonaccrual  status  and  fees  collected  is not
     significant to the computations. All loans and deposits are domestic.

                                      -2-
<PAGE>
                       DARLINGTON COUNTY BANCSHARES, INC.

Net interest income, the principal source of earnings, is the difference between
the income earned on earning assets (primarily loans and investment  securities)
and the  interest  expenses  incurred on interest  bearing  liabilities  (mainly
deposits). The net interest spread represents the differential between the yield
earned  on  average   earning   assets   and  the  rate  paid  on  the   average
interest-bearing  liabilities.  The net interest  yield  represents net interest
income divided by average earning assets.

Net interest income in 2003 increased  $50,658 or 3.73% from net interest income
in 2002. The increase was primarily a result of lower rates on deposit accounts.
Interest income in 2003 decreased $42,807 or 2.34% from the corresponding amount
earned in 2002.  Interest  expense in 2003 decreased  $93,465 or 19.97% from the
amount paid in 2002.  The net  interest  margin  decreased to 4.53% in 2003 from
4.76% in 2002.

ANALYSIS OF CHANGES IN NET INTEREST  INCOME.  The following table sets forth the
effect  that  the  varying  levels  of  earning   assets  and   interest-bearing
liabilities and the applicable  rates have had on changes in net interest income
from 2003 to 2002.
<TABLE>
<CAPTION>
                                                                             2003 COMPARED WITH 2002
                                                                -----------------------------------------------
                                                                                      VARIANCE
                                                                                        DUE TO
  (Dollars in thousands)                                           VOLUME(1)           RATE(1)            TOTAL
                                                                   ---------          ---------           -----
  EARNING ASSETS
<S>                                                             <C>               <C>              <C>
  Loans                                                         $         106     $         (80)   $          26
  Securities, taxable                                                       9               (73)             (64)
  Securities, nontaxable                                                  (12)                5               (7)
  Federal funds sold and other                                             14               (11)               3
                                                                -------------     -------------    -------------
      Total interest income                                               117              (159)             (42)
  INTEREST-BEARING LIABILITIES
  Interest-bearing deposits:
    Savings                                                                (1)              (14)             (15)
    NOW and money market                                                   60               (51)               9
    Time deposits                                                         (38)              (49)             (87)
                                                                -------------     -------------    -------------
      Total interest-bearing liabilities                                   21              (114)             (93)
                                                                -------------     -------------    -------------
      Net interest income                                       $          96     $         (45)   $          51
                                                                =============     =============    =============
</TABLE>
(1)  Volume-rate  changes  have been  allocated  to each  category  based on the
percentage of the total change.

                                 LOAN PORTFOLIO

The  Bank  engages  in  a  full  complement  of  lending  activities,  including
commercial, consumer, installment and real estate loans.

Commercial  loans are spread  across  various  industry  groups,  with no single
industry accounting for a significant amount of the portfolio.  Commercial loans
are made on either a secured or unsecured basis.  When taken,  security consists
of liens on real property,  inventories,  receivables,  equipment, and furniture
and fixtures.  Unsecured commercial loans are generally short-term with emphasis
on repayment  strengths and low debt to net worth ratios.  At December 31, 2003,
approximately $1,410,694 of loans were unsecured.

Consumer  loans are  primarily  secured  installment  loans to  individuals  for
personal,  family  and  household  purposes,   including  automobile  loans  and
pre-approved lines of credit.




                                      -3-
<PAGE>
                       DARLINGTON COUNTY BANCSHARES, INC.

Management believes that the loan portfolio is adequately diversified. There are
no foreign  loans in the  portfolio.  The  following  table  presents  the major
categories  of loans in the Bank's loan  portfolio and total amount of all loans
at December 31, 2003 and 2002:

    (Dollars in thousands)                           2003           2002
                                                     ----           ----
    Real estate - mortgage                         $    9,511    $    8,714
    Real estate - construction                          1,231           732
    Commercial and industrial                           3,755         3,797
    Loans to individuals for household, family
      and other consumer expenditures                   3,955         4,001
    Agriculture                                           931         1,034
    All other loans, including overdrafts               1,139           719
    Deferred loan origination costs                        20            18
                                                   ----------    ----------
                                                   $   20,542    $   19,015
                                                   ==========    ==========

Accrual  of  interest  is  discontinued  on a loan when  management  of the Bank
determines,  after  consideration  of economic  and business  factors  affecting
collection  efforts,  that  collection of interest is doubtful.  At December 31,
2003, and 2002 the Bank had  approximately  $71,097 and $58,800 in  non-accruing
loans, respectively.

With  respect  to the loans  accounted  for on a  non-accrual  basis,  the gross
interest  income that would have been  recorded if the loans had been current in
accordance  with their original terms and  outstanding  throughout the period or
since  origination  amounts to $5,731 for the year ended  December  31, 2003 and
$3,900 for the year ended December 31, 2002.

As of December 31, 2003, there were no loans classified for regulatory  purposes
as doubtful,  substandard or special  mention which (i) represent or result from
trends or  uncertainties  which  management  reasonably  expects will materially
impact  future  operating  results,  liquidity,  or capital  resources,  or (ii)
represent  material  credits about which  management is aware of any information
which  causes  management  to have  serious  doubts  as to the  ability  of such
borrowers to comply with the loan repayment terms.

At December 31, 2003, management is not aware of any potential problem loans.

The  Bank  accounts  for  impaired  loans  in  accordance  with  SFAS  No.  114,
"Accounting by Creditors for Impairment of a Loan".  This standard requires that
all  creditors  value a loan at the loan's fair value if it is probable that the
creditor will be unable to collect all amounts due according to the terms of the
loan  agreement.  Fair value may be  determined  based upon the present value of
expected cash flows,  market price of the loan,  if  available,  or value of the
underlying collateral.  Expected cash flows are required to be discounted at the
loan's  effective  interest  rate.  SFAS No. 114 was  amended by SFAS No. 118 to
allow a creditor to use existing  methods for recognizing  interest income on an
impaired  loan and by  requiring  additional  disclosures  about how a  creditor
recognizes interest income on an impaired loan. When the ultimate collectibility
of an impaired  loan's  principal  is in doubt,  wholly or  partially,  all cash
receipts are applied to principal. When this doubt does not exist, cash receipts
are applied under the contractual terms of the loan agreement. Once the recorded
principal  balance has been reduced to zero, future cash receipts are applied to
interest income, to the extent that any interest has been foregone. Further cash
receipts are recorded as recoveries of any amounts previously charged off.

A loan is also considered  impaired if its terms are modified in a troubled debt
restructuring.  For these accruing  impaired loans,  cash receipts are typically
applied to principal and interest receivable in accordance with the terms of the
restructured loan agreement.  Interest income is recognized on these loans using
the accrual method of accounting.  As of December 31, 2003 and 2002 the Bank had
no impaired loans.

                                      -4-
<PAGE>
                       DARLINGTON COUNTY BANCSHARES, INC.

                            ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is based on management's ongoing evaluation of the
loan portfolio and reflects an amount that, in management's opinion, is adequate
to  absorb  losses in the  existing  portfolio.  In  evaluating  the  portfolio,
management takes into consideration numerous factors, including current economic
conditions,  prior loan loss experience,  the composition of the loan portfolio,
and  management's  estimate  of  anticipated  credit  losses.  Loans are charged
against  the  allowance  at such  time  as they  are  determined  to be  losses.
Subsequent  recoveries  are credited to the  allowance.  The  allowance for loan
losses is estimated by applying  average loss  percentages to accounts graded by
management as substandard or doubtful and adding a percentage of all outstanding
loans to allow for  unidentified  losses  inherent in the portfolio.  Management
reviews  loans that are  exhibiting  signs of  weakness  and grades  those loans
according  to the  borrowers'  financial  status,  ability  to repay,  estimated
collateral values, etc. Management considers the year-end allowance  appropriate
and  adequate  to  cover  possible  losses  in  the  loan  portfolio.   However,
management's judgment is based upon a number of assumptions about future events,
which are believed to be reasonable, but which may or may not prove valid. Thus,
there can be no assurance that charge-offs in future periods will not exceed the
allowance for loan losses or that additional increases in the allowance for loan
losses will not be required.

The Bank is subject to  regulatory  examinations  which  include a review of the
methodology used to calculate loan losses and the size of the allowance for loan
losses in  comparison  to a group of peer  banks  identified  by the  regulatory
agencies.  Regulatory  agencies may require  additions to the allowance for loan
losses based upon the regulators' credit  evaluations and information  available
to them at the time of their examination.

In assessing the adequacy of the allowance,  management relies  predominantly on
its ongoing  review of the loan  portfolio,  which  reviews  specific  loans for
potential charge-off as well as an assessment of the portfolio in the aggregate.

On December 31, 2003 and 2002,  the  allowance  for loan losses was $214,621 and
$205,728,  respectively.  The ratio of the  allowance  for loan  losses to loans
outstanding  was 1.04% at  December  31, 2003 and 1.08% at  December  31,  2002.
During 2003, the Bank  experienced  net  charge-offs of $99,107  compared to net
charge-offs of $52,080 in the prior year.

The Bank made recoveries of loans previously charged off of $16,277 and $786 for
the years ended December 31, 2003 and 2002, respectively.

The Bank made provisions for loan losses of  approximately  $108,000 and $70,000
for the years ended December 31, 2003 and 2002, respectively.

Management  continues  to  closely  monitor  the  levels of  non-performing  and
potential  problem  loans and will  address  the  weaknesses  in these  loans to
enhance the ultimate collection or recovery on these assets. Should increases in
the overall level of non-performing  and potential problem loans accelerate from
the historical trend, management will adjust the methodology for determining the
allowance for loan losses and will increase the provision and allowance for loan
losses. This would likely decrease net income.

The following table summarizes changes in the allowance arising from charge-offs
and  recoveries  by category  and  additions  to the  allowance  which have been
charged to expense for the years ended December 31, 2003 and 2002.

                                                 2003             2002
                                                 ----             ----
     Balance at beginning of year          $    205,728     $     187,808
     Charge-offs
       Commercial and industrial                (25,384)          (12,000)
       Consumer                                 (90,000)          (40,866)
                                           ------------     -------------
         Total charge-offs                     (115,384)          (52,866)
                                           ------------     -------------
     Recoveries
       Commercial and industrial                  9,277                -
       Real estate                                   -                 -
       Consumer                                   7,000               786
                                           ------------     -------------
         Total recoveries                        16,277               786
                                           ------------     -------------
     Net charge-offs                            (99,107)          (52,080)
     Provision for loan losses                  108,000            70,000
                                           ------------     -------------
     Balance at end of year                $    214,621     $     205,728
                                           ============     =============

                                      -5-
<PAGE>
                       DARLINGTON COUNTY BANCSHARES, INC.

The following  table presents the allocation of the allowance for loan losses at
December  31,  2003 and 2002,  based on the  percentage  of total  loans in each
category for the applicable year. Management does not segregate the allowance by
category,  and the entire  allowance  is  available  to absorb  losses  from all
categories.

<TABLE>
<CAPTION>
                                                2003                              2002
                                    ------------------------------    ----------------------------
                                                        PERCENT OF                      PERCENT OF
  (Dollars in thousands)                AMOUNT            TOTAL            AMOUNT         TOTAL
                                        ------          ----------         ------       ----------
<S>                                 <C>                   <C>         <C>                 <C>
  Commercial and industrial         $    39,276           18.30%      $     41,146        20.00%
  Real estate:
    Construction                         12,877            6.00              7,818          3.80
    Mortgage                             99,370           46.30             94,223         45.80
  Consumer                               63,098           29.40             62,541         30.40
                                    -----------          ------       ------------         -----
      Total                         $   214,621          100.0%       $    205,728         100.0%
                                    ===========          =====        ============         =====
</TABLE>
Management  considers the allowance for loan losses  adequate to cover  inherent
losses on loans  outstanding as of December 31, 2003. The  determination  of the
allowance for loan losses using the Bank's  procedures and methods is based upon
judgments and  assumptions  about future  economic  conditions and other factors
affecting loans. No assurance can be given that the Bank will not sustain losses
which are  sizeable in  comparison  to the amount  reserved  or that  subsequent
evaluation of the loan portfolio  will not require  changes to the allowance for
loan  losses.  The  allowance  for loan  losses  is also  subject  to  review by
regulatory agencies through periodic examinations. Such examination could result
in required changes to the allowance for loan losses.

INVESTMENTS

The Bank invests  primarily in federal agency  obligations  and mortgage  backed
securities. Federal agency obligations are guaranteed by the United States.

