SECURITIES AND EXCHANGE COMMISSION
                                Washington, D. C.

                                   FORM 10-KSB

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

                   For the Fiscal Year Ended December 31, 1999

                          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 Pursuant to Section 12(b) of the Securities
                             Exchange Act of 1934:
                                      None
                              ------------------

        Securities Registered Pursuant to Section 12(g) of the Securities
                             Exchange Act of 1934:
                          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. [  ]

The issuer's revenues for its fiscal year were $2,001,949.
                                               ----------

The aggregate  market value of the voting and  non-voting  common equity held by
nonaffiliates of the Registrant (158,000 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, 2000: 158,000 shares of $.01 par value common stock.

                       DOCUMENTS INCORPORATED BY REFERENCE
                       -----------------------------------

Portions of the  Registrant's  Proxy  Statement  for the 2000 Annual  Meeting of
Shareholders - Part III

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



<PAGE>

                                     PART I


ITEM 1.  BUSINESS
-----------------

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:  risks from changes in economic
and industry  conditions;  changes in interest  rates;  risks inherent in making
loans including  repayment  risks and value of collateral;  dependence on senior
management;  and 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 other are cautioned to consider these and
other risks and uncertainties.

THE COMPANY

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 Exchange 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 Federal  Reserve
Board. For ease of  presentation,  the formation of the holding company has been
treated as if it occurred at the earliest date presented in Form 10KSB.

Prior to the organization of the Company, the Bank filed all of its registration
statements with the Federal Deposit Insurance  Company.  Beginning July 1, 1999,
with the formation of the bank holding  company,  the company is now required to
file the full 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 for the purpose of becoming a community bank.

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

GENERAL BUSINESS

The Bank  provides  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.

                                       -1-


<PAGE>

TERRITORY AND COMPETITION

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. 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  distinction 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.

INTEREST RATES AND INTEREST DIFFERENTIAL
<TABLE>
<CAPTION>

                                               AVERAGE BALANCES, INCOME AND EXPENSES, AND RATES

                                                                                DECEMBER 31,
                                                     1999                                      1998
                                  AVERAGE       REVENUE/     YIELD/        AVERAGE      REVENUE/        YIELD/
                                  BALANCE        EXPENSE       RATE         BALANCE      EXPENSE          RATE

<S>                           <C>            <C>               <C>      <C>            <C>

Interest earning assets
    Loans                     $   16,366,000 $    1,477,742      9.03%  $   16,709,000 $   1,542,452        9.23%
                              -------------- --------------      ----   -------------- -------------        ----
    Investment securities
      Taxable                      5,268,000        317,797      6.12        3,409,000       206,591        6.06
      Tax exempt                     996,000         45,865      4.60          755,000        40,631        5.38
                                     -------         ------      ----          -------        ------        ----
        Total investment
          securities               6,264,000        363,662      5.88        4,164,000       247,222        5.94

Federal funds sold and
    securities purchased
      under agreements
      to resell                    3,130,000        156,072      4.99        4,358,000       222,853        5.11
                                   ---------        -------      ----        ---------       -------        ----
        Total average
          interest earning
          assets                  25,760,000      2,001,949      7.77       25,231,000     2,012,527        7.98
Non-interest earning assets
    Cash and due from banks        1,221,000                                 1,033,000
    Premises and equipment           900,000                                   706,000
    Other, less reserve for
      loan losses                    179,000                                   175,000
                                     -------                                   -------
        Total average non-
          interest earning
          assets                   2,300,000                                 1,914,000
                                   ---------                                 ---------
Total average assets          $   28,060,000                            $   27,145,000
                              ==============                            ==============
</TABLE>

                                       -2-


<PAGE>
<TABLE>
<CAPTION>

                                               AVERAGE BALANCES, INCOME AND EXPENSES, AND RATES

                                                                                DECEMBER 31,
                              ----------------------------------------------------------------------------------
                                                     1999                                      1998
                              ---------------------------------------   ----------------------------------------
                                  AVERAGE       REVENUE/     YIELD/        AVERAGE      REVENUE/        YIELD/
                                  BALANCE        EXPENSE       RATE         BALANCE      EXPENSE          RATE
                                  -------        -------       ----         -------      -------          ----

<S>                           <C>               <C>              <C>   <C>               <C>

Interest-bearing liabilities
    Deposits:
      Savings and Christ-
        mas Clubs             $    3,054,000    $    69,503      2.28%  $    3,379,000   $    88,795        2.63%
      NOW and money
        market                     7,339,000        162,568      2.22        6,595,000       174,205        2.64
      Time deposits                9,420,000        432,381      4.59        9,075,000       484,584        5.34
                                   ---------        -------      ----        ---------       -------        ----
        Total interest-
          bearing deposits        19,813,000        664,452      3.35       19,049,000       747,584        3.92
Federal funds purchased
    and securities sold
    under agreements to
    repurchase                         2,000             92      4.87                -             -        0.00
Non-interest bearing
    liabilities
    Demand deposits                4,997,000                                 5,003,000
    Other liabilities                129,000                                   194,000
                                     -------                                   -------
        Total non-interest
          bearing liabilities      5,126,000                                 5,197,000
Stockholders' equity               3,119,000                                 2,899,000
                                   ---------                                 ---------
Total average liabilities
    and stockholders'
    equity                    $   28,060,000                            $   27,145,000
                              ==============                            ==============
Net interest income                          $    1,337,497                            $   1,264,943
                                             ==============                            =============
Interest income/earning
    assets                                                       7.77                                       7.98
Interest expense/earning
    assets                                                       2.58                                       2.96
                                                                 ----                                       ----
Net interest income/earning
    assets                                                       5.19%                                      5.01%
                                                                 ====                                       ====
</TABLE>


NET INTEREST INCOME

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 interest yield represents net interest income
divided by average earning assets.

Net interest  income in 1999 increased  $72,554 or 5.7% from net interest income
in 1998.  Interest  income on earning assets in 1999  decreased  $10,578 or 0.5%
from  the   corresponding   amount   earned  in  1998.   Interest   expense   to
interest-bearing  liabilities in 1999 decreased $83,132 or 11.1% from the amount
paid in 1998.  The net interest  yield  increased to 5.19% in 1999 from 5.01% in
1998.  The volume and yield/rate  variance  analyzes the increase or decrease of
interest  income  due to growth or change of rate in each  category  of  earning
assets.