The  amortized  cost  and  approximate  fair  value  of  investment  securities,
including  maturities,  are  summarized  at  December  31 in  the  table  below.
Weighted-average yields on investment securities available for sale are based on
amortized  cost.  The  weighted-average  yields on state,  county and  municipal
securities  are calculated on a fully taxable  equivalent  basis using a federal
tax rate of 34.00%.
<TABLE>
<CAPTION>

                                                       2003
                                          -------------------------------       WEIGHTED-
     (Dollars in thousands)                    AMORTIZED            FAIR        AVERAGE
                                                 COST              VALUE          YIELD
                                               ---------           -----        ----------
     <S>                                  <C>               <C>                     <C>
     AVAILABLE FOR SALE
     Federal agencies
       One to five years                  $        4,496    $       4,502           2.97%
                                          --------------    -------------          -----
     Mortgage backed
       One to five years                             886              880           2.84
       Five to ten years                           5,164            5,165           3.64
       After ten years                               522              517           4.30
                                          --------------    -------------          -----
                                                   6,572            6,562           3.58
                                          --------------    -------------          -----
         Total available for sale         $       11,068    $      11,064
                                          ==============    =============
     HELD TO MATURITY
     State, county and municipal
       Less than one year                 $           85    $          87           6.54
                                          --------------    -------------          -----
         Total held to maturity           $           85    $          87           6.54
                                          ==============    =============          =====
</TABLE>

                                      -6-
<PAGE>
                       DARLINGTON COUNTY BANCSHARES, INC.
<TABLE>
<CAPTION>
                                                       2002
                                          -------------------------------       WEIGHTED-
     (Dollars in thousands)                    AMORTIZED            FAIR        AVERAGE
                                                 COST              VALUE          YIELD
                                               ---------           -----        ----------
     <S>                                  <C>               <C>                     <C>
     AVAILABLE FOR SALE
     Federal agencies
       One to five years                  $        2,595    $       2,622           4.36%
                                          --------------    -------------          -----
     Mortgage backed
       Less than one year                            369              376           5.81
       Five to ten years                           1,488            1,503           4.05
       After ten years                             1,364            1,403           5.61
                                          --------------    -------------          -----
                                                   3,221            3,282           4.91
                                          --------------    -------------          -----
         Total available for sale         $        5,816    $       5,904
                                          ==============    =============
     HELD TO MATURITY
     State, county and municipal
       Less than one year                 $           80    $          81           6.39%
       One to five years                              87               90           6.50
       Five to ten years                             474              482           6.02
                                          --------------    -------------          -----
         Total held to maturity           $          641    $         653           6.13
                                          ==============    =============          =====
</TABLE>

For purposes of the maturity table,  mortgage-backed  securities,  which are not
due at a single maturity date, have been allocated over maturity groupings based
on an average  maturity  life  computation  of the  underlying  collateral.  The
mortgage-backed  securities may mature earlier than their average maturity lives
because of principal prepayments.

Investment   securities  with  an  aggregate  amortized  cost  of  approximately
$1,500,896  ($1,496,602  fair value) and $1,200,000  ($1,205,000  fair value) at
December 31, 2003 and 2002, respectively, were pledged to secure public deposits
and for other purposes.

The Bank accounts for  investment  securities in  accordance  with  Statement of
Financial   Accounting   Standards   (SFAS)  No.  115  "Accounting  for  Certain
Investments in Debt and Equity  Securities." Debt securities are classified upon
purchase  as  available  for sale,  held to  maturity  or  trading.  Such assets
classified as available for sale are carried at fair value.  Unrealized gains or
losses are  reported  as a  component  of  shareholders'  equity net of deferred
income taxes.  Securities classified as held to maturity are carried at cost and
adjusted for the  amortization  of premiums and the accretion of  discounts.  In
order to qualify as held to maturity, the Bank must have the ability to hold the
securities to maturity. Trading securities are carried at market value. The Bank
has no trading  securities.  Gains or losses on  disposition  of securities  are
based on the  difference  between the net  proceeds  and the  adjusted  carrying
amount of the securities sold, using the specific identification method.

                                    DEPOSITS

The  Bank  offers  a full  range  of  interest-bearing  and  noninterest-bearing
accounts,  including commercial and retail checking accounts,  negotiable orders
of withdrawal  ("NOW") accounts,  money market accounts,  individual  retirement
accounts,  regular interest-bearing  statement savings accounts and certificates
of deposit with fixed rates and a range of maturity date options. The sources of
deposits  are  residents,  businesses  and  employees of  businesses  within the
midlands region. The Bank pays competitive  interest rates on interest checking,
savings, money market, time and individual retirement accounts.

The Bank's average interest-bearing deposits in 2003 were $24,265,000,  compared
to  $22,151,000,  in the prior year,  an increase of  $2,114,000  or 9.54%.  The
largest  increase was in money market  accounts as a result of us paying  higher
rates on these accounts than do our competitors.  The Bank typically pays higher
money market  rates in order to maintain the deposit base at the desired  level.
Noninterest-bearing  deposits  increased from 2002 to 2003 primarily as a result
of deposits made by a large customer in the fourth quarter of 2003.

                                      -7-
<PAGE>
                       DARLINGTON COUNTY BANCSHARES, INC.

The following tables  presents,  for the years ended December 31, 2003 and 2002,
the  average  amount  and  average  rate paid on each of the  following  deposit
categories:
<TABLE>
<CAPTION>

                                                     2003                           2002
                                        ------------------------------   ---------------------------
                                             AVERAGE        AVERAGE         AVERAGE       AVERAGE
   (Dollars in thousands)                     AMOUNT       RATE PAID         AMOUNT      RATE PAID
                                             -------       ---------        -------      ---------
<S>                                     <C>                   <C>        <C>                <C>
   Noninterest-bearing deposits         $       5,012         0.00%      $     4,789        0.00%
   Interest-bearing deposits
     Savings deposits                           2,305         1.08             2,351        1.74
     NOW and money market                      15,851         1.44            12,117        1.81
     Time deposits                              6,109         1.98             7,680        2.72
</TABLE>

The Bank's core deposits  consist of consumer time deposits,  savings  accounts,
NOW accounts,  money market accounts and checking  accounts.  Although such core
deposits are becoming  increasingly interest sensitive for both the Bank and the
industry  as a whole,  such core  deposits  continue  to provide the Bank with a
large and stable  source of funds.  The Bank  closely  monitors  its reliance on
certificates  of deposit greater than $100,000,  which are generally  considered
less stable and less reliable as a source of funds than core deposits.

At  December  31,  2003 and 2002,  certificates  of deposit of  $100,000 or more
totaled $906,887 and $773,000, respectively. At December 31, 2003, approximately
$430,635  matures within three months,  and $349,902  matures over three through
six months.
                           RETURN ON EQUITY AND ASSETS

The following table presents certain ratios relating to the Company's equity and
assets:

                                                          YEARS ENDED
                                                          DECEMBER 31,
                                                  --------------------------
                                                   2003                2002
                                                   ----                ----
     Return on average total assets                 0.76%               1.04%
     Return on average stockholders' equity         6.59                8.57
     Cash dividend payout ratio                    62.10               49.19
     Average equity to average assets ratio        11.58               12.15

                                    DIVIDENDS

South  Carolina  banking   regulations  require  that  cash  dividends  paid  to
shareholders  receive the prior written approval of the Commissioner of Banking.
The Bank is  authorized  to pay cash  dividends  up to 100% of net income in any
calendar  year  without  obtaining  the prior  approval of the  Commissioner  of
Banking  provided that the Bank received a composite rating of one or two at the
last  Federal or State  regulatory  examination.  Under  Federal  Reserve  Board
regulations,  the  amounts  of loans  or  advances  from the Bank to the  parent
company are also restricted. The Company paid a cash dividend of $1.00 per share
in January 2003 to  stockholders  of record as of December 31, 2002. The Company
paid a cash  dividend  of $1.00 per share in  January  2002 to  stockholders  of
record as of December 31, 2001.

                          EFFECTS OF REGULATORY ACTION

REGULATION OF THE BANK. The Bank is subject to examination by the South Carolina
State  Board of  Financial  Institutions.  In  addition,  the Bank is subject to
various  other state and federal  laws and  regulations,  including  state usury
laws,  laws relating to  fiduciaries,  laws relating to consumer credit and laws
relating  the branch  banking.  The Bank's loan  operations  are also subject to
certain federal  consumer credit laws and  regulations  promulgated  thereunder,
including,  but not  limited  to: the federal  Truth-In-Lending  Act,  governing
disclosures of credit terms to consumer borrowers;  the Home Mortgage Disclosure
Act, requiring financial  institutions to provide certain information concerning
their mortgage  lending;  the Equal Credit  Opportunity Act and the Fair Housing
Act,  prohibiting  discrimination on the basis of certain  prohibited factors in
extending credit; the Fair Credit Reporting Act, governing the use and provision
of information to credit reporting agencies; the Bank Secrecy Act, dealing with,
among other things, the reporting of certain currency transactions; and the Fair
Debt  Collection  Act,  governing  the  manner  in which  consumer  debts may be
collected by collection agencies.

                                      -8-
<PAGE>
                       DARLINGTON COUNTY BANCSHARES, INC.

The deposit operations of the Bank are also subject to the Truth in Savings Act,
requiring  certain  disclosures  about  rates  paid  on  savings  accounts;  the
Expedited   Funds   Availability   Act,  which  deals  with  disclosure  of  the
availability  of funds  deposited in accounts and the  collection  and return of
checks  by  banks;   the  Right  to  Financial   Privacy  Act,   which   imposes
confidentiality  requirements with respect to consumer financial records and the
Electronic  Funds  Transfer  Act,  which  govern   automatic   deposits  to  and
withdrawals from deposit accounts and customers' rights and liabilities  arising
from the use of automated teller machines and other electronic banking services.

The Bank is also subject to the  requirements of the Community  Reinvestment Act
(the  "CRA").  The CRA imposes on  financial  institutions  an  affirmative  and
ongoing  obligation  to meet  the  credit  needs  of  their  local  communities,
including low and  moderate-income  neighborhoods,  consistent with the safe and
sound  operation of those  institutions.  Each  financial  institution's  actual
performance  in meeting  community  credit  needs are  evaluated  as part of the
examination process, and are also considered in evaluating mergers, acquisitions
and applications to open a branch or facility.

OTHER SAFETY AND SOUNDNESS  REGULATIONS - PROMPT CORRECTIVE  ACTION. The federal
banking  agencies  have broad  powers under  current  federal law to take prompt
corrective action to resolve problems of insured  depository  institutions.  The
extent of these powers  depends upon  whether the  institutions  in question are
"well capitalized, "adequately capitalized",  "undercapitalized," "significantly
undercapitalized" or "critically undercapitalized."

A bank that is  "undercapitalized"  becomes subject to provisions of the Federal
Deposit  Insurance  Act.  In such a case,  the bank is  restricted  from  paying
capital  distributions  and  management  fees;  the  Federal  Deposit  Insurance
Corporation  ("FDIC") is required to monitor the condition of the bank; the bank
is required to submit a capital restoration plan; growth of the bank's assets is
restricted;  and the bank  must  obtain  prior  approval  of  certain  expansion
proposals.  A bank that is "significantly  undercapitalized"  is also subject to
restrictions on compensation  paid to senior  management of the bank, and a bank
that is "critically  undercapitalized" is further subject to restrictions on the
activities of the bank and  restrictions on payment of subordinated  debt of the
bank.  The  purpose  of these  provisions  is to  require  banks  with less than
adequate  capital to act quickly to restore  their  capital and to have the FDIC
move  promptly  to take over  banks  that are  unwilling  or unable to take such
steps. At December 31, 2003, the Bank is categorized as "well capitalized" under
the regulatory framework for prompt corrective action.

BROKERED DEPOSITS. Under current FDIC regulations,  "well capitalized" banks may
accept brokered deposits without restriction, "adequately capitalized" banks may
accept  brokered  deposits  with a  waiver  from the FDIC  (subject  to  certain
restrictions on payment of rates), while "undercapitalized" banks may not accept
brokered deposits.  Management does not believe that these regulations will have
a material adverse effect on the operations of the Bank.

INTERSTATE BANKING.  Current Federal law authorizes  interstate  acquisitions of
banks and bank holding companies without geographic  limitation.  Effective June
1, 1998, a bank  headquartered  in one state was authorized to merge with a bank
headquartered  in another state,  as long as neither of the states had opted out
of such  interstate  merger  authority  prior  to such  date.  After a bank  has
established  branches in a state through an interstate merger  transaction,  the
bank may establish and acquire additional  branches at any location in the state
where a bank  headquartered  in that state  could have  established  or acquired
branches under applicable Federal or state law.

GRAMM-LEACH-BLILEY   ACT.  On  November  12,  1999,  the  President  signed  the
Gramm-Leach-Bliley  Act (the  "Act"),  which  makes it easier  for  affiliations
between banks,  securities firms and insurance  companies to take place. The Act
removes  Depression-era  barriers that had separated banks and securities firms,
and seeks to protect the privacy of consumers' financial information.

Under provisions of the legislation, which were effective March 11, 2000, banks,
securities firms and insurance  companies are able to structure new affiliations
through a holding  company  structure  or through a  financial  subsidiary.  The
legislation  creates  a new type of bank  holding  company  called a  "financial
holding  company"  which has powers much more  extensive  than those of standard
holding  companies.  These  expanded  powers  include  authority  to  engage  in
"financial  activities,"  which are activities that are (1) financial in nature;
(2) incidental to activities that are financial in nature;  or (3) complementary
to a  financial  activity  and that do not impose a safety and  soundness  risk.
Significantly,   the  permitted  financial   activities  for  financial  holding
companies  include  authority  to  engage  in  merchant  banking  and  insurance
activities,  including insurance portfolio investing. A bank holding company can
qualify as a financial holding company and expand the services it offers only if
all of its subsidiary depository institutions are well-managed, well-capitalized
and  have  received  a  rating  of   "satisfactory"   on  their  last  Community
Reinvestment Act examination.

                                      -9-
<PAGE>
                       DARLINGTON COUNTY BANCSHARES, INC.

The  legislation  also  creates  another new type of entity  called a "financial
subsidiary." A financial subsidiary may be used by a national bank or a group of
national  banks  to  engage  in  many of the  same  activities  permitted  for a
financial holding company,  though several of these  activities,  including real
estate development or investment,  insurance or annuity underwriting,  insurance
portfolio  investing and merchant  banking,  are reserved for financial  holding
companies.  A bank's  investment  in a financial  subsidiary  affects the way in
which the bank calculates its regulatory capital, and the assets and liabilities
of financial subsidiaries may not be consolidated with those of a bank. The bank
must also be certain that its risk management procedures are adequate to protect
it from  financial  and  operational  risks  created  both by itself  and by any
financial subsidiary.  Further, the bank must establish policies to maintain the
separate  corporate  identities of the bank and its financial  subsidiary and to
prevent each from becoming liable for the obligations of the other.