                                       -3-


<PAGE>

VOLUME AND YIELDS/RATE VARIANCE
<TABLE>
<CAPTION>

                                      1999 COMPARED TO 1998                      1998 COMPARED TO 1997
                              ------------------------------          ---------------------------------
                                 VOLUME            RATE         NET           VOLUME           RATE          NET
                                 ------            ----         ---           ------           ----          ---
<S>                           <C>            <C>           <C>            <C>             <C>            <C>

Interest income
    Loans                     $    (31,305)  $   (33,405)  $   (64,710)   $     41,363    $   (36,139)   $    5,224
    Investment securities:
      Taxable                      113,706         1,973       115,679          (9,732)        (9,799)      (19,531)
      Tax exempt                     9,557        (4,323)        5,234          13,122          1,638        14,760
Federal funds sold and
    securities purchased
    under agreements to
    resell                         (61,609)       (5,172)      (66,781)        100,079         (7,292)       92,787
                                   -------        ------       -------         -------         ------        ------
        Total earning
          assets                    30,349       (40,927)      (10,578)        144,832        (51,592)       93,240
                                    ------       -------       -------         -------        -------        ------

Interest expense
    Savings                         (8,035)      (11,257)      (19,292)         14,105            188        14,293
    NOW and money
      market                        27,275       (38,912)      (11,637)          8,030          1,141         9,171
    Time deposits                   19,337       (71,632)      (52,295)         39,283          4,090        43,373
    Federal funds purchased
      and securities sold
      under agreements
      to repurchase                     92             -            92               -              -             -
                                        --                          --
        Total interest-
          bearing liabilities       38,669      (121,801)      (83,132)         61,418          5,419        66,837
                                    ------      --------       -------          ------          -----        ------

        Net interest income   $     (8,320)  $    80,874   $    72,554    $     83,414    $   (57,011)   $   26,403
                              ============   ===========   ===========    ============    ===========    ==========
<FN>

Note:  Volume-rate changes have been allocated to each category based on the percentage of total change.
</FN>
</TABLE>

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  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, 1999,  approximately
$2,826,000 of loans were unsecured.



                                       -4-


<PAGE>

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

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, 1999 and 1998:
<TABLE>
<CAPTION>

                                                           1999               1998
                                                    --------------     --------------

<S>                                                 <C>                <C>

Real estate - mortgage                              $    7,473,000     $     7,638,000
Real estate - construction                                 329,000             369,000
Commercial and industrial                                3,739,000           3,604,331
Loans to individuals for household, family and
    other consumer expenditures                          2,978,000           2,908,000
Agriculture                                                992,000             586,000
All other loans, including overdrafts                      961,152           1,103,156
Deferred loan origination costs                             18,693              18,464
                                                    $   16,490,845     $    16,226,951
                                                    ==============     ===============
</TABLE>

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,
1999, and 1998 the Bank had $27,949 and $85,912 in non-accruing loans.

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 $11,719 for the year ended  December 31, 1999 and
$15,088 for the year ended December 31, 1998.

As of December 31, 1999, 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.

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 first to principal
then to interest income. 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, 1999 and 1998, the Bank had
no impaired loans.

                                       -5-
<PAGE>

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.

The Bank is  subject  to  regulatory  examinations  which  include  a review  of
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.

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, 1999,  the allowance for loan losses was $208,641.  The ratio of
the allowance for loan losses to net loans outstanding was 1.27% at December 31,
1999 compared to 1.75% at December 31, 1998.  During 1999, the Bank  experienced
net  charge-offs of $88,028  compared to net charge-offs of $76,850 in the prior
year.

The Bank made recoveries of loans  previously  charged off against the allowance
of  $16,920  and  $151,614  for the year  ended  December  31,  1999  and  1998,
respectively.  The 1998 recoveries included recovered one previously charged off
loan of approximately $145,000.

The Bank made  provisions  for loan losses of $0 and $22,183 for the years ended
December 31, 1999 and 1998, 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.





                                       -6-


<PAGE>

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.
<TABLE>
<CAPTION>

                                                                         SUMMARY OF LOAN LOSS EXPERIENCE
                                                                         FOR THE YEARS ENDED DECEMBER 31,
                                                                               1999                   1998
                                                                               ----                   ----
<S>                                                                    <C>                     <C>

Balance at beginning of year                                           $       279,749         $       182,802
Charge-offs:
    Commercial and industrial                                                  (48,000)                (40,000)
    Consumer                                                                   (40,028)                (36,850)
                                                                               -------                 -------
                                                                               (88,028)                (76,850)
                                                                               -------                 -------
Recoveries:
    Commercial and industrial                                                    2,000                 145,614
    Real estate                                                                  4,000                       -
    Consumer                                                                    10,920                   6,000
                                                                                ------                   -----
                                                                                16,920                 151,614
                                                                                ------                 -------
Net charge-offs                                                                (71,108)                 74,764
Provision for loan losses                                                            -                  22,183
                                                                                ------                  ------
Balance at end of year                                                 $       208,641         $       279,749
                                                                       ===============         ===============
</TABLE>

The following  table presents the allocation of the allowance for loan losses at
December  31,  1999 and 1998,  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>

                                                                                        YEARS ENDED DECEMBER 31,
                                                                                        ------------------------
                                                                                        1999               1998
                                                                                        ----               ----
<S>                                                                              <C>                <C>

Commercial and industrial                                                        $      47,308      $       62,131
Real estate - construction                                                               4,163               6,361
Real estate - mortgage                                                                  94,533             131,677
Consumer installment                                                                    62,617              79,580
                                                                                        ------              ------
    Total                                                                        $     208,641      $      279,749
                                                                                 =============      ==============
</TABLE>

Management  considers the allowance for loan losses  adequate to cover  inherent
losses on loans  outstanding as of December 31, 1999. The  determination  of the
allowance for loan losses using the Bank's  procedures and methods is based upon
judgements 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.