The Act also establishes the concept of "functional  supervision,"  meaning that
similar activities should be regulated by the same regulator.  Accordingly,  the
Act spells out the regulatory  authority of the bank  regulatory  agencies,  the
Securities and Exchange  Commission and state insurance  regulators so that each
type of activity is supervised by the regulator  with  corresponding  expertise.
The Federal  Reserve  Board is intended  to be an umbrella  supervisor  with the
authority to require a bank holding company or financial  holding company or any
subsidiary  of  either  to file  reports  as to its  financial  condition,  risk
management systems,  transactions with depository  institution  subsidiaries and
affiliates,  and  compliance  with  any  federal  law that it has  authority  to
enforce.

Although  the Act  reaffirms  that  states  are  the  regulators  for  insurance
activities  of  all  persons,  including   federally-chartered  banks,  the  Act
prohibits  states from preventing  depository  institutions and their affiliates
from conducting insurance activities.

The Act also  establishes a minimum  federal  standard of privacy to protect the
confidentiality  of a consumer's  personal  financial  information and gives the
consumer the power to choose how personal  financial  information may be used by
financial institutions.

The Company anticipates that the Act and the regulations which are to be adopted
pursuant to the Act will be likely to create new  opportunities  for it to offer
expanded  services to  customers  in the future,  though the Company has not yet
determined what the nature of the expanded services might be or when the Company
might find it feasible to offer them. The Company  further  expects that the Act
will increase competition from larger financial  institutions that are currently
more capable than the Company of taking  advantage of the opportunity to provide
a broader range of services.  However, the Company continues to believe that its
commitment to providing  high quality,  personalized  service to customers  will
permit it to remain competitive in its market area.

LEGISLATIVE PROPOSALS. New proposed legislation which could significantly affect
the business of banking has been  introduced  or may be  introduced  in Congress
from time to time.  Management  of the Bank cannot  predict the future course of
such  legislative  proposals  or their impact on the Company and the Bank should
they be adopted.

FISCAL  AND  MONETARY  POLICY.  Banking is a business  that  depends  largely on
interest rate  differentials.  In general,  the difference  between the interest
paid by a bank  on its  deposits  and its  other  borrowings,  and the  interest
received by a bank on its loans and securities  holdings,  constitutes the major
portion of a bank's  earnings.  Thus, the earnings and growth of the Company and
the Bank are subject to the  influence of economic  conditions  generally,  both
domestic and foreign, and also to the monetary and fiscal policies of the United
States and its agencies,  particularly the Federal Reserve.  The Federal Reserve
regulates  the supply of money  through  various  means,  including  open-market
dealings in United  States  government  securities,  the discount  rate at which
banks may borrow  from the Federal  Reserve,  and the  reserve  requirements  on
deposits. The nature and timing of any changes in such policies and their impact
on the Company and the Bank cannot be predicted.

                               IMPACT OF INFLATION

Unlike  most  industrial  companies,  the assets and  liabilities  of  financial
institutions  such as the Bank are  primarily  monetary  in  nature.  Therefore,
interest rates have a more significant  impact on the Bank's performance than do
the effects of changes in the general rate of  inflation  and changes in prices.
In addition, interest rates do not necessarily move in the same magnitude as the
prices of goods and  services.  As  discussed  previously,  management  seeks to
manage the  relationships  between interest  sensitive assets and liabilities in
order to protect against wide rate fluctuations,  including those resulting from
inflation.

                                      -10-
<PAGE>
                       DARLINGTON COUNTY BANCSHARES, INC.

                                    EMPLOYEES

The  Bank  presently  employs  fourteen  (14)  full-time  equivalent  employees.
Management believes that its employee relations are good.

ITEM 2.  DESCRIPTION OF PROPERTY

The  Company's  corporate  office is located at 202 Cashua  Street,  Darlington,
South  Carolina.  The  building  also houses the Bank's  branch  facilities  and
central operations, including data processing and accounting.

The Company currently owns its building free and clear of any liens. The Company
believes that its facilities are adequate for its current operations.

ITEM 3.  LEGAL PROCEEDINGS

There are no material pending legal  proceedings to which the Company is a party
or of  which  any  of  its  properties  are  subject;  nor  are  there  material
proceedings  known  to  the  Company  to be  contemplated  by  any  governmental
authority against the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted  during the fourth  quarter ended December 31, 2003 to a
vote of security holders of the Company.

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

During  the  period  covered  by this  report  and to  date,  there  has been no
established  trading market for the Company's  stock, and one is not expected to
develop in the near future.

As of March 15,  2004 the number of holders  of record of the  Company's  common
stock was 487.

In January  2003 and 2002,  the Company  paid  dividends  of $1.00 and $1.00 per
share  to  the  shareholders  of  record  as of  December  31,  2003  and  2002,
respectively.  State banking  regulations  restrict the amount of dividends that
can be paid by the Bank to the Company.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

                                     GENERAL

The following  discussion is intended to assist in  understanding  the financial
condition  and  results  of  operations  of the  Company,  and should be read in
conjunction  with the Company's  consolidated  financial  statements and related
notes filed with this  report.  Because the Bank is  responsible  for all of the
Company's operations,  the discussion will refer to the results of operations of
the Bank.

                          CRITICAL ACCOUNTING POLICIES

The Company has adopted various accounting policies which govern the application
of accounting  principles  generally accepted in the United States of America in
the  preparation  of  the  Company's  financial   statements.   The  significant
accounting  policies  of the  Company  are  described  in the  footnotes  to the
consolidated financial statements.

Certain  accounting  policies involve  significant  judgments and assumptions by
management  which have a material impact on the carrying value of certain assets
and liabilities.  Management  considers such accounting  policies to be critical
accounting policies.  The judgments and assumptions used by management are based
on historical experience and other factors,  which are believed to be reasonable
under the circumstances.  Because of the nature of the judgments and assumptions
made by  management,  actual  results  could  differ  from these  judgments  and
estimates  which could have a material  impact on the carrying  values of assets
and liabilities and the results of operations of the Company.

                                      -11-
<PAGE>
                       DARLINGTON COUNTY BANCSHARES, INC.

The Company  believes  the  allowance  for loan losses is a critical  accounting
policy that  requires  the most  significant  judgments  and  estimates  used in
preparation of its consolidated  financial  statements.  Refer to the "Allowance
for Loan Losses"  sections  above for a detailed  description  of the  Company's
estimation process and methodology related to the allowance for loan losses.

                              RESULTS OF OPERATIONS

2003 COMPARED TO 2002

Net income for the year ended  December 31, 2003 was  $254,416  compared to 2002
net income of  $321,229.  The  Company  earned  $1.61 per  common  share in 2003
compared to $2.03 per common share in 2002. The decrease in net interest  income
is mainly attributable to a lower net interest margin as a result of significant
interest rate reductions during the year.

Net interest  income,  which is the difference  between  interest  earned on the
Company's  interest  earning  assets  and  interest  paid  on  interest  bearing
liabilities,  was  $1,408,448  for the year ended  December 31, 2003 compared to
$1,357,790 for the year ended December 31, 2002. Net interest  income,  which is
the main  driver of the  Company's  earnings  increased  $50,658  or 3.73%.  Net
interest income increased in 2003 primarily because the drop in average rates on
interest  bearing  liabilities  exceeded  the drop in average  rates on interest
earning assets.

Average  earning  assets were  $31,061,000  or 93.32% of total average assets as
compared to  $28,523,000  or 92.52% of total average assets in 2002. The primary
types  of  earning  assets  are  loans,  investment  securities  and  short-term
investments.  Loans comprised  approximately  64.01% of the Bank's total earning
assets, while investment securities comprised 26.37% and short-term  investments
9.62% in 2003.

Average loans  increased  $1,415,000 or 7.66% during 2003. The increase in loans
in 2003 was primarily due to rates which encouraged  refinancings and other loan
growth. The average yield on loans decreased 42 basis points to 7.31%.

Commercial and  industrial  loans  comprised  18.28% of the loan portfolio as of
December  31,  2003,  compared to 19.97% in 2002.  Loans  secured by real estate
comprised 52.30% of the portfolio as of December 31, 2003, compared to 49.68% as
of December 31, 2002.  Consumer and other loans  comprised  29.33% and 30.26% of
the portfolio at December 31, 2003 and 2002, respectively.

During 2003  interest  expense on deposits was  $374,529,  a decrease of $93,465
from 2002.  During the year,  the Bank was unable to decrease  the average  rate
paid on time deposits as quickly and by the same magnitude that rates  decreased
on interest earning assets. As a result,  the interest rate spread declined from
4.28% in 2002 to 4.20% in 2003.

The amount of net loans charged off in 2003 was  approximately  $99,107 compared
to approximately $52,080 in 2002. The ratio of net charge-offs to average loans,
net of unearned income, for 2003 was 0.48% as compared to 0.28% in 2002.

Provision  for loan losses in 2003 was  approximately  $108,000  and in 2002 was
approximately  $70,000.  The allowance for loan losses as a percentage of loans,
net of unearned income, was 1.04% at December 31, 2003 and 1.08% at December 31,
2002.  Loans greater than 90 days past due totaled $137,000 at December 31, 2003
compared  to  $188,000  at  December  31,  2002.  Management  believes  that the
allowance  for loan  losses is  adequate  to cover  losses  inherent in the loan
portfolio as of December 31, 2003.

Non-interest  income  decreased  $29,779 or 7.83% in 2003 to  $350,556.  Service
charges on deposit  accounts  decreased  $41,990 or 11.76%  while other  service
charges and fees  decreased  $12,554 or 54.01% in 2003.  The decrease in service
charges  on  deposit  accounts  was  primarily  attributable  to a  decrease  in
overdraft charges, which decreased $41,990, or 11.76% from the prior year.

Non-interest  expense  increased  $62,066,  or  5.19%,  to  $1,257,682  in 2003.
Salaries and employee benefits expense increased $22,352 or 3.37% to $685,596 in
2003.  Furniture and equipment  expense  increased  $27,689 or 28.83% from prior
year.  The  increase  was  primarily  due to  depreciation  expenses and service
contracts  associated  with new equipment.  Other  operating  expense  increased
$35,473 or 20.39% in 2003 primarily as a result of increased  professional  fees
for outsourced internal audit and compliance services.

                                      -12-
<PAGE>
                       DARLINGTON COUNTY BANCSHARES, INC.

                         LIQUIDITY AND CAPITAL RESOURCES

CAPITAL RESOURCES

The capital  base for the Company  increased  by $27,399  during  2003.  This is
comprised  of  $254,416  of net  income  and a  negative  charge of  $69,017  in
unrealized  losses on available for sale  securities  offset by $158,000 paid in
dividends to  stockholders.  The  Company's  equity to asset ratio was 11.15% on
December 31, 2003, as compared to 13.04% on December 31, 2002.

The Federal Deposit  Insurance  Corporation has issued guidelines for risk-based
capital  requirements.  As of December  31,  2003,  the Bank exceeds the capital
requirement levels that are to be maintained.

<TABLE>
<CAPTION>
ANALYSIS OF CAPITAL AND CAPITAL RATIOS

     (Dollars in thousands)                                                     2003             2002
                                                                           -------------    -------------
<S>       <C>                                                              <C>              <C>
     Tier 1 capital                                                        $       3,976    $       3,857
     Tier 2 capital                                                                  214              205
                                                                           -------------    -------------
       Total qualifying capital                                            $       4,190    $       4,062
                                                                           =============    =============

     Risk-adjusted total assets (including off-balance-sheet exposures)    $      23,950    $      20,665
                                                                           =============    =============

     Risk-based capital ratios:
       Tier 1 risk-based capital ratio                                             16.60%          18.66%
       Total risk-based capital ratio                                              17.49%          19.66%
       Tier 1 leverage ratio                                                       11.11%          12.51%
</TABLE>

LIQUIDITY AND ASSET/LIABILITY MANAGEMENT

Asset/liability  management  is the  process  by  which  the Bank  monitors  and
controls  the mix and  maturities  of its  assets  and  liabilities  in order to
promote stable growth in net interest income.  The goal of liquidity  management
is to ensure the  availability of adequate funds to meet the loan demand and the
deposit  withdrawal  needs of bank  customers.  Maintaining an adequate level of
liquidity is achieved  through a combination of sufficient  liquid assets,  core
deposit growth and access to alternate  sources of funds which provide a sizable
base from which to draw as liquidity needs arise.

At December 31, 2003, the Bank has an unused line of credit to purchase  Federal
funds  from an  unrelated  bank  totaling  $2,500,000.  This  line of  credit is
available on a one to fourteen day basis for general  corporate  purposes of the
Bank. The lender has reserved the right to withdraw this line at its option.

Interest  sensitive  assets  and  liabilities  are  those  that are  subject  to
repricing in the near term,  including both floating rate  instruments and those
with  approaching  maturities.  The interest  sensitivity  gap is the difference
between total interest  sensitive assets and liabilities in a given time period.
The  objective  of interest  rate  sensitivity  management  is to  maintain  the
difference  between  interest  sensitive  assets and liabilities at a level that
will  minimize the effects on the net interest  margin of  significant  interest
rate shifts.

The Bank's period and cumulative interest sensitivity positions which existed at
year-end are as follows.


                                      -13-
<PAGE>
                       DARLINGTON COUNTY BANCSHARES, INC.

<TABLE>
<CAPTION>
INTEREST SENSITIVITY ANALYSIS
                                                                                             GREATER
                                                     AFTER ONE    AFTER THREE                THAN ONE
                                          WITHIN       THROUGH      THROUGH      WITHIN      YEAR OR
  DECEMBER 31, 2003                          ONE        THREE       TWELVE          ONE         NON-
  (Dollars in thousands)                   MONTH       MONTHS       MONTHS         YEAR      SENSITIVE       TOTAL
                                          ------     ---------    -----------    ------     ----------      -------

  ASSETS
  Earning assets:
<S>                                     <C>          <C>          <C>           <C>          <C>          <C>
    Loans                               $   5,015    $   2,003    $   2,115     $  9,133     $ 11,409     $  20,542
    Securities                                 -            -            85           85       11,114        11,199
    Federal funds sold and other            1,368           -            -         1,368           -          1,368
                                        ---------    ---------    ---------     --------     --------     ---------
        Total earning assets                1,368        5,976        2,200       10,586       22,523        33,109
                                        ---------    ---------    ---------     --------     --------     ---------
  LIABILITIES
  Interest-bearing liabilities
    Interest-bearing deposits:
      Demand deposits                      17,355           -            -        17,355           -         17,355
      Savings deposits                      1,911           -            -         1,911           -          1,911
      Time deposits                           687        1,527        3,634        5,848           80         5,928
                                        ---------    ---------    ---------     --------     --------     ---------
        Total interest-bearing deposits    19,953        1,527        3,634       25,114           80        25,194
        Total interest-bearing
           liabilities                     19,953        1,527        3,634       25,114           80        25,194
                                        ---------    ---------    ---------     --------     --------     ---------
  Period gap                            $ (18,585)   $   5,491    $  (1,434)    $(14,528)    $ 22,443
                                        =========    =========    =========     ========     ========
  Cumulative gap                        $ (18,585)   $ (13,094)   $ (14,528)    $(14,528)    $  7,915
                                        =========    =========    =========     ========     ========
  Ratio of cumulative gap to total
    earning assets                         (56.13)%     (39.55)%     (43.88)%     (43.88)%      23.91%
</TABLE>

<TABLE>
<CAPTION>
  SOURCES AND USES OF FUNDS
                                                                             DECEMBER 31,
                                                     -----------------------------------------------------------
                                                                 2003                          2002
                                                     ----------------------------     --------------------------
                                                                       PERCENT OF                     PERCENT OF
  (Dollars in thousands)                                 AMOUNT          TOTAL           AMOUNT         TOTAL
                                                         ------        ----------        ------       ----------
  Composition of sources
<S>                                                  <C>                  <C>         <C>                  <C>
    Demand deposits                                  $     5,012          15.06%      $      4,789         15.53%
    NOW and money market                                  15,851           47.63            12,117         39.30
    Time and savings deposits                              8,414           25.28            10,031         32.55
    Short-term borrowings                                     -               -                  3          0.01
    Other non interest-bearing funds                         148            0.44               143          0.46
    Stockholders' equity                                   3,856           11.59             3,747         12.15
                                                     -----------          ------      ------------        ------
      Total sources                                  $    33,281          100.00%     $     30,830        100.00%
                                                     ===========          ======      ============        ======
  Composition of uses
    Loans(1)                                         $    19,883           59.74%     $     18,468         59.90%
    Investment securities                                  8,187           24.60             8,233         26.70
    Other earning assets                                   2,991            8.99             1,822          5.92
    Other assets                                           2,220            6.67             2,307          7.48
                                                     -----------          ------      ------------        ------
      Total uses                                     $    33,281          100.00%     $     30,830        100.00%
                                                     ===========          ======      ============        ======
</TABLE>
(1)  Loan balances stated net of unearned income

SOURCES OF FUNDS

Average sources of funds increased  $2,451,000 to $33,281,000  from December 31,
2002 to December 31, 2003. This represents an increase of 7.95% in total average
sources of funds.  Average NOW and money market deposits increased $3,734,000 or
30.82%. This was partially offset by a decrease of $1,617,000, or 16.12% in time
and savings deposits.  Average loans increased $1,415,000 or 7.66% while average
investment  securities  decreased  $46,000  or 0.56%  and other  earning  assets
increased  $1,169,000  or 64.16%,  to account  for the  majority  of the overall
increase of total uses of funds in 2003.

                                      -14-
<PAGE>
                       DARLINGTON COUNTY BANCSHARES, INC.

                         OFF BALANCE SHEET ARRANGEMENTS

The Bank is a party to financial  instruments with off balance sheet risk in the
normal course of business to meet the financing  needs of its  customers.  These
financial  instruments  include available credit on credit lines and commitments
to extend credit.  Those instruments  involve,  to varying degrees,  elements of
credit  and  interest  rate  risk in  excess  of the  amount  recognized  in the
statements  of  financial  position.  The Bank uses the same credit  policies in
making  commitments and conditional  obligations as it does for on balance sheet
instruments.

                                                             CONTRACT
                                                              AMOUNT
                                                             --------
    Financial instruments whose contract amounts
      represent credit risk at December 31, 2003:
        Commitments to extend credit                       $   4,793,976
                                                           =============

Of these  commitments  to extend  credit,  $3,443,012  are at variable rates and
$1,350,964 are at fixed rates.

Commitments  to  extend  credit  are  agreements  to lend as long as there is no
violation of any condition  established in the contract.  Commitments  generally
have fixed expiration dates or other termination clauses and may require payment
of a fee.  Since many of the  commitments  are expected to expire  without being
drawn upon, the total  commitment  amounts do not necessarily  represent  future
cash  requirements.  The Bank evaluates each  customer's  creditworthiness  on a
case-by-case basis. The amount of collateral obtained if deemed necessary by the
Bank upon extension of credit is based on management's credit evaluation.

                      RECENTLY ISSUED ACCOUNTING STANDARDS

In December  2002, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards ("SFAS") No. 148,  "Accounting for
Stock-based  Compensation  - Transition  and  Disclosure,"  an amendment of FASB
Statement  No.  123,  "Accounting  for  Stock-Based  Compensation",  to  provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based  employee  compensation.  SFAS No. 148 also
amends the disclosure  provisions of SFAS No. 123 and  Accounting  Pronouncement
Board  ("APB")  Opinion  No.  28,  "Interim  Financial  Reporting",  to  require
disclosure in the summary of significant  accounting  policies of the effects of
an entity's accounting policy with respect to stock-based employee  compensation
on reported net income and  earnings  per share in annual and interim  financial
statements.  While SFAS No. 148 does not amend SFAS No. 123 to require companies
to  account  for  employee  stock  options  using  the fair  value  method,  the
disclosure  provisions  of SFAS No. 148 are  applicable  to all  companies  with
stock-based employee  compensation,  regardless of whether they account for that
compensation  using the fair value method of SFAS No. 123 or the intrinsic value
method of APB Opinion No. 25. The  provisions  of SFAS No. 148 are effective for
annual financial statements for fiscal years ending after December 15, 2002, and
for financial  reports  containing  condensed  financial  statements for interim
periods  beginning  after December 15, 2002. The  disclosure-only  provisions of
SFAS 148 had no impact on the financial condition of the Company.

In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of  Statement  133 on
Derivative  Instruments  and  Hedging  Activities."  SFAS  No.  149  amends  and
clarifies  accounting for derivative  instruments,  including certain derivative
instruments  embedded in other contracts and loan commitments that relate to the
origination of mortgage loans held for sale,  and for hedging  activities  under
SFAS No. 133. SFAS No. 149 is generally  effective for contracts entered into or
modified  after  June 30,  2003.  The  adoption  of SFAS No.  149 did not have a
material impact on the financial condition or operating results of the Company.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with  Characteristics  of both Liabilities and Equity." SFAS No. 150
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with  characteristics  of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some  circumstances).  Many of those  instruments
were previously  classified as equity.  SFAS No. 150 is generally  effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period  beginning  after June
15,  2003.  The  adoption of SFAS No. 150 did not have a material  impact on the
financial condition or operating results of the Company.

                                      -15-
<PAGE>
                       DARLINGTON COUNTY BANCSHARES, INC.

In November 2002, the FASB issued  Interpretation  ("FIN") No. 45,  "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees of  Indebtedness  of Others".  FIN No. 45 requires a company,  at the
time it issues a guarantee, to recognize an initial liability for the fair value
of obligations assumed under the guarantee and elaborates on existing disclosure
requirements  related to  guarantees  and  warranties.  The initial  recognition
requirements of FIN No. 45 are effective for guarantees issued or modified after
December 31, 2002.  The  disclosure  requirements  are  effective  for financial
statements of periods ending after December 15, 2002. The adoption of FIN No. 45
did not have a material effect on the Company's financial position or results of
operations.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities." FIN No. 46 requires a variable  interest entity to be consolidated by
a company if that  company is subject to a majority of the risk of loss from the
variable interest  entity's  activities or entitled to receive a majority of the
entity's residual returns,  or both. FIN No. 46 also requires  disclosures about
variable interest entities that a company is not required to consolidate, but in
which it has a significant  variable interest.  FIN No. 46 provides guidance for
determining  whether  an  entity  qualifies  as a  variable  interest  entity by
considering,  among other  considerations,  whether the entity lacks  sufficient
equity  or  its  equity  holders  lack  adequate  decision-making  ability.  The
consolidation  requirements of FIN No. 46 apply immediately to variable interest
entities created after January 31, 2003. The consolidation requirements apply to
existing  entities in the first fiscal year or interim  period  beginning  after
June 15, 2003.  Certain of the  disclosure  requirements  apply in all financial
statements  issued  after  January 31,  2003,  regardless  of when the  variable
interest  entity  was  established.  The  adoption  of FIN No. 46 did not have a
material effect on the Company's financial position or results of operations.

                                    INFLATION

Since the assets and  liabilities  of a bank are  primarily  monetary  in nature
(payable in fixed,  determinable amounts), the performance of a bank is affected
more by changes in interest rates than by inflation.  Interest  rates  generally
increase as the rate of inflation increases,  but the magnitude of the change in
rates may not be the same.

While the effect of inflation on banks is normally not as  significant as is its
influence  on those  businesses  which  have  large  investments  in  plant  and
inventories, it does have an effect. During periods of high inflation, there are
normally  corresponding  increases in the money supply,  and banks will normally
experience  above-average  growth in assets,  loans and deposits.  Also, general
increases in the prices of goods and services will result in increased operating
expenses.

ITEM 7.  FINANCIAL STATEMENTS

The required financial statements are included herein beginning on page F-1.

ITEM 8.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

There has been no occurrence requiring a response to this item.







                                      -16-
<PAGE>
                       DARLINGTON COUNTY BANCSHARES, INC.

ITEM 8A.  CONTROLS AND PROCEDURES

Under the supervision and with the  participation  of the Company's  management,
including its principal executive officer and principal  financial officer,  the
Company conducted an evaluation of the effectiveness of the design and operation
of its disclosure  controls and  procedures,  as defined in Rules  13a-15(e) and
15d-15(e) under the Securities  Exchange Act of 1934, as amended,  as of the end
of the period  covered by this report  (the  "Evaluation  Date").  Based on this
evaluation,  the Company's  principal  executive officer and principal financial
officer  concluded  as of the  Evaluation  Date  that the  Company's  disclosure
controls and procedures were effective such that the information relating to the
Company, including its consolidated subsidiary,  required to be disclosed in its
Securities and Exchange  Commission ("SEC") reports (i) is recorded,  processed,
summarized  and  reported  within the time  periods  specified  in SEC rules and
forms,  and (ii) is accumulated and  communicated  to the Company's  management,
including its principal  executive officer and principal  financial officer,  as
appropriate to allow timely decisions regarding required disclosure.

During the fourth  quarter of 2003,  the Company did not make any changes in its
internal controls over financial reporting that have materially affected, or are
reasonably likely to affect, those controls.

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information set forth under the captions "ELECTION OF DIRECTORS,"  "BUSINESS
EXPERIENCE OF DIRECTORS  AND  EXECUTIVE  OFFICERS,"  "SECTION  16(a)  BENEFICIAL
OWNERSHIP REPORTING  COMPLIANCE" and "EXECUTIVE OFFICERS" in the Proxy Statement
for the 2004 Annual Meeting of Shareholders (the "Proxy Statement"),  which will
be filed within 120 days of the Bank's fiscal year end, is  incorporated  herein
by reference.

The Company has adopted a code of ethics  that  applies to  principal  executive
officer,  principal  financial officer,  and controller that meets some, but not
all, of the  requirements for a "code of ethics," as defined by SEC regulations.
The  Company  intends to adopt a revised  code of ethics  during the next fiscal
year that  meets the  definition  of a "code of  ethics"  under  applicable  SEC
regulations.

ITEM 10.  EXECUTIVE COMPENSATION

The  information  set forth under the captions  "COMPENSATION  OF DIRECTORS  AND
EXECUTIVE OFFICERS" in the Proxy Statement is incorporated herein by reference.

ITEM 11.  SECURITY OWNERSHIP  OF  CERTAIN  BENEFICIAL OWNERS  AND MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS

The  information  set forth under the  caption  "SECURITY  OWNERSHIP  OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT" in the Proxy Statement is incorporated  herein
by reference.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information set forth under the caption "CERTAIN  RELATIONSHIPS  AND RELATED
TRANSACTIONS" in the Proxy Statement is incorporated herein by reference.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits (numbered in accordance with Item 601 of Regulation S-B):
<TABLE>
<CAPTION>

           Exhibit #         Description

              <S>            <C>
              3.1            Articles of  Incorporation  of the Company:  Incorporated  by  reference to Exhibit  3.(I) of the Form
                             8-A filed by the Company with the SEC on March 20, 2000.

              3.2            Bylaws of the Company:  Incorporated by reference to Exhibit 3.(II) of the Form 8-A filed by the
                             Company with the SEC on March 20, 2000.

              4.1            See Exhibits 3.1 and 3.2.

                                      -17-
<PAGE>
                       DARLINGTON COUNTY BANCSHARES, INC.


             21.1+           Subsidiaries of the Company.

             31.1+           Section 302 Certification of Chief Executive Officer.