                                       -7-


<PAGE>

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 as follows at December 31:

                                                                1999
                                                     -------------------------
                                                     AMORTIZED           FAIR
                                                        COST             VALUE
                                                        ----             -----
AVAILABLE FOR SALE
------------------
    Federal Agencies
        One to five years                         $   2,500,000    $   2,437,977
        Five to ten years                             1,500,000        1,433,266
                                                      ---------        ---------
                                                      4,000,000        3,871,243
                                                      ---------        ---------
    Mortgage backed
        One to five years                             1,254,879        1,227,635
        After ten years                                  81,287           81,762
                                                         ------           ------
                                                      1,336,166        1,309,397
                                                      ---------        ---------
    Total available for sale                      $   5,336,166    $   5,180,640
                                                  =============    =============

HELD TO MATURITY
----------------
    State, county and municipal
        One to five years                         $     550,644    $     551,175
        Five to ten years                               472,002          438,675
                                                        -------          -------
    Total held to maturity                        $   1,022,646    $     989,850
                                                  =============    =============

                                                               1998
                                                    --------------------------
                                                    AMORTIZED             FAIR
                                                       COST              VALUE
                                                       ----              -----
AVAILABLE FOR SALE
------------------
    Federal Agencies
        Less than one year                        $   1,305,300    $   1,310,061
        One to five years                             1,499,953        1,498,902
                                                      ---------        ---------
        Five to ten years                             2,805,253        2,808,963
                                                      ---------        ---------

    Mortgage backed
        One to five years                             1,500,403        1,512,477
        After ten years                                  99,951          101,026
                                                         ------          -------
                                                      1,600,354        1,613,503
                                                      ---------        ---------
    Total available for sale                      $   4,405,607    $   4,422,466
                                                  =============    =============

HELD TO MATURITY
----------------
    State, county and municipal
        One to five years                         $     664,916    $     678,342
        Five to ten years                                90,346           93,675
                                                         ------           ------
    Total held to maturity                        $     755,262    $     772,017
                                                  =============    =============

                                       -8-


<PAGE>

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
$1,200,000   ($1,184,000  fair  value)  at  December  31,  1999  and  $1,965,000
($1,983,000  fair value) at December  31, 1998,  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  deposits in 1999 were  $19,813,000,  compared to $19,049,000
the prior year, an increase of $764,000 or 4.8%.

The following tables  presents,  for the years ended December 31, 1999 and 1998,
the amount and average rate paid on each of the following deposit categories:
<TABLE>
<CAPTION>

                                                           AMOUNT                    AVERAGE RATE PAID
                                                     ---------------------           ------------------
                                                     1999             1998           1999        1998
<S>                                          <C>               <C>                   <C>        <C>

Noninterest-bearing deposits                 $     4,645,316   $  5,531,815             0%          0%
Interest-bearing deposits
    Interest checking                              7,251,572      7,699,886          1.78        2.64
    Savings deposits                               2,236,130      4,293,681          1.78        2.63
    Money market                                     362,446        401,676          1.78        2.64
    Certificates of deposit                        7,508,303      7,233,036          4.51        5.34
    Individual retirement accounts                 1,930,704      2,170,546          4.80        5.34
</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 deposits greater than $100,000,  which are generally  considered
less stable and less reliable than core deposits.

                                       -9-


<PAGE>

At  December  31,  1999 and 1998,  certificate  of  deposits of $100,000 or more
totaled $2,045,853 and $1,780,946, respectively.

DIVIDENDS

State banking regulations  restrict the amount of dividends that can be paid and
require prior  approval of the State Board of Financial  Institutions.  The Bank
declared  a cash  dividend  of 80 cents  per  share  during  January  of 2000 to
stockholders of record as of December 31, 1999. The Bank paid a cash dividend of
 .55 cents per share in January 1999 to shareholders of record as of December 31,
1998.

CAPITAL RESOURCES

The  capital  base for the Bank  increased  by  $196,152  during  1999.  This is
comprised  of  $412,528  net  income  offset by a  $113,676  unrealized  loss on
available for sale  securities  and $102,700 paid in dividends to  stockholders.
The Bank's  equity to asset ratio was 12.07  percent on December  31,  1999,  as
compared to 10.15 percent on December 31, 1998.

The Federal Deposit  Insurance  Corporation has issued guidelines for risk-based
capital  requirements.  As of December  31,  1999,  the Bank exceeds the capital
requirement levels that are to be maintained.
<TABLE>
<CAPTION>

                                                        CAPITAL RATIOS
                                                    (AMOUNTS IN THOUSANDS)

                                                                        WELL                    ADEQUATELY
                                                                     CAPITALIZED                CAPITALIZED
                                          ACTUAL                     REQUIREMENT                REQUIREMENT
                                  -----------------------        --------------------        ---------------------
                                  AMOUNT            RATIO        AMOUNT         RATIO        AMOUNT          RATIO
                                  ------            -----        ------         -----        ------          -----

<S>                              <C>                  <C>     <C>                 <C>     <C>                 <C>

Total capital (to risk
    weighted assets)             $     3,631          21.5%   $     1,692         10.0%   $     1,354         8.00%
Tier 1 capital (to risk
    weighted assets)                   3,422          20.2          1,015          6.0            677         4.00
Tier 1 capital (to average
    assets)                            3,422          12.1          1,416          5.0          1,133         4.00
</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.

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 periodic and cumulative interest  sensitivity  positions
which existed at year end are as follows.


                                      -10-


<PAGE>
<TABLE>
<CAPTION>

                                                                    TOTAL          OVER ONE
                                                                   WITHIN          YEAR OR
                                0-3 MONTHS      4-12 MONTHS       ONE YEAR      NON-SENSITIVE        TOTAL
                                ----------      -----------       --------      -------------        -----
<S>                             <C>             <C>               <C>           <C>                <C>

Earning assets
    Loans net of unearned
      income                    $     9,764     $      1,123      $   10,887    $       5,604      $    16,491
    Investment securities             1,960              499           2,459            5,756            8,215
                                      -----              ---           -----            -----            -----
      Total earning assets           11,724            1,622          13,346           11,360           24,706

    Percentage of total
      earning assets                  47.45%            6.57%          54.02%           45.98%          100.00%
Interest-bearing liabilities
    Certificates of deposits
      of $100,000 or more             1,083              963           2,046                -            2,046
    Other time and savings
      deposits                       12,733            4,304          17,037              183           17,220
                                     ------            -----          ------              ---           ------
      Total interest-bearing
        liabilities                  13,816            5,267          19,083              183           19,266
Other sources                             -                -               -            5,440            5,440
                                -----------     ------------      ----------    -------------      -----------
        Total sources           $    13,816     $      5,267      $   19,083    $       5,623      $    24,706
                                ===========     ============      ==========    =============      ===========
Percentage of total earning
    assets                            55.92%           21.32%          77.24%           22.76%          100.00%
Interest sensitive gap               (2,092)          (3,645)         (5,737)           5,737                -
Cumulative interest sensitive
    gap                              (2,092)          (5,737)         (5,737)               -                -
</TABLE>
<TABLE>
<CAPTION>