             31.2+           Section 302 Certification of Chief Financial Officer.

             32.1+           Section 906 Certification of Chief Executive Officer.

             32.2+           Section 906 Certification of Chief Financial Officer.

               +             Filed with this Form 10-KSB.
</TABLE>

(b) Reports on Form 8-K

               None

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

The  information  set forth under the  heading  "PRINCIPAL  ACCOUNTANT  FEES AND
SERVICES" in the Proxy Statement is incorporated hereby by reference.












                                      -18-
<PAGE>
                       DARLINGTON COUNTY BANCSHARES, INC.

SIGNATURES

In  accordance  with  Section 13 of the  Securities  Exchange  Act of 1934,  the
Company  has  duly  caused  this  report  to be  signed  on  its  behalf  by the
undersigned, thereunto duly authorized.


      DARLINGTON COUNTY BANCSHARES, INC.
      ----------------------------------
              Name of Bank



By:  s/Henry M. Funderburk                      Date:  March 24, 2004
     ----------------------------------                ---------------
     Henry M. Funderburk, President and
     Chief Executive Officer
     (Principal Executive Officer)


By:  s/Ellen Berry                              Date:  March 24, 2004
     -----------------------------------               --------------
     Ellen Berry
     Vice President and Cashier
     (Controller)
     Darlington County Bank


By:  s/Charles A. Hardin                        Date:  March 24, 2004
     ------------------------------------              --------------
     Charles A. Hardin
     Vice President
     (Acting as Chief Financial Officer)
     Darlington County Bank












                                      -19-
<PAGE>
                       DARLINGTON COUNTY BANCSHARES, INC.

SIGNATURES

In  accordance  with the Exchange  Act, this report has been signed below by the
following persons on behalf of the registrant in the capacities and on the dates
indicated.

<TABLE>
<CAPTION>

                           SIGNATURE                                   TITLE                          DATE
----------------------------------------------------------        ----------------------        ---------------



<S>                                                               <C>                           <C>
s/ R. E. Goodson                                                  Chairman of the Board         March 24, 2004
-----------------------------------------
R. E. Goodson, Sr.


s/ Hubert C. Baker                                                Director                      March 24, 2004
-----------------------------------------
Hubert C. Baker


s/ W. Edwin Dargan                                                Director                      March 24, 2004
-----------------------------------------
W. Edwin Dargan


s/ Raymond Galloway                                               Director                      March 24, 2004
-----------------------------------------
Raymond Galloway


s/ Charles G. Howard                                              Director                      March 24, 2004
-----------------------------------------
Charles G. Howard


s/ Albert L. James, III                                           Director                      March 24, 2004
-----------------------------------------
Albert L. James, III


s/ W. B. McCown, III                                              Director                      March 24, 2004
-----------------------------------------
W. B. McCown, III


s/ G. Clyde Scott                                                 Director                      March 24, 2004
-----------------------------------------
G. Clyde Scott


s/ Eugene A. Vaughn                                               Director                      March 24, 2004
-----------------------------------------
Eugene A. Vaughn


s/ Henry M. Funderburk, III                                       Director and                  March 24, 2004
-----------------------------------------                         President and Chief
Henry M. Funderburk, III                                          Executive Officer
                                                                  Darlington County Bank


</TABLE>


                                      -20-

<PAGE>
                       DARLINGTON COUNTY BANCSHARES, INC.






<TABLE>
<CAPTION>



                                TABLE OF CONTENTS

                                                                                  PAGE NO.

<S>                                                                                <C>
Independent Accountants' Report.......................................................F-2
Consolidated Balance Sheets...........................................................F-3
Consolidated Statements of Income.....................................................F-4
Consolidated Statements of Stockholders' Equity and Comprehensive Income..............F-5
Consolidated Statements of Cash Flows.................................................F-6
Notes to Consolidated Financial Statements.........................................F-7-18

</TABLE>

















                                       F-1


<PAGE>

                         INDEPENDENT ACCOUNTANTS' REPORT
                         -------------------------------


The Directors and Stockholders
Darlington County Bancshares, Inc. and Subsidiary
Darlington, South Carolina


We have  audited the  accompanying  consolidated  balance  sheets of  Darlington
County Bancshares, Inc. and Subsidiary as of December 31, 2003 and 2002, and the
related   consolidated   statements   of   income,   stockholders'   equity  and
comprehensive  income  and cash  flows for each of the  years in the three  year
period ended December 31, 2003. These consolidated  financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Darlington  County  Bancshares,  Inc. and Subsidiary as of December 31, 2003 and
2002 and the results of their operations and cash flows for each of the years in
the three year period ended  December  31, 2003,  in  conformity  with  auditing
standards generally accepted in the United States of America.



/s/ Elliott Davis, LLC
Columbia, South Carolina
January 9, 2004



                                      F-2
<PAGE>
                             DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY

<TABLE>
<CAPTION>
                                        CONSOLIDATED BALANCE SHEETS



                                                                                   DECEMBER 31,
                                                                     -----------------------------------------
                                                                            2003                  2002
                                                                     -------------------   -------------------
ASSETS

<S>                                                                   <C>                      <C>
Cash and due from banks                                               $       1,378,221        $   1,144,161

                                                                                                     314,713

Federal funds sold                                                            1,368,000            2,386,000

Investment securities held to maturity
     (fair value $86,567 in 2003 and $653,556 in 2002)                           85,353              641,054

Investment securities available for sale                                     11,064,750            5,904,573

Other investments, at cost                                                       50,405               50,405

Loans                                                                        20,542,916           19,015,019

     Less allowance for loan losses                                            (214,621)            (205,728)
                                                                     -------------------   -------------------

            Net loans                                                        20,328,295           18,809,291

Premises and equipment                                                          940,060            1,002,578

Accrued interest receivable                                                     294,530              282,438

Other assets                                                                    133,859               47,021
                                                                     -------------------   -------------------

            Total assets                                              $      35,643,473     $     30,267,521
                                                                     ===================   ===================

Liabilities and stockholders' equity

Deposits
     Demand                                                               $   6,384,380         $  4,606,528
                                                                                                   4,910,391
     Savings and NOW                                                         19,255,759           15,252,327
     Other time                                                               5,928,466            6,344,674
                                                                     -------------------   -------------------

            Total deposits                                                   31,568,605           26,203,529

Other liabilities                                                               101,788              118,311
                                                                     -------------------   -------------------

            Total liabilities                                                31,670,393           26,321,840
                                                                     -------------------   -------------------

Commitments and contingencies - Notes 9 and 14

Stockholders' equity
     Common stock - $.01 par value, 1,000,000 shares authorized,
        158,000 shares issued and outstanding                                     1,580                1,580
     Capital in excess of par value of stock                                  1,617,920            1,617,920
     Retained earnings                                                        2,355,919            2,259,503
     Accumulated other comprehensive income (loss)                              (2,339)               66,678
                                                                     -------------------   -------------------

            Total stockholders' equity                                        3,973,080            3,945,681
                                                                     -------------------   -------------------

            Total liabilities and stockholders' equity                   $   35,643,473         $ 30,267,521
                                                                     ===================   ===================

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

</TABLE>

                                      F-3
<PAGE>
                             DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY

<TABLE>
<CAPTION>
                                     CONSOLIDATED STATEMENTS OF INCOME



                                                                                    FOR THE YEARS ENDED DECEMBER 31,
                                                                   ------------------------------------------------------------
                                                                          2003                 2002                2001
                                                                   -------------------   ------------------  ------------------
INTEREST INCOME
<S>                                                                <C>                        <C>                <C>
     Loans                                                         $          1,453,502       $  1,427,972       $  1,536,015
     Investment securities
        Taxable                                                               275,830              339,127            285,394
        Exempt from federal income taxes                                       21,346               28,617             31,130
                                                                   -------------------   ------------------  ------------------

            Total interest on investment securities                           297,176              367,744            316,524

     Federal funds sold                                                        31,394               28,964            163,260
     Other                                                                        905                1,104              1,822
                                                                   -------------------   ------------------  ------------------

            Total interest income                                           1,782,977            1,825,784          2,017,621

INTEREST EXPENSE
     Deposits                                                                 374,529              467,994            791,742
                                                                   -------------------   ------------------  ------------------

            Net interest income                                             1,408,448            1,357,790         1,225,879

Provision for loan losses                                                     108,000               70,000            59,992
                                                                   -------------------   ------------------  ------------------

            Net interest income after provision for loan losses             1,300,448            1,287,790         1,165,887

NONINTEREST INCOME
     Service charges on deposit accounts                                      315,104              357,094            309,082
     Gain on sale of available for sale securities                             24,765                 -                  -
     Other service charges and fees                                            10,687               23,241             27,685
                                                                   -------------------   ------------------  ------------------

            Total noninterest income                                          350,556              380,335            336,767

NONINTEREST EXPENSES
     Salaries and employee benefits                                           685,596              663,244            630,724
     Occupancy                                                                 77,322               73,550             69,472
     Furniture and equipment                                                  123,721               96,032             80,147
     Office supplies                                                           55,276               44,997             46,664
     Data processing fees                                                     108,885              146,384            104,622
     Other operating                                                          206,882              171,409            211,477
                                                                   -------------------   ------------------  ------------------

            Total noninterest expenses                                      1,257,682            1,195,616          1,143,106
                                                                   -------------------   ------------------  ------------------

            Income before income taxes                                        393,322              472,509            359,548

PROVISION FOR INCOME TAXES                                                    138,906              151,280            109,100
                                                                   -------------------   ------------------  ------------------

            Net income                                             $          254,416         $    321,229     $      250,448
                                                                   ===================   ==================  ==================

NET INCOME PER SHARE OF COMMON STOCK                               $             1.61         $       2.03     $         1.59
                                                                   ===================   ==================  ==================

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

</TABLE>

                                      F-4
<PAGE>
                             DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY

<TABLE>
<CAPTION>
                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                               YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001




                                                                       CAPITAL IN                    ACCUMULATED         TOTAL
                                                 COMMON STOCK           EXCESS OF                      OTHER COM-        STOCK-
                                            ------------------------    PAR VALUE       RETAINED       PREHENSIVE       HOLDERS'
                                              SHARES       AMOUNT       OF STOCK        EARNINGS     INCOME (LOSS)       EQUITY
                                            -----------  -----------  --------------  -------------  --------------- ---------------

<S>                                            <C>          <C>        <C>              <C>              <C>             <C>
BALANCE, DECEMBER 31, 2000                     158,000      $ 1,580    $ 1,617,920      $2,003,826       $ (36,369)      $3,586,957
                                                                                                                     ---------------

    Net income                                                                            250,448                          250,448
    Other comprehensive income, net of
       income taxes of $7,715:
       Unrealized gain on securities
           available for sale                                                                               14,982          14,982
                                                                                                                     ---------------
       Comprehensive income                                                                                                265,430
    Cash dividend, $1.00 per share                                                       (158,000)                        (158,000)
                                            -----------  -----------  --------------  -------------  --------------- ---------------

BALANCE, DECEMBER 31, 2001                     158,000       1,580        1,617,920     2,096,274          (21,387)      3,694,387
                                                                                                                     ---------------

    Net income                                                                            321,229                          321,229
    Other comprehensive income, net of
       income tax of $45,367:
       Unrealized gain on securities
           available for sale                                                                               88,065          88,065
                                                                                                                     ---------------
       Comprehensive income                                                                                                409,294
    Cash dividend, $1.00 per share                                                       (158,000)                        (158,000)
                                            -----------  -----------  --------------  -------------  --------------- ---------------


BALANCE, DECEMBER 31, 2002                     158,000        1,580       1,617,920      2,259,503           66,678       3,945,681
                                                                                                                     ---------------
    Net income                                                                             254,416
                                                                                                                           254,416
    Other comprehensive income, net of
       income tax benefit of $1,205:
       Unrealized loss on securities
           available for sale                                                                              (53,415)        (53,415)
          Plus reclassification
    adjustments                                                                                            (15,602)        (15,602)
            for gains included in net
    income
                                                                                                                     ---------------
       Comprehensive income                                                                                                185,399
    Cash dividend, $1.00 per share                                                       (158,000)                        (158,000)
                                            -----------  -----------  --------------  -------------  --------------- ---------------

BALANCE, DECEMBER 31, 2003                     158,000     $ 1,580      $1,617,920    $ 2,355,919         $(2,339)     $ 3,973,080
                                            ===========  ===========  ==============  =============  =============== ===============


               The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>


                                      F-5
<PAGE>
                             DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY

<TABLE>
<CAPTION>
                                  CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                        FOR THE YEARS ENDED DECEMBER 31,
                                                                        ---------------------------------------------------------
                                                                              2003                2002                2001
                                                                        -----------------  -------------------  -----------------
OPERATING ACTIVITIES
<S>                                                                          <C>                 <C>                <C>
     Net income                                                              $   254,416         $   321,229        $   250,448
     Adjustments to reconcile net income to
        net cash provided by operating activities
        Depreciation                                                              84,466              75,845             70,598
        Amortization and accretion                                                47,211              16,172              5,161
        Provision for loan losses                                                108,000              70,000             59,992
        Gain on sale of securities available for sale                            (24,765)                -                  -
        Loss on sale of premises and equipment                                      -                    -               4,057
        Deferred income taxes                                                     22,350              22,000             36,000
        Changes in assets and liabilities:
          (Increase) decrease in accrued interest receivable                     (12,092)            (28,725)            167,667
          Decrease (increase) in other assets                                   (109,188)             94,108            (60,611)
          Increase (decrease) in other liabilities                                 7,474              (1,102)           (40,729)
                                                                        -----------------  -------------------  -----------------
            Cash provided by operating activities                                377,872             569,527            492,583
                                                                        -----------------  -------------------  -----------------

INVESTING ACTIVITIES
     Decrease in federal funds sold                                            1,018,000           1,127,000            907,000
     Proceeds from calls and maturities of investment
        securities held to maturity                                              560,000              75,000                -
     Proceeds from calls and maturities of investment
        securities available for sale                                          4,117,823           7,963,135          6,686,060
     Proceeds from sales of securities available for sale                      1,340,360                 -                  -
     Purchase of investment securities available for sale                    (10,738,119)         (6,122,031)        (9,642,485)
     Net increase in loans                                                    (1,627,004)         (1,454,561)        (1,406,085)
     Proceeds from sale of premises and equipment                                   -                    -                7,384
     Purchases of premises and equipment                                         (21,948)            (15,039)          (270,372)
                                                                        -----------------  -------------------  -----------------
            Cash provided by (used for) investing activities                 (5,350,888)           1,573,504         (3,718,498)
                                                                        -----------------  -------------------  -----------------

FINANCING ACTIVITIES
     Dividends paid                                                             (158,000)           (158,000)          (158,000)
     Increase (decrease) in deposits                                           5,365,076          (1,155,583)         2,609,031
                                                                        -----------------  -------------------  -----------------
            Cash provided by (used for) financing activities                   5,207,076          (1,313,583)         2,451,031
                                                                        -----------------  -------------------  -----------------

                                                                                 234,060             829,448           (774,884)
            Increase (decrease) in cash and due from banks

CASH AND DUE FROM BANKS, BEGINNING OF YEAR                                     1,144,161             314,713          1,089,597
                                                                        -----------------  -------------------  -----------------

CASH AND DUE FROM BANKS, END OF YEAR                                         $ 1,378,221        $  1,144,161         $  314,713
                                                                        =================  ===================  =================

SUPPLEMENTAL DISCLOSURES
     Cash paid for:
        Interest                                                              $  380,875         $   510,806        $   825,097
                                                                        =================  ===================  =================

        Income taxes                                                          $  151,200         $     7,999        $   175,967
                                                                        =================  ===================  =================

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

</TABLE>

                                      F-6
<PAGE>

                DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                      F-18
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES
------------------------------------------------------------------

PRINCIPLES  OF  CONSOLIDATION  AND  NATURE OF  OPERATIONS  -  Darlington  County
Bancshares,  Inc. (the  "Company") was organized in July 1999 for the purpose of
being the holding company for Darlington  County Bank (the "Bank").  The Company
presently  engages in no other  business  than that of owning  the Bank,  has no
employees  and  operates  as one  business  segment.  The  Company is subject to
regulation by the Federal Reserve Board. The consolidated  financial  statements
include the accounts of the Company and the Bank with all intercompany  balances
and transactions having been eliminated.

The Bank operates  under a state  charter and provides full banking  services to
its  customers.  The Bank is subject to regulation by the South  Carolina  State
Board of Financial  Institutions and the Federal Deposit Insurance  Corporation.
The Bank makes commercial and personal loans to individuals and small businesses
located  primarily  in the  South  Carolina  midlands  region.  The  Bank  has a
diversified  loan portfolio and the  borrowers'  ability to repay their loans is
not dependent upon any specific economic sector.

USE OF  ESTIMATES  IN  FINANCIAL  STATEMENT  PREPARATION  - The  preparation  of
consolidated  financial  statements in  conformity  with  accounting  principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities and disclosure of contingent  assets and liabilities as of the dates
of the balance  sheets and the  statements  of income for the  periods  covered.
Actual results could differ from those estimates.

CASH AND CASH  EQUIVALENTS - For purposes of the  statement of cash flows,  cash
and cash  equivalents are defined as those amounts included in the balance sheet
caption  "Cash and Due from Banks." Cash and cash  equivalents  have an original
maturity of three months or less.

INVESTMENT   SECURITIES  -  The  Bank  accounts  for  investment  securities  in
accordance  with Statement of Financial  Accounting  Standards  ("SFAS") No. 115
"Accounting  for  Certain  Investments  in Debt  and  Equity  Securities."  Debt
securities are classified  upon purchase as available for sale, held to maturity
or trading.  Such assets  classified  as available  for sale are carried at fair
value.  Unrealized  gains or losses are reported as a component of stockholders'
equity,  accumulated  other  comprehensive  loss, net of deferred  income taxes.
Securities  classified as held to maturity are carried at cost, adjusted for the
amortization of premiums and the accretion of discounts.  In order to qualify as
held to  maturity,  the  Bank  must  have the  ability  and  intent  to hold the
securities to maturity. Trading securities are carried at market value. The Bank
has no trading  securities.  Gains or losses on  disposition  of securities  are
based on the  difference  between the net  proceeds  and the  adjusted  carrying
amount of the securities sold, using the specific identification method.

LOANS - Interest on loans is accrued into income based upon the interest method.
Loan  origination  and  commitment  fees and direct loan  origination  costs are
deferred  and  amortized  over  the  contractual  life of the  related  loans or
commitments as an adjustment of the related loan yields.

ALLOWANCE  FOR  LOAN  LOSSES  - The  allowance  for  loan  losses  is  based  on
management's  ongoing  evaluation  of the loan  portfolio and reflects an amount
that,  in  management's  opinion,  is adequate to absorb  losses in the existing
portfolio.  In evaluating the  portfolio,  management  takes into  consideration
numerous  factors,  including  current  economic  conditions,  prior  loan  loss
experience,  the composition of the loan portfolio, and management's estimate of
anticipated credit losses.  Loans are charged against the allowance at such time
as they are determined to be losses.  Subsequent  recoveries are credited to the
allowance.  Management considers the year-end allowance appropriate and adequate
to cover possible losses in the loan portfolio;  however,  management's judgment
is based upon a number of assumptions about future events, which are believed to
be  reasonable,  but  which may or may not prove  valid.  Thus,  there can be no
assurance  that  charge-offs in future periods will not exceed the allowance for
loan losses or that  additional  increases in the allowance for loan losses will
not be  required.  Allowances  for loan  losses are subject to review by various
regulatory authorities and may be subject to adjustment upon their examination.

                                      F-7
<PAGE>
                DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES - continued
------------------------------------------------------------------

ACCOUNTING  FOR  IMPAIRED  LOANS - The  Bank  accounts  for  impaired  loans  in
accordance  with SFAS No. 114,  "Accounting  by Creditors  for  Impairment  of a
Loan".  This standard requires that all creditors value loans at the loan's fair
value if it is probable  that the creditor will be unable to collect all amounts
due according to the terms of the loan  agreement.  Fair value may be determined
based upon the present value of expected  cash flows,  market price of the loan,
if available,  or value of the  underlying  collateral.  Expected cash flows are
required to be discounted at the loan's  effective  interest rate.  SFAS No. 114
was  amended by SFAS No. 118 to allow a creditor  to use  existing  methods  for
recognizing  interest  income on an impaired  loan and by  requiring  additional
disclosures about how a creditor recognizes interest income on an impaired loan.
When the ultimate  collectibility  of an impaired loan's  principal is in doubt,
wholly or partially, all cash receipts are applied to principal. When this doubt
does not exist,  cash  receipts are applied under the  contractual  terms of the
loan agreement.  Once the recorded  principal  balance has been reduced to zero,
future cash  receipts  are applied to  interest  income,  to the extent that any
interest has been foregone.  Further cash receipts are recorded as recoveries of
any amounts previously charged off.

A loan is also considered  impaired if its terms are modified in a troubled debt
restructuring.  For these accruing  impaired loans,  cash receipts are typically
applied to principal and interest receivable in accordance with the terms of the
restructured loan agreement.

PREMISES  AND  EQUIPMENT  - Premises  and  equipment  are  stated at cost,  less
accumulated  depreciation.  The  provision for  depreciation  is computed by the
straight-line  method,  based on the  estimated  useful lives for  furniture and
equipment of 5 to 7 years and buildings of 40 years.  The cost of assets sold or
otherwise  disposed of and the related allowance for depreciation are eliminated
from the accounts and the resulting  gains or losses are reflected in the income
statement when incurred. Maintenance and repairs are charged to current expense.
The costs of major renewals and improvements are capitalized.

NON-PERFORMING  ASSETS - Loans are placed in a  non-accrual  status when, in the
opinion of management,  the collection of additional  interest is  questionable.
Thereafter,  no interest is taken into income  unless  received in cash or until
such  time  as the  borrower  demonstrates  the  ability  to pay  principal  and
interest.

FORECLOSED  REAL ESTATE - Foreclosed  real estate is stated at the lower of cost
or estimated  fair value less estimated  costs to sell. Any accrued  interest on
the related  loan at the date of  acquisition  is charged to  operations.  Costs
relating to the  development  and improvement of property are capitalized to the
extent that such costs do not exceed the estimated fair value less selling costs
of the property,  whereas those  relating to holding the property are charged to
expense.

INCOME  TAXES - The  Company  accounts  for income  taxes  under  SFAS No.  109,
"Accounting for Income Taxes." Certain items of income and expense for financial
reporting   (principally   provision  for  loan  losses  and  depreciation)  are
recognized  differently  for income tax purposes.  Provisions for deferred taxes
are made in recognition of such temporary differences.

ADVERTISING  EXPENSE -  Advertising  and public  relations  costs are  generally
expensed as incurred. External costs incurred in producing media advertising are
expensed the first time the advertising takes place.  External costs relating to
direct mailing costs are expended in the period in which the direct mailings are
sent.  Advertising  and  public  relations  costs of $7,474  and  $11,072,  were
included in the Company's results of operations for 2003 and 2002.

NET  INCOME PER SHARE - Net  income  per share is  computed  on the basis of the
weighted  average number of common shares  outstanding,  158,000 shares in 2003,
2002 and 2001.  The Company has no  instruments  which are dilutive;  therefore,
only basic net income per share of common stock is presented.


                                      F-8
<PAGE>
                DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES - continued
------------------------------------------------------------------

RECENTLY  ISSUED  ACCOUNTING   STANDARDS  -  In  December  2002,  the  Financial
Accounting  Standards  Board ("FASB") issued  Statement of Financial  Accounting
Standards  ("SFAS")  No.  148,   "Accounting  for  Stock-based   Compensation  -
Transition and Disclosure," an amendment of FASB Statement No. 123,  "Accounting
for Stock-Based Compensation",  to provide alternative methods of transition for
a voluntary  change to the fair value based method of accounting for stock-based
employee  compensation.  SFAS No. 148 also amends the  disclosure  provisions of
SFAS No. 123 and Accounting Pronouncement Board ("APB") Opinion No. 28, "Interim
Financial  Reporting",  to require  disclosure  in the  summary  of  significant
accounting policies of the effects of an entity's accounting policy with respect
to  stock-based  employee  compensation  on reported net income and earnings per
share in annual and interim  financial  statements.  While SFAS No. 148 does not
amend SFAS No. 123 to require  companies to account for employee  stock  options
using the fair  value  method,  the  disclosure  provisions  of SFAS No. 148 are
applicable to all companies with stock-based employee  compensation,  regardless
of whether  they  account for that  compensation  using the fair value method of
SFAS No. 123 or the intrinsic value method of APB Opinion No. 25. The provisions
of SFAS No. 148 are effective for annual  financial  statements for fiscal years
ending after December 15, 2002, and for financial reports  containing  condensed
financial  statements for interim periods beginning after December 15, 2002. The
disclosure-only  provisions  of SFAS  No.  148 had no  impact  on the  financial
condition of the Company.

In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of  Statement  133 on
Derivative  Instruments  and  Hedging  Activities."  SFAS  No.  149  amends  and
clarifies  accounting for derivative  instruments,  including certain derivative
instruments  embedded in other contracts and loan commitments that relate to the
origination of mortgage loans held for sale,  and for hedging  activities  under
SFAS No. 133. SFAS No. 149 is generally  effective for contracts entered into or
modified  after June 30,  2003.  The  adoption  of SFAS No. 149 did not have any
impact on the financial condition or operating results of the Company.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with  Characteristics  of both Liabilities and Equity." SFAS No. 150
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with  characteristics  of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some  circumstances).  Many of those  instruments
were previously  classified as equity.  SFAS No. 150 is generally  effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period  beginning  after June
15, 2003.  The adoption of SFAS No. 150 did not have any impact on the financial
condition or operating results of the Company.

In November 2002, the FASB issued  Interpretation  ("FIN") No. 45,  "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees of  Indebtedness  of Others".  FIN No. 45 requires a company,  at the
time it issues a guarantee, to recognize an initial liability for the fair value
of obligations assumed under the guarantee and elaborates on existing disclosure
requirements  related to  guarantees  and  warranties.  The initial  recognition
requirements of FIN No. 45 are effective for guarantees issued or modified after
December 31, 2002.  The  disclosure  requirements  are  effective  for financial
statements of periods ending after December 15, 2002. The adoption of FIN No. 45
did not have any  effect on the  Company's  financial  position  or  results  of
operations.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities." FIN No. 46 requires a variable  interest entity to be consolidated by
a company if that  company is subject to a majority of the risk of loss from the
variable interest  entity's  activities or entitled to receive a majority of the
entity's residual returns,  or both. FIN No. 46 also requires  disclosures about
variable interest entities that a company is not required to consolidate, but in
which it has a significant  variable interest.  FIN No. 46 provides guidance for
determining  whether  an  entity  qualifies  as a  variable  interest  entity by
considering,  among other  considerations,  whether the entity lacks  sufficient
equity  or  its  equity  holders  lack  adequate  decision-making  ability.  The
consolidation  requirements of FIN No. 46 apply immediately to variable interest
entities created after January 31, 2003. The consolidation requirements apply to
existing  entities in the first fiscal year or interim  period  beginning  after
June 15, 2003.  Certain of the  disclosure  requirements  apply in all financial
statements  issued  after  January 31,  2003,  regardless  of when the  variable
interest  entity was  established.  The  adoption of FIN No. 46 did not have any
effect on the Company's financial position or results of operations.