                                                  SOURCES AND USES OF FUNDS
                                 (AVERAGE BALANCES FOR YEARS ENDED DECEMBER 31 IN THOUSANDS)

                                                                               DECEMBER 31,
                                                  ---------------------------------------------------------------
                                                              1999                                1998
                                                  ----------------------------         --------------------------
                                                    AMOUNT             PERCENT         AMOUNT             PERCENT
<S>                                               <C>                  <C>          <C>                    <C>

Composition of sources:
    Demand deposits                               $        4,997       17.81%       $        5,003         18.43%
    Now and money market                                   7,339       26.15%                6,595         24.29%
    Time and savings deposits                             12,474       44.45%               12,454         45.88%
    Short-term borrowings                                      2        0.01%                               0.00%
    Other non interest-bearing funds                         129        0.46%                  194          0.71%
    Stockholders' equity                                   3,119       11.12%                2,899         10.68%
                                                           -----       -----                 -----         -----
        Total sources                             $       28,060      100.00%       $       27,145        100.00%
                                                  ==============      ======        ==============        ======

Composition of uses:
    *Loans                                           $   16,368        58.33%           $   16,709         61.56%
    Investment securities                                 6,264        22.32%                4,164         15.34%
    Other earning assets                                  3,128        11.15%                4,358         16.05%
Other assets                                              2,300         8.20%                1,914          7.05%
                                                          -----         ----                 -----          ----
        Total uses                                   $   28,060       100.00%               27,145        100.00%
                                                     ==========       ======                ======        ======
*Loan balances stated net of unearned income
</TABLE>


                                      -11-


<PAGE>

SOURCES OF FUNDS

Average sources of funds  increased  $915,000 to $28,060,000 in 1999 compared to
$27,145,000  in 1998.  This  represents  an  increase  of 3.4% in total  average
sources of funds.  Average NOW and money market deposits  increased  $744,000 or
11.3%,  which mainly accounts for the increase of total average source of funds.
Average investment  securities increased $2,100,000 or 50.4% while average other
earning  assets  decreased  $1,230,000  or 28.2%  and  average  loans  decreased
$341,000 or 2.0% to account  for the overall  increase of total uses of funds in
1999.

EFFECTS OF REGULATORY ACTION

REGULATION OF THE BANK

The Bank is subject to examination by the State Board. In addition,  the Bank is
subject to various other state and federal laws and regulations, including state
usury laws, laws relating to fiduciaries,  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 facts 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  certain  currency  transactions;   and  the  Fair  Debt
Collection Act, governing the manner in which consumer debts may be collected by
collection agencies.  The deposit operations of the Bank are also subject to the
Trust 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 a duty to
maintain  certain   confidentiality   of  consumer  financial  records  and  the
Electronic  Funds Transfer Act and  regulations  promulgated  thereunder,  which
govern  automatic   deposits  to  and  withdrawals  from  deposit  accounts  and
customers'  rights and  liabilities  arising  from the use of  automated  teller
machines and other electronic banking services.

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."








                                      -12-


<PAGE>

A bank that is  "undercapitalized"  becomes  subject to  provisions of the FDIA:
restricting payment of capital distributions and management fees; requiring FDIC
to monitor the  condition  of the bank;  requiring  submission  by the bank of a
capital  restoration  plan;  restricting  the  growth of the  bank's  assets and
requiring  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.

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.  The  regulations  provide  that  the  definitions  of "well
capitalized,"  "adequately  capitalized" and  "undercapitalized" are the same as
the  definitions  adopted by the  agencies to  implement  the prompt  corrective
action provisions of the 1991 Banking Law (described in the previous paragraph).
Management does not believe that these  regulations will have a material adverse
effect on the operations of the Bank.

INTERSTATE BANKING

In July 1994,  South Carolina enacted  legislation  which  effectively  provides
that, after September 30, 1996,  out-of-state bank holding companies  (including
bank holding  companies in Southern  Region,  as defined  under the statute) may
acquire other banks or bank holding  companies  having offices in South Carolina
upon the  approval of the South  Carolina  Board of Financial  Institutions  and
assuming compliance with certain other conditions,  including that the effect of
the transaction  not lessen  competition and that the laws of the state in which
the out-of-state  bank holding company filing the applications has its principal
place of business  permit South Carolina bank holding  companies to acquire bank
and bank holding companies in that state. Although such legislation may increase
takeover  activity  in South  Carolina,  the Bank  does not  believe  that  such
legislation will have a material impact on its competitive position. However, no
assurance of such fact may be given.

The  Riegle-Neal  Instate  Banking  and  Branching  Efficiency  Act of 1994  has
increased  the ability of bank  holding  companies  and banks to operate  across
state lines. Under the Riegle-Neal  Interstate Banking and Branching  Efficiency
Act of 1994, the existing  restrictions  on interstate  acquisitions  of bank by
bank holding companies will be repealed one year following enactment,  such that
the Company and any other bank holding  company  located in South Carolina could
acquire any South Carolina-based bank, in either case subject to certain deposit
percentage and other restrictions. The legislation also provides that, unless an
individual state elects  beforehand  either (i) to accelerate the effective date
or (ii) to prohibit out-of-state banks from operating interstate branches within
its territory, on or after June 1, 1999, adequately capitalized and managed bank
holding  companies will be able to consolidate  their multistate bank operations
into a single bank subsidiary and to branch interstate through acquisitions.  De
novo  branching  by an  out-of-state  bank  would  be  permitted  only  if it is
expressly  permitted by the laws of the host state.  the  authority of a bank to
establish  and operate  branches  within a state will  continue to be subject to
applicable state branching laws. South Carolina law was amended,  effective July
1, 1996, to permit such  interstate  branching  but not de novo  branching by an
out-of-state  bank.  The Bank  believes  that  this  legislation  may  result in
additional acquisitions of South Carolina financial institutions by out-of-state
financial  institutions.  However,  the Bank does not presently  anticipate that
such legislation will have a material impact on its operations or future plans.



                                      -13-


<PAGE>

RECENT LEGISLATION

On November 12, 1999,  the President  signed the  Gramm-Leach-Bliley  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.  Most of the provisions of the Act require the
applicable   regulators  to  adopt  regulations  in  order  to  implement  these
provisions.

Under  provisions of the new  legislation,  which are 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) complimentary
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.

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 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  privacy  provisions  of the Act  will not go into
effect  until after  adoption of  implementing  regulations  by various  federal
agencies.



                                      -14-


<PAGE>

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.