RECLASSIFICATIONS  - Certain previously  reported amounts have been reclassified
to conform to the  current  year  presentation.  Such  changes  had no effect on
previously reported net income or stockholders' equity.

                                      F-9
<PAGE>
                DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES - continued
------------------------------------------------------------------

RISKS AND  UNCERTAINTIES  - In the normal  course of its  business,  the Company
encounters two significant  types of risks:  economic and regulatory.  There are
three main  components of economic  risk:  interest  rate risk,  credit risk and
market risk. The Company is subject to interest rate risk to the degree that its
interest-bearing  liabilities  mature or  reprice  at  different  speeds,  or on
different basis, than its  interest-earning  assets.  Credit risk is the risk of
default on the Company's loan portfolio that results from  borrower's  inability
or unwillingness to make contractually  required payments.  Market risk reflects
changes in the value of collateral underlying loans receivable and the valuation
of real estate held by the Company.

The  Company is subject to the  regulations  of various  governmental  agencies.
These  regulations can and do change  significantly  from period to period.  The
Company also undergoes periodic  examinations by the regulatory agencies,  which
may subject it to further changes with respect to asset  valuations,  amounts of
required  loss  allowances  and  operating  restrictions  from  the  regulators'
judgments  based  on  information  available  to  them  at  the  time  of  their
examination.

NOTE 2 - RESTRICTIONS ON CASH AND DUE FROM BANKS
------------------------------------------------

The Bank is required to maintain  average reserve balances either at the Bank or
on deposit with the Federal  Reserve Bank. The average  amounts of these reserve
balances  for the years  ended  December  31,  2003 and 2002 were  approximately
$227,000 and $191,000, respectively.

NOTE 3 - INVESTMENT SECURITIES
------------------------------

The  amortized  cost  and  approximate  fair  value  of  investment  securities,
including maturities, are summarized as follows at December 31:
<TABLE>
<CAPTION>
                                                                                         2003
                                                          -------------------------------------------------------------------
                                                                                   GROSS UNREALIZED
                                                             AMORTIZED     --------------------------------       FAIR
                                                                COST             GAINS           LOSSES           VALUE
                                                          ----------------- ---------------- --------------- ----------------

AVAILABLE FOR SALE
------------------
   Federal Agencies
<S>                                                             <C>                 <C>            <C>         <C>
     One to five years                                          $4,496,151          $ 8,125        $  1,776    $ 4,502,500
                                                          ----------------- ---------------- --------------- ----------------

   Mortgage backed
     One to five year                                              885,627             -              5,682         879,945
     Five to ten years                                           5,163,956           16,158          14,573       5,165,541
     After ten years                                               522,559              422           6,217         516,764
                                                          ----------------- ---------------- --------------- ----------------

                                                                 6,572,142           16,580          26,472       6,562,250
                                                          ----------------- ---------------- --------------- ----------------

Total available for sale                                       $11,068,293          $24,705        $ 28,248     $11,064,750
                                                          ================= ================ =============== ================

HELD TO MATURITY
----------------
   State, county and municipal
     Less than one year                                            $85,353           $1,214          $    -       $  86,567
     One to five years                                                                                    -
     Five to ten years                                                                                    -
                                                          ----------------- ---------------- --------------- ----------------

Total held to maturity                                       $      85,353           $1,214          $    -       $  86,567
                                                          ================= ================ =============== ================

</TABLE>


                                      F-10
<PAGE>
                DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - INVESTMENT SECURITIES - continued
------------------------------
<TABLE>
<CAPTION>

                                                                                         2002
                                                          -------------------------------------------------------------------
                                                                                   GROSS UNREALIZED
                                                              AMORTIZED     --------------------------------      FAIR
                                                                COST             GAINS           LOSSES           VALUE
                                                          ----------------- ---------------- --------------- ----------------

AVAILABLE FOR SALE
------------------
   Federal Agencies
<S>                                                           <C>                <C>               <C>           <C>
     One to five years                                        $  2,595,000       $   27,266        $   -         $ 2,622,266
                                                          ----------------- ---------------- --------------- ----------------

   Mortgage backed
     Less than one year                                        $   368,524       $    7,640        $   -          $  376,164
     Five to ten years                                           1,487,534           15,792            -           1,503,326
     After ten years                                             1,364,048           38,769            -           1,402,817
                                                          ----------------- ---------------- --------------- ----------------

                                                                 3,220,106           62,201            -           3,282,307
                                                          ----------------- ---------------- --------------- ----------------

Total available for sale                                      $  5,815,106       $   89,467        $   -         $ 5,904,573
                                                          ================= ================ =============== ================

HELD TO MATURITY
----------------
   State, county and municipal
     Less than one year                                        $    80,364       $    1,069        $   -          $   81,433
     One to five years                                              86,411            3,941            -              90,352
     Five to ten years                                             474,279            7,492            -             481,771
                                                          ----------------- ---------------- --------------- ----------------

Total held to maturity                                         $   641,054       $   12,502        $   -          $  653,556
                                                          ================= ================ =============== ================

</TABLE>

For purposes of the maturity table,  mortgage-backed  securities,  which are not
due at a single maturity date, have been allocated over maturity groupings based
on an average  maturity  life  computation  of the  underlying  collateral.  The
mortgage-backed  securities may mature earlier than their average maturity lives
because of principal prepayments.

The following table shows gross unrealized losses and fair value,  aggregated by
investment category,  and length of time that individual securities have been in
a continuous unrealized loss position, at December 31, 2003.

<TABLE>
<CAPTION>
AVAILABLE FOR SALE
                                          LESS THAN                   TWELVE MONTHS
                                        TWELVE MONTHS                   OR MORE                        TOTAL
                                 ---------------------------    ------------------------     ----------------------------
                                                  UNREALIZED                  UNREALIZED                       UNREALIZED
                                    FAIR VALUE       LOSSES      FAIR VALUE      LOSSES        FAIR VALUE         LOSSES
                                    ----------    -----------    ----------   -----------      ----------      ----------
<S>                              <C>             <C>            <C>          <C>             <C>              <C>
   Federal agencies              $      996,151  $     1,776    $        -   $        -      $     996,151    $     1,776
   Mortgage-backed securities         6,562,250       26,472             -            -          6,562,250         26,472
                                 --------------  -----------    -----------  -----------     -------------    -----------
     Total available for sale    $    7,558,401  $    28,248    $        -   $        -      $   7,558,401    $    28,248
                                 ==============  ===========    ===========  ===========     =============    ===========
</TABLE>

Investment   securities  with  an  aggregate  amortized  cost  of  approximately
$1,500,896   ($1,496,602  fair  value)  at  December  31,  2003  and  $1,200,000
($1,205,000  fair value) at December  31, 2002,  were  pledged to secure  public
deposits  and for  other  purposes.  Fair  value  of  investment  securities  is
determined using quoted market prices.


                                      F-11
<PAGE>
                DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES
--------------------------------------------

Following is a summary of loans by major classification:
<TABLE>
<CAPTION>
                                                                                                      DECEMBER 31,
                                                                                       --------------------------------------
                                                                                              2003                2002
                                                                                       -------------------  -----------------

<S>                                                                                          <C>                <C>
Real estate - mortgage                                                                       $  9,511,000       $  8,714,000
Real estate - construction                                                                      1,231,000            732,000
Commercial and industrial                                                                       3,755,000          3,797,000
Loans to individuals for household, family and other consumer expenditures                      3,955,000          4,001,000
Agriculture                                                                                       931,000          1,034,000
All other loans, including overdrafts                                                           1,139,526            718,541
Deferred loan origination costs                                                                    20,390             18,478
                                                                                       -------------------  -----------------

                                                                                            $  20,542,916   $     19,015,019
                                                                                       ===================  =================
</TABLE>

Changes in the allowance for loan losses are summarized as follows for the years
ended December 31:

<TABLE>
<CAPTION>
                                                                      2003             2002                     2001
                                                                -------------------  -------------------  -------------------

<S>                                                                     <C>              <C>                   <C>
Balance, beginning of year                                              $   205,728      $    187,808          $   252,219
Recoveries of loans previously charged against
    the allowance                                                            16,277               786              118,465

                     The allowance

Provision for loan losses                                                   108,000            70,000               59,992
Loans charged against the allowance                                        (115,384)          (52,866)            (242,868)
                                                                -------------------  -------------------  -------------------

Balance, end of year                                              $         214,621       $   205,728        $     187,808
                                                                ===================  ===================  ===================
</TABLE>


At December 31, 2003 and 2002,  non-accrual loans totaled  approximately $71,097
and  $58,800,  respectively.  The gross  interest  income  which would have been
recorded under the original terms of the non-accrual loans amounted to $5,731 in
2003, $3,900 in 2002, and $1,364 in 2001. No interest was recorded on nonaccrual
loans in 2003,  2002 and 2001.  As of December 31, 2003 and 2002 the Bank had no
impaired loans.

NOTE 5 - PREMISES AND EQUIPMENT

Premises and equipment at December 31 is summarized as follows:

<TABLE>
<CAPTION>

                                                              2003               2002
                                                         ----------------   ---------------

<S>                                                           <C>              <C>
Land and buildings                                            $ 971,923        $   965,625
Furniture, fixtures and equipment                               767,175            768,585
                                                         ----------------   ---------------

                                                              1,739,098          1,734,210
Less accumulated depreciation and amortization                  799,038            731,632
                                                         ----------------   ---------------

                                                              $ 940,060        $ 1,002,578
                                                         ================   ===============
</TABLE>

Depreciation  and  amortization  of  bank  premises  and  equipment  charged  to
operating expense totaled $84,466 in 2003, $75,845 in 2002, and $70,598 in 2001,
respectively.

                                      F-12
<PAGE>
                DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - DEPOSITS
-----------------

At  December  31,  2003 and 2002,  certificates  of deposit of  $100,000 or more
totaled approximately $906,887 and $773,000,  respectively.  Interest expense on
these deposits was $16,020 in 2003, $30,448 in 2002, and $80,153 in 2001.

At December 31, 2003, the scheduled maturities of certificates of deposit are as
follows:

                  2004                                    $ 5,848,469
                  2005                                         74,671
                  2006 and thereafter                           5,326
                                                     -----------------

                                                          $ 5,928,466
                                                     =================

NOTE 7 - UNUSED LINES OF CREDIT
-------------------------------

At  December  31,  2003,  the Bank has an  unused  short-term  line of credit to
purchase Federal funds from an unrelated bank totaling $2,500,000.  This line of
credit  is  available  on a one to  fourteen  day basis  for  general  corporate
purposes of the Bank. The lender has reserved the right to withdraw this line at
its option.

NOTE 8 - INCOME TAXES

The following  summary of the provision for income taxes  includes tax deferrals
which arise from temporary  differences  in the  recognition of certain items of
revenue and expense for tax and financial reporting purposes for the years ended
December 31:
<TABLE>
<CAPTION>

                                                     2003                 2002                 2001
                                             -------------------  -------------------  -------------------
Income taxes currently payable
<S>                                                  <C>               <C>                   <C>
Federal                                              $110,878          $    121,278          $    63,400
State                                                  11,449                15,336                9,700
                                             -------------------  -------------------  -------------------

                                                      122,327               136,614               73,100
                                             -------------------  -------------------  -------------------

Tax consequences of differences
Loan losses                                            23,875                 2,358               13,448
Depreciation                                            2,330                11,360                9,968
Other                                                  (9,626)                  948               12,584
                                             -------------------  -------------------  -------------------

                                                       16,579                14,666               36,000
                                             -------------------  -------------------  -------------------

    Provision                                        $138,906           $   151,280         $    109,100
                                             ===================  ===================  ===================
</TABLE>

The income tax effect of cumulative temporary differences at December 31, are as
follows:

<TABLE>
<CAPTION>
                                                                  DEFERRED TAX ASSET (LIABILITY)
                                                               --------------------------------------
                                                                      2003                2002
                                                               -------------------  -----------------

<S>                                                                    <C>                <C>
Allowance for loan losses                                              $  46,073          $  69,948
Accumulated depreciation                                                 (58,163)           (55,833)
Unrealized gain (loss) on investment securities                            2,665            (28,664)
Other, net                                                                (4,390)           (14,016)
                                                               -------------------  -----------------

                                                                       $ (13,815)        $  (28,565)
                                                               ===================  =================

</TABLE>
The net  deferred  tax asset  (liability)  is reported in the  category of other
assets in the balance sheets at December 31, 2003 and 2002.

                                      F-13
<PAGE>
                DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - INCOME TAXES - continued
---------------------

The  provision  for  income  taxes is  reconciled  to the  amount of income  tax
computed at the federal  statutory  rate on income  before  income taxes for the
years ended December 31, as follows:

<TABLE>
<CAPTION>
                                                      2003                          2002                          2001
                                           ----------------------------  ---------------------------  -----------------------------
                                              AMOUNT            %           AMOUNT           %            AMOUNT            %

<S>                                            <C>              <C>      <C>                 <C>        <C>                <C>
  Tax expense at statutory rate                $133,729         34.0%    $   159,700         33.8%      $  122,246         34.0%
  Increase (decrease) in taxes resulting from:
     Tax exempt interest                         (1,123)        (0.28)        (9,700)        (2.05)        (15,600)        (4.32)
     State bank tax (net of federal               7,556          1.92         10,200          2.16          10,000          2.77
         benefit)
     Other - net                                 (1,256)        (0.32)        (8,920)        (1.89)         (7,546)        (2.21)
                                           --------------   -----------  --------------  -----------  ---------------  ------------

       Tax provision                           $138,906         35.32%      $ 151,280        32.02%     $  109,100         30.24%
                                           ==============   ===========  ==============  ===========  ===============  ============
</TABLE>

NOTE 9 - FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK
----------------------------------------------------------

The Bank is a party to financial  instruments with off balance sheet risk in the
normal course of business to meet the financing  needs of its  customers.  These
financial  instruments  include available credit on credit lines and commitments
to extend credit.  Those instruments  involve,  to varying degrees,  elements of
credit  and  interest  rate  risk in  excess  of the  amount  recognized  in the
statements  of financial  position.  The contract  amounts of these  instruments
reflect  the  extent  of  involvement  the Bank  has in  particular  classes  of
financial  instruments.  The Bank  uses  the  same  credit  policies  in  making
commitments  and  conditional  obligations  as it  does  for  on  balance  sheet
instruments.