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.

EMPLOYEES

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

ITEM 2. PROPERTIES
------------------

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.

ITEM 3. LEGAL PROCEEDINGS
-------------------------

There are no material pending legal  proceedings to which the Company is a party
or of  which  any of  their  properties  are  subject;  nor are  there  material
proceedings  known  to  the  Company  to be  contemplated  by  any  governmental
authority;  nor are there material proceedings known to the Company,  pending or
contemplated,  in which any  director,  officer or  affiliate  or any  principal
security holder of the Company,  or any associate of any of the foregoing,  is a
party or has an interest adverse to the Company.

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

No matter was submitted  during the fourth  quarter ended December 31, 1999 to a
vote of security holders of the Company.






                                      -15-


<PAGE>

                                     PART II


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 Bank's  stock,  and one is not  expected to
develop in the near future.

As of March 15, 2000,  the number of holders of record for the Company's  common
stock was 503.


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

1999 COMPARED TO 1998

Net income for the year ended  December  31,  1999 was  $412,528  compared  with
$410,216 in 1998. Earnings per share for 1999 was $2.61 as compared to $2.60 per
share in 1998.

Net  interest  income,  which  is the  difference  between  interest  earned  on
interest-earning  assets and interest paid on interest bearing  liabilities,  is
the largest contributor to the Company's earnings. Net interest income increased
$72,554  or 5.8% from 1998.  Interest  income  decreased  in 1999 due to a lower
average loan portfolio and interest  expense  decreased by $83,132  because of a
lower deposit base.

Average earning assets in 1999 were $25,760,000 or 91.8% of total average assets
as compared to $25,231,000 or 92.9% of total average assets in 1998. The primary
types  of  earning  assets  are  loans,   investment  securities  and  temporary
investments.  Loans comprised  63.5% of the Bank's total earning  assets,  while
investment  securities comprised 24.3% and temporary investments comprised 12.2%
in 1999.

Average loans decreased $341,000 or 2.0% during 1999. At year ended December 31,
1999,  net loans totaled  $16,490,845.  This reflects an increase of $263,894 or
1.6% compared to December 31, 1998.

Commercial,  financial  and  agricultural  loans  comprised  34.4%  of the  loan
portfolio as of December 31, 1999.  Loans secured by real estate comprised 47.3%
of the  portfolio,  while consumer and other loans  comprised  18.3% of the loan
portfolio as of year ended December 31, 1999.

The amount of net loans charged off in 1999 was  approximately  $71,000 compared
to $75,000 in 1998 and $63,000 in 1997. The ratio of net  charge-offs to average
loans, net of unearned income,  for 1999 was 0.43% as compared  to-0.45% in 1998
and 0.39% in 1997.

There was no provision for loans losses made in 1999, leaving a reserve for loan
losses of $209,000. This allowance for loan losses as a percentage of loans, net
of unearned  income,  was 1.27% on December  31,  1999,  as compared to 1.72% on
December 31, 1998.

Non-interest  income  increased  $18,217  or 7.1% in 1999.  Service  charges  on
deposit accounts increased $24,125 or 10.4% while other service charges and fees
decreased $5,908 or 22.0% in 1999.







                                      -16-


<PAGE>

Non-interest  expense increased $121,642 or 13.7% in 1999. Salaries and employee
benefits expense  increased $8,219 or 1.8% in 1999. Other operating expense plus
data processing fees increased $87,682 or 32.8% in 1999. Also, occupancy expense
increase $11,419 or 22.3% and furniture and equipment  expense  increased $7,277
or  12.9% in  1999,  which  is  attributed  to the new  addition  to the  Bank's
facility.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the Financial  Accounting  Standards Board (FASB) issued SFAS 133,
"Accounting for Derivative  Instruments and Hedging Activities." All derivatives
are to be measured at fair value and  recognized  in the balance sheet as assets
and liabilities.  This statement's effective date was delayed by the issuance of
SFAS 137,  "Accounting  for  Derivative  Instruments  and Hedging  Activities  -
Deferral of the  Effective  Date of SFAS 133," and is effective for fiscal years
and quarters beginning after June 15, 2000. The Company does not expect that the
adoption  of SFAS 133 will have a  material  impact on the  presentation  of the
Company's financial results or financial position.

ITEM 7.   FINANCIAL STATEMENTS
------------------------------

The following financial statements are filed with this report:

-    Independent Auditor's Report

-    Consolidated Balance Sheets as of December 31, 1999 and 1998

-    Consolidated  Statements  of Income for the years ended  December 31, 1999,
     1998 and 1997

-    Consolidated  Statements  of  Stockholders'  Equity  for  the  years  ended
     December 31, 1999, 1998 and 1997

-    Consolidated  Statements  of Cash Flows for the years  ended  December  31,
     1999, 1998 and 1997

-    Notes to Consolidated Financial Statements









<PAGE>












                DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY

                         REPORT ON FINANCIAL STATEMENTS

              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997


<PAGE>

                DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
                           DARLINGTON, SOUTH CAROLINA


                                    CONTENTS
                                    --------


                                                                   PAGE

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                    1

FINANCIAL STATEMENTS
     Consolidated balance sheets                                      2
     Consolidated statements of income                                3
     Consolidated statements of stockholders' equity                  4
     Consolidated statements of cash flows                            5

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                            6 - 15

<PAGE>











               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



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, 1999 and 1998, and the
related consolidated  statements of income,  stockholders' equity and cash flows
for each of the  three  years in the  period  ended  December  31,  1999.  These
consolidated   financial   statements  are  the  responsibility  of  the  Bank'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  generally  accepted  auditing
standards.  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, 1999 and
1998 and the  results of their  operations  and cash flows for each of the three
years in the period ended  December  31,  1999,  in  conformity  with  generally
accepted accounting principles.






January 12, 2000

Elliott, Davis & Company, LLP
-----------------------------
Greenville, South Carolina

<PAGE>
<TABLE>
<CAPTION>

                DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

                                                                                                    DECEMBER 31,
                                                                                  ------------------------------------------
                                                                                           1999                 1998
                                                                                  ----------------      --------------------
                                                           ASSETS

<S>                                                                               <C>                   <C>

CASH AND DUE FROM BANKS                                                           $      1,409,349      $        871,807

FEDERAL FUNDS SOLD                                                                       1,960,000             7,270,000
INVESTMENT SECURITIES HELD TO MATURITY
  (FAIR VALUE $989,850 IN 1999 AND $772,017 IN 1998)                                     1,022,646               755,262
INVESTMENT SECURITIES AVAILABLE FOR SALE                                                 5,180,640             4,422,466
OTHER INVESTMENTS, AT COST                                                                  50,405                50,405
LOANS                                                                                    16,490,845           16,226,951
  Less allowance for loan losses                                                          (208,641)             (279,749)
                                                                                          --------              --------
Net loans                                                                               16,282,204            15,947,202
PREMISES AND EQUIPMENT                                                                     914,260               887,400
ACCRUED INTEREST RECEIVABLE                                                                398,394               339,436
FORECLOSED REAL ESTATE                                                                           -                67,669
OTHER ASSETS                                                                               149,079                19,965
                                                                                           -------                ------
                                                                                  $     27,366,977      $     30,631,612
                                                                                  ================      ================

                                            LIABILITIES AND STOCKHOLDERS' EQUITY

DEPOSITS
  Demand deposits                                                                 $      4,645,315      $      5,531,244
  Savings and NOW deposits                                                               9,850,149            12,395,244
  Other time deposits                                                                    9,439,007             9,403,584
                                                                                         ---------             ---------
       Total deposits                                                                   23,934,471            27,330,072
OTHER LIABILITIES                                                                          128,624               193,810
                                                                                           -------               -------
       Total liabilities                                                                24,063,095            27,523,882
                                                                                        ----------            ----------
COMMITMENTS AND CONTINGENCIES - NOTE 9
STOCKHOLDERS' EQUITY
  Common stock - $.01 par value, 1,000,000 shares authorized,
    158,000 shares issued and outstanding at December 31, 1999;
    $5 par value; 158,000 shares authorized, issued and outstanding
    at December 31, 1998                                                                     1,580               790,000
  Capital in excess of par value of stock                                                1,617,920               829,500
  Retained earnings                                                                      1,787,030             1,477,202
  Accumulated other comprehensive income (loss)                                           (102,648)               11,028
                                                                                          --------                ------
       Total stockholders' equity                                                        3,303,882             3,107,730
                                                                                         ---------             ---------
                                                                                  $     27,366,977      $     30,631,612
                                                                                  ================      ================
</TABLE>

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

                                       -2-

<PAGE>
<TABLE>
<CAPTION>

                                      DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
                                              CONSOLIDATED STATEMENTS OF INCOME


                                                                               FOR THE YEARS ENDED DECEMBER 31,
                                                                           1999               1998               1997

<S>                                                                    <C>           <C>                <C>

INTEREST INCOME
    Loans                                                              $ 1,477,742   $      1,542,452   $      1,537,228
    Investment securities
        Taxable                                                            317,797            204,211            224,094
        Exempt from federal income taxes                                    45,865             40,631             25,871
                                                                            ------             ------             ------
          Total interest on investment securities                          363,662            244,842            249,965

    Federal funds sold                                                     156,072            222,853            130,066
    Other                                                                    4,473              2,380              2,028
                                                                             -----              -----              -----
          Total interest income                                          2,001,949          2,012,527          1,919,287
                                                                         =========          =========          =========

INTEREST EXPENSE
    Deposits                                                               664,452            747,584            680,749
                                                                           -------            -------            -------
          Net interest income                                            1,337,497          1,264,943          1,238,538

PROVISION FOR LOAN LOSSES                                                        -             22,183             89,755
                                                                         ---------          ---------          ---------
          Net interest income after provision for loan losses            1,337,497          1,242,760          1,148,783

NONINTEREST INCOME
    Service charges on deposit accounts                                    255,534            231,409            212,720
    Other service charges and fees                                          20,933             26,841             26,756
                                                                            ------             ------             ------
          Total noninterest income                                         276,467            258,250            239,476
                                                                           -------            -------            -------

NONINTEREST EXPENSES
    Salaries and employee benefits                                         472,350            464,131            427,819
    Occupancy                                                               62,587             51,168             45,449
    Furniture and equipment                                                 63,802             56,525             57,913
    Office supplies                                                         53,628             46,583             46,903
    Data processing fees                                                    89,484             64,942             66,370
    Other operating                                                        265,585            202,445            173,491
                                                                           -------            -------            -------
          Total noninterest expenses                                     1,007,436            885,794            817,945
                                                                         ---------            -------            -------
          Income before income taxes                                       606,528            615,216            570,314

PROVISION FOR INCOME TAXES                                                 194,000            205,000            198,500
                                                                           -------            -------            -------

          Net income                                                 $     412,528      $     410,216      $     371,814
                                                                     =============      =============      =============

NET INCOME PER SHARE OF COMMON STOCK                                 $        2.61      $        2.60      $        2.35
                                                                     =============      =============      =============

</TABLE>


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

                                                                  -3-


<PAGE>
<TABLE>
<CAPTION>

                                      DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
                                       CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                    FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997


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


<S>                                         <C>       <C>            <C>          <C>           <C>           <C>

BALANCE, JANUARY 1, 1997                    158,000   $  790,000     $   829,500  $    853,172   $      (905) $  2,471,767
                                                                                                              ------------
   Net income                                   -            -                 -       371,814             -       371,814
   Other comprehensive income, net
     of income taxes of $2,350:
     Unrealized gain on securities
       available for sale                         -            -               -             -         3,525         3,525
                                                                                                               -----------
     Comprehensive income                                                                                          375,339
   Cash dividend, $.45 per share                  -            -               -       (71,100)            -       (71,100)
                  ----                      -------      -------         -------       -------         -----   -----------

BALANCE, DECEMBER 31, 1997                  158,000      790,000         829,500     1,153,886         2,620     2,776,006
                                                                                                               -----------
   Net income                                     -            -               -       410,216             -       410,216
   Other comprehensive income, net
     of income taxes of $3,209:
     Unrealized gain on securities
       available for sale                         -            -               -             -         8,408         8,408
                                                                                                                ----------
     Comprehensive income                                                                                          418,624
   Cash dividend, $.55 per share                  -            -               -       (86,900)            -       (86,900)
                  ----                      -------      -------         -------       -------        ------    ----------

BALANCE, DECEMBER 31, 1998                  158,000      790,000         829,500     1,477,202        11,028     3,107,730

   Net income                                     -            -               -       412,528             -       412,528
   Par value conversion                           -    (788,420)         788,420             -             -             -
   Other comprehensive income, net
     of income taxes of $58,708:
     Unrealized loss on securities
       available for sale                         -            -               -             -      (113,676)     (113,676)
                                                                                                    --------
     Comprehensive income                                                                                          298,852
   Cash dividend, $.65 per share                               -               -      (102,700)            -      (102,700)
                  ----                      -------       ------       ---------      --------      --------      --------