<TABLE>
<CAPTION>
                                                                                        CONTRACT
                                                                                         AMOUNT
                                                                                     ----------------
     Financial  instruments  whose  contract  amounts  represent  credit risk at
       December 31, 2003:

<S>                                                                                   <C>
          Commitments to extend credit                                                $    4,793,976
                                                                                     ================
</TABLE>

Of these  commitments  to extend  credit,  $3,443,012  are at variable rates and
$1,350,964 are at fixed rates.

Commitments  to  extend  credit  are  agreements  to lend as long as there is no
violation of any condition  established in the contract.  Commitments  generally
have fixed expiration dates or other termination clauses and may require payment
of a fee.  Since many of the  commitments  are expected to expire  without being
drawn upon, the total  commitment  amounts do not necessarily  represent  future
cash  requirements.  The Bank evaluates each  customer's  creditworthiness  on a
case-by-case basis. The amount of collateral obtained if deemed necessary by the
Bank upon extension of credit is based on management's credit evaluation.

NOTE 10 - CARRYING AMOUNTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS
------------------------------------------------------------------

SFAS No. 107, "Disclosures about Fair Value of Financial  Instruments," requires
disclosure of fair value  information,  whether or not recognized in the balance
sheets,  when it is practical to estimate the fair value. SFAS No. 107 defines a
financial instrument as cash, evidence of an ownership interest in an entity, or
contractual  obligations  which require the exchange of cash or other  financial
instruments.  Certain  items  are  specifically  excluded  from  the  disclosure
requirements,  including the Company's  common  stock,  premises and  equipment,
accrued interest receivable and payable and other assets and liabilities.

For cash and due from banks,  Federal  funds sold,  and other  investments,  the
carrying value is a reasonable estimate of fair value.

For investment securities held to maturity and available for sale, fair value is
based on available  quoted  market  prices or quoted  market  prices for similar
securities if a quoted market price is not available.

                                      F-14
<PAGE>
                DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - CARRYING AMOUNTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS - continued
------------------------------------------------------------------

The fair value of loans is estimated based upon discounted  future cash flows at
the weighted average rates in the portfolio  compared to discounted  future cash
flows using discount rates comparable to rates currently offered for such loans.

The fair value of deposits is estimated by  discounting  the amounts  payable at
the rates currently offered for deposits of similar account types.

The carrying amounts and fair values of the Company's financial  instruments are
as follows:

<TABLE>
<CAPTION>
                                                                                 DECEMBER 31,
                                                    -------------------------------------------------------------------------
                                                                  2003                                 2002
                                                    -----------------------------------  ------------------------------------
                                                      CARRYING                              CARRYING
                                                       AMOUNT           FAIR VALUE           AMOUNT           FAIR VALUE
                                                    ----------------   ----------------  -----------------  -----------------
Financial assets:
<S>                                                    <C>               <C>                  <C>               <C>
   Cash and due from banks                             $   1,378,221     $   1,378,221        $  1,144,161      $  1,144,161
   Federal funds sold                                      1,368,000         1,368,000           2,386,000         2,386,000
   Investment securities held to maturity                     85,353            86,567             641,054           653,556
   Investment securities available for sale               11,064,750        11,064,750           5,904,573         5,904,573
   Other investments                                          50,405            50,405              50,405            50,405
   Loans, gross                                           20,542,916        20,319,467          19,015,019        19,082,901

Financial liabilities:
   Deposits                                            $  31,568,605    $   31,577,036        $ 26,203,529      $ 26,218,041


                                                          NOTIONAL          FAIR              NOTIONAL             FAIR
                                                           AMOUNT           VALUE              AMOUNT             VALUE
                                                          --------          -----             --------            -----
Commitments to extend credit                           $  4,793,976      $         -     $      3,511,000       $          -
</TABLE>

The Company had $4,793,976 of off-balance sheet financial commitments, which are
commitments  to  originate  loans  and  unused  lines  of  credit.  Since  these
obligations are based on current market rates, the carrying amount is considered
to be a reasonable estimate of fair value.

Fair value  estimates  are made at a specific  point in time,  based on relevant
market  information  and  information  about  the  financial  instrument.  These
estimates do not reflect any premium or discount that could result from offering
for sale the Company's  entire  holdings of a particular  financial  instrument.
Because no active  market  exists  for a  significant  portion of the  Company's
financial  instruments,  fair value  estimates are based on judgments  regarding
future expected loss experience,  current economic conditions,  current interest
rates  and  prepayment  trends,   risk   characteristics  of  various  financial
instruments  and other  factors.  These  estimates are  subjective in nature and
involve  uncertainties and matters of significant  judgment and therefore cannot
be  determined  with  precision.  Changes  in any of these  assumptions  used in
calculating fair value would also significantly  affect the estimates.  Further,
the fair value  estimates  were  calculated  as of  December  31, 2003 and 2002.
Changes in market interest rates and prepayment  assumptions could significantly
change  the fair  value.  Therefore,  management  believes  that  the  foregoing
information  is of limited  value and has no basis for  determining  whether the
fair value  presented would be indicative of the value which could be negotiated
during an actual sale.

Fair value  estimates are based on existing on and  off-balance  sheet financial
instruments  without  attempting  to estimate  the value of  anticipated  future
business  and the  value of  assets  and  liabilities  that  are not  considered
financial instruments.  For example, the Company has assets and liabilities that
are not considered  financial assets or liabilities  including deposit franchise
value,  deferred  tax assets and  liabilities  and premises  and  equipment.  In
addition,  the tax  ramifications  related to the  realization of the unrealized
gains and losses can have a significant  effect on fair value estimates and have
not been considered in any of these estimates.

                                      F-15
<PAGE>
                DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 - RESTRICTIONS ON DIVIDENDS
-----------------------------------

South  Carolina  banking   regulations  require  that  cash  dividends  paid  to
shareholders  receive the prior written approval of the Commissioner of Banking.
The Bank is  authorized  to pay cash  dividends  up to 100% of net income in any
calendar  year  without  obtaining  the prior  approval of the  Commissioner  of
Banking  provided that the Bank received a composite rating of one or two at the
last  Federal or State  regulatory  examination.  Under  Federal  Reserve  Board
regulations,  the  amounts  of loans  or  advances  from the Bank to the  parent
company are also restricted.

NOTE 12 - TRANSACTIONS WITH DIRECTORS, OFFICERS AND ASSOCIATES
--------------------------------------------------------------

Directors  and  officers  of the  Company  and  associates  of such  persons are
customers  of and had  transactions  with the  Bank in the  ordinary  course  of
business.  Additional  transactions may be expected to take place in the future.
Also,  included in the loan  transactions are outstanding loans and commitments,
all of which  were  made on  comparable  terms,  including  interest  rates  and
collateral, as those prevailing at the time for other customers of the Bank, and
did not  involve  more than  normal  risk of  collectibility  or  present  other
unfavorable  features.  Total loans to all  officers  and  directors,  including
immediate  family and business  interests,  at December 31, 2003 and 2002,  were
$1,013,954 and $933,807,  respectively.  During 2003, $253,261 in new loans were
made to this  group and  repayments  of  $173,114  were  received.  Deposits  by
directors,  officers and their  related  interests,  as of December 31, 2003 and
2002, approximated $592,995 and $916,348, respectively.

NOTE 13 - RETIREMENT PLAN
-------------------------

The Bank  sponsors  Simplified  Employee  Pension  (SEP)  individual  retirement
accounts  for all  officers  and  employees  meeting  certain  age  and  service
requirements.  Contributions are at the discretion of and determined annually by
the Board of Directors and are not to exceed the maximum amount deductible under
the applicable  section of the Internal  Revenue Code.  Included in expenses are
contributions  to the retirement plan of $24,152,  $24,936,  and $26,000 for the
years ended December 31, 2003, 2002 and 2001, respectively.

NOTE 14 - COMMITMENTS AND CONTINGENCIES
---------------------------------------

In the ordinary course of business, the Company may, from time to time, become a
party to legal claims and disputes.  At December 31, 2003,  management and legal
counsel  are not aware of any pending or  threatened  litigation  or  unasserted
claims or  assessments  that  could  result in  losses,  if any,  that  would be
material to the consolidated financial statements.

NOTE 15 - REGULATORY MATTERS
----------------------------

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

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Bank to maintain  minimum amounts and ratios (set forth in the table
below)  of total  and Tier I  capital  to  risk-weighted  assets,  and of Tier I
capital to average assets.  Management  believes,  as of December 31, 2003, that
the Bank meets all capital adequacy requirements to which it is subject.

                                      F-16
<PAGE>
                DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 - REGULATORY MATTERS - continued
----------------------------

As of December 31, 2003, the most recent  notification from the FDIC categorized
the  Bank  as  well  capitalized  under  the  regulatory  framework  for  prompt
corrective  action.  There are no conditions  or events since that  notification
that management  believes have changed the  institution's  category.  The Bank's
actual capital amounts and ratios and minimum  regulatory amounts and ratios are
presented as follows:
<TABLE>
<CAPTION>
                                                                                                              TO BE WELL
                                                                                                           CAPITALIZED UNDER
                                                                                  FOR CAPITAL              PROMPT CORRECTIVE
                                                                               ADEQUACY PURPOSES           ACTION PROVISIONS
                                                                          --------------------------- ---------------------------
                                                      ACTUAL                        MINIMUM                     MINIMUM
                                            ----------------------------  --------------------------- ---------------------------
(Dollars in thousands)                          AMOUNT         RATIO        AMOUNT         RATIO         AMOUNT         RATIO
                                            --------------- ------------  ------------ -------------- -------------  ------------

AS OF DECEMBER 31, 2003
<S>                                              <C>                        <C>                           <C>
Total capital (to risk weighted assets)          $   4,190     17.49%       $   1,916         8.00%       $   2,395      10.0%
Tier 1 capital (to risk weighted assets)             3,976     16.60              958         4.00            1,437      6.00
assets)
Tier 1 capital (to average assets)                   3,976     11.11            1,432         4.00            1,789      5.00

AS OF DECEMBER 31, 2002
Total capital (to risk weighted assets)          $   4,062     19.67%       $   1,653         8.00%        $  2,067      10.0%
Tier 1 capital (to risk weighted assets)             3,857     18.66              827         4.00            1,240      6.00
assets)
Tier 1 capital (to average assets)                   3,857     12.51            1,233         4.00            1,541      5.00
</TABLE>

NOTE 16 - PARENT COMPANY FINANCIAL INFORMATION
----------------------------------------------

Following is condensed  financial  information of Darlington County  Bancshares,
Inc. (parent company only):

<TABLE>
<CAPTION>
                            CONDENSED BALANCE SHEETS
                            ------------------------
                                                                        DECEMBER 31,
                                                          -----------------------------------------
                                                                 2003                  2002
                                                          -------------------   -------------------
ASSETS
<S>                                                           <C>                     <C>
     Investment in Bank subsidiary                            $    3,973,080          $  3,945,681
                                                          ===================   ===================

STOCKHOLDERS' EQUITY                                          $    3,973,080          $  3,945,681
                                                          ===================   ===================
</TABLE>


                         CONDENSED STATEMENTS OF INCOME
                         ------------------------------
<TABLE>
<CAPTION>
                                                                       FOR THE YEARS ENDED
                                                                          DECEMBER 31,
                                                            -----------------------------------------
                                                                   2003                  2002
                                                            -------------------   -------------------

Dividend from bank subsidiary before equity in

<S>                                                               <C>                    <C>
     Undistributed net income of bank subsidiary                  $    158,000           $   158,000

Equity in undistributed net income of
     Bank subsidiary                                                    96,416               163,229
                                                            -------------------   -------------------

         Net income                                                $   254,416           $   321,229
                                                            ===================   ===================
</TABLE>


                                      F-17
<PAGE>

NOTE 16 - PARENT COMPANY FINANCIAL INFORMATION - continued
----------------------------------------------

<TABLE>
<CAPTION>
                       CONDENSED STATEMENTS OF CASH FLOWS
                       ----------------------------------

                                                                                              FOR THE YEARS ENDED
                                                                                                  DECEMBER 31,
                                                                                    -----------------------------------------
                                                                                           2003                  2002
                                                                                    -------------------   -------------------
OPERATING ACTIVITIES
<S>                                                                                        <C>                  <C>
     Net income                                                                            $  254,416           $   321,229
     Adjustments to reconcile net income to net cash
         provided by operating activities
        Equity in undistributed net income of Bank subsidiary                                 (96,416)             (163,229)
                                                                                    -------------------   -------------------

         Net cash provided by operating activities                                            158,000               158,000

FINANCING ACTIVITY

     Dividends paid                                                                          (158,000)             (158,000)

CASH AND DUE FROM BANKS, BEGINNING OF YEAR                                                        -                     -
                                                                                    -------------------   -------------------

CASH AND DUE FROM BANKS, END OF YEAR                                                        $     -              $      -
                                                                                    ===================   ===================



</TABLE>













                                      F-18