BALANCE, DECEMBER 31, 1999                  158,000   $    1,580     $ 1,617,920  $  1,787,030   $  (102,648) $  3,303,882
                                            =======   ==========     ===========  ============   ===========  ============
</TABLE>




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

                                       -4-

<PAGE>

                DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>


                                                                               For the years ended December 31,
                                                                      --------------------------------------------------
                                                                          1999                 1998             1997
                                                                          ----                 ----             ----
<S>                                                                  <C>                <C>                <C>

OPERATING ACTIVITIES
  Net income                                                         $     412,528      $     410,216      $     371,814
  Adjustments to reconcile net income to
    net cash provided by operating activities
    Depreciation                                                            58,806             43,649             49,670
    Amortization and accretion                                               4,690              6,180              5,064
    Provision (benefit) for loan losses                                          -             22,183             89,755
Provision (benefit) for deferred income taxes                               (8,000)           (45,700)            15,586
Changes in assets and liabilities:
      (Increase) decrease in accrued interest receivable                   (58,956)             4,706             (9,606)
      (Increase) decrease in other assets                                  (62,406)            80,921             (9,939)
      Decrease in other liabilities                                        (65,186)           (33,708)            (2,290)
                                                                           -------            -------             ------
         Cash provided by operating activities                             281,476            488,447            510,054
                                                                           -------            -------            -------
INVESTING ACTIVITIES
  Decrease (increase) in federal funds sold                              5,310,000         (3,890,000)         2,010,000
  Proceeds from maturities of investment securities
    held to maturity                                                       204,000                  -                  -
  Proceeds from maturities of investment securities
    available for sale                                                   1,064,738          2,940,842          2,303,865
  Purchase of investment securities held to maturity                      (471,370)                 -           (257,258)
  Purchase of investment securities available for sale                  (2,000,000)        (4,112,563)        (2,049,539)
  Net increase in loans                                                   (335,004)           (96,260)        (1,580,028)
  Purchases of premises and equipment                                      (85,666)          (349,233)           (10,383)
  Net decrease in foreclosed real estate                                    67,669             15,000                  -
                                                                            ------             ------
         Cash provided by (used for) investing activities                3,754,367         (5,492,214)           416,657
                                                                         ---------         ----------            -------
FINANCING ACTIVITIES
  Dividends declared                                                      (102,700)           (86,900)           (71,100)
  Increase (decrease) in deposits                                       (3,395,601)         4,997,478         (1,052,903)
                                                                        ----------          ---------         ----------
         Cash provided by (used for) financing activities               (3,498,301)         4,910,578         (1,124,003)
                                                                        ----------          ---------         ----------

         Increase (decrease) in cash and due from banks                    537,542            (93,189)          (197,292)

CASH AND DUE FROM BANKS, BEGINNING OF YEAR                                 871,807            964,996          1,162,288
                                                                           -------            -------          ---------

CASH AND DUE FROM BANKS, END OF YEAR                                 $   1,409,349      $     871,807      $     964,996
                                                                     =============      =============      =============

SUPPLEMENTAL DISCLOSURES
  Schedule of cash paid for:
    Interest                                                         $     677,933      $     752,614      $     660,239
                                                                     =============      =============      =============

    Income taxes                                                     $     290,915      $     237,155      $     225,021
                                                                     =============      =============      =============
</TABLE>





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

                                       -5-
<PAGE>

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


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"). On July 1, 1999, pursuant to a Plan of Exchange 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  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. For ease
     of  presentation,  the formation of the holding company has been treated as
     if  it  occurred  at  the  earliest  date  presented  in  these   financial
     statements.  This presentation has no effect on net income or stockholders'
     equity.

     The Bank operates under a state charter and provides full banking  services
     to its  customers.  The Bank is subject to regulation by the 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
     generally  accepted  accounting  principles  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 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 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 and taken 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.


                                                                    (Continued)
                                       -6-

<PAGE>

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES, CONTINUED

    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.

    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 first to principal then
     to interest income. 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,
     1999 and 1998, the Bank had no impaired loans.

    PREMISES AND EQUIPMENT
     Premises and equipment are stated at cost less accumulated depreciation and
     amortization. Depreciation and amortization are computed over the estimated
     useful lives of the assets  using the  straight-line  method.  Additions to
     premises  and  equipment  and  major   replacements  or  improvements   are
     capitalized  at cost.  Maintenance,  repairs  and  minor  replacements  are
     expensed  when  incurred.  Gains and  losses on  routine  dispositions  are
     reflected in current operations.

    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.

                                                                     (Continued)

                                       -7-
<PAGE>

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES, CONTINUED

    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.

    NET INCOME PER SHARE
     Net  income  per share is  computed  on the basis of the  weighted  average
     number of common shares  outstanding,  158,000 in 1999,  1998 and 1997. The
     Company has no instruments  which are dilutive;  therefore,  only basic net
     income per share of common stock is presented.

    RECENTLY ISSUED ACCOUNTING STANDARDS
     In June 1998, the Financial  Accounting  Standards Board (FASB) issued SFAS
     133,  "Accounting for Derivative  Instruments and Hedging  Activities." All
     derivatives  are to be measured at fair value and recognized in the balance
     sheet as  assets  and  liabilities.  This  statement's  effective  date was
     delayed by the issuance of SFAS 137, "Accounting for Derivative Instruments
     and Hedging  Activities - Deferral of the Effective  Date of SFAS 133," and
     is effective for fiscal years and quarters  beginning  after June 15, 2000.
     The  Company  does not  expect  that the  adoption  of SFAS 133 will have a
     material impact on the presentation of the Company's  financial  results or
     financial position.


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,  1999  and  1998  were
approximately $197,000 and $256,000, respectively.









                                       -8-

<PAGE>

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>

                                                                                               1999
                                                                 --------------------------------------------------------
                                                                                        Gross unrealized
                                                                     Amortized      -----------------------       Fair
                                                                      cost             gains        losses        value
                                                                      ----             -----        ------        -----
<S>                                                              <C>                <C>          <C>          <C>

AVAILABLE FOR SALE
   Federal Agencies
     One to five years                                            $     2,500,000   $        -   $   62,023   $  2,437,977
     Five to ten years                                                  1,500,000            -       66,734      1,433,266
                                                                        ---------                    ------      ---------
                                                                        4,000,000            -      128,757      3,871,243
                                                                        ---------                   -------      ---------
   Mortgage backed
     One to five years                                                  1,254,879            -       27,244      1,227,635
     After ten years                                                       81,287          475            -         81,762
                                                                           ------          ---                      ------
                                                                        1,336,166          475       27,244      1,309,397
                                                                        ---------          ---       ------      ---------
   Total available for sale                                       $     5,336,166   $      475   $  156,001   $  5,180,640
                                                                  ===============   ==========   ==========   ============
HELD TO MATURITY
   State, county and municipal
     One to five years                                            $       550,644   $      531   $        -       $551,175
     After ten years                                                      472,002            -       33,327        438,675
                                                                          -------                    ------        -------
Total held to maturity                                            $     1,022,646   $      531   $   33,327     $  989,850
                                                                  ===============   ==========   ==========       ========

                                                                                              1998
                                                                  --------------------------------------------------------
AVAILABLE FOR SALE
   Federal Agencies
     One to five years                                            $     1,305,300   $    4,761   $        -   $  1,310,061
     Five to ten years                                                  1,499,953            -        1,051      1,498,902
                                                                        ---------                     -----      ---------
                                                                        2,805,253        4,761        1,051      2,808,963
                                                                        ---------        -----        -----      ---------
   Mortgage backed
     One to five years                                                  1,500,403       12,074            -      1,512,477
     After ten years                                                       99,951        1,075            -        101,026
                                                                           ------        -----                     -------
                                                                        1,600,354       13,149            -      1,613,503
                                                                        ---------       ------                   ---------
   Total available for sale                                       $     4,405,607   $   17,910   $    1,051   $  4,422,466
                                                                  ===============   ==========   ==========     ==========
HELD TO MATURITY
   State, county and municipal
     One to five years                                            $       664,916   $   13,426   $        -   $    678,342
     Five to ten years                                                     90,346        3,329            -         93,675
                                                                           ------        -----                      ------
Total held to maturity                                            $       755,262   $   16,755   $        -   $    772,017
                                                                  ===============   ==========   =========        ========

</TABLE>


                                                                     (Continued)

                                       -9-
<PAGE>

NOTE 3 - INVESTMENT SECURITIES, Continued

     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
$1,200,000   ($1,184,000  fair  value)  at  December  31,  1999  and  $1,965,000
($1,983,000  fair value) at December  31, 1998,  were  pledged to secure  public
deposits  and for  other  purposes.  Fair  value  of  investment  securities  is
determined using quoted market prices.


NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES

     Following is a summary of loans by major classification at December 31,:

                                                     1999                1998
                                                     ----                ----
     Real estate - mortgage                  $     7,473,000     $    7,638,000
     Real estate - construction                      329,000            369,000
     Commercial and industrial                     3,739,000          3,604,331
     Loans to individuals for household, family and
       other consumer expenditures                 2,978,000          2,908,000
     Agriculture                                     992,000            586,000
     All other loans, including overdrafts           961,152          1,103,156
     Deferred loan origination costs                  18,693             18,464
                                              --------------     --------------
                                              $   16,490,845     $   16,226,951
                                              ==============     ==============

     Changes in the allowance for loan losses are  summarized as follows for the
years ended December 31,:
<TABLE>
<CAPTION>

                                                   1999              1998               1997
                                             --------------    ---------------     -------------
<S>                                          <C>               <C>                 <C>

Balance, beginning of year                   $      279,749    $       182,802     $      156,079
Recoveries of loans previously charged
  against the allowance                              16,921            151,614              2,423
Provision for loan losses                                 -             22,183             89,755
Loans charged against the allowance                 (88,028)           (76,850)           (65,455)
                                                    -------            -------            -------

Balance, end of year                         $      208,642    $       279,749     $      182,802
                                             ==============    ===============     ==============
</TABLE>

     At  December  31,  1999 and 1998,  non-accrual  loans  totaled  $27,949 and
$85,912,  respectively. The gross interest income which would have been recorded
under the original terms of the  non-accrual  loans amounted to $11,719 in 1999,
$15,088 in 1998,  and $13,869 in 1997.  No interest was  recorded on  nonaccrual
loans in 1999, 1998 and 1997.  There were no impaired loans at December 31, 1999
or 1998.





                                      -10-
<PAGE>

NOTE 5 -  PREMISES AND EQUIPMENT

     Premises and equipment at December 31 is summarized as follows:

                                                  1999                  1998
                                            ---------------     --------------
     Land and buildings                     $       954,850     $      936,866
     Furniture, fixtures and equipment              488,659            420,977
                                                    -------            -------
                                                  1,443,509          1,357,843
     Less accumulated depreciation and
        amortization                                529,249            470,443
                                                    -------            -------
                                            $       914,260     $      887,400
                                            ===============     ==============

     Depreciation  and  amortization  of bank premises and equipment  charged to
operating expense totaled $58,806 in 1999, $43,649 in 1998 and $49,670 in 1997.


NOTE 6 - DEPOSITS

     At December 31, 1999 and 1998,  certificates of deposit of $100,000 or more
totaled approximately $2,045,853 and $1,780,946,  respectively. Interest expense
on these deposits was $75,263 in 1999, $63,864 in 1998 and $72,695 in 1997.

     At December 31, 1999, the scheduled  maturities of  certificates of deposit
are as follows:

        2000                                           $     5,523,108
        2001                                                 3,655,684
        2002                                                   155,776
        2003                                                   104,439
        ----                                                   -------
                                                       $     9,439,007
                                                       ===============


NOTE 7 - UNUSED LINES OF CREDIT

     At December 31, 1999, 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 seven day basis for general  corporate  purposes
of the Bank.  The lender has  reserved  the right to  withdraw  this line at its
option.













                                      -11-
<PAGE>

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,:


                                              1999           1998         1997
                                              ----           ----         ----

 Income taxes currently payable
   Federal                                $ 183,000       $  232,200  $ 176,764
   State                                     19,000           18,500      6,150
                                             ------           ------      -----
                                            202,000          250,700    182,914
                                            -------          -------    -------
 Tax consequences of differences

   Loan losses                                    -          (37,202)    13,376
   Depreciation                               1,630           (5,275)    (4,829)
   Other                                     (9,630)          (3,223)     7,039
                                             ------           ------      -----
                                             (8,000)         (45,700)    15,586
                                             ------          -------     ------

      Provision                           $ 194,000       $  205,000   $198,500
                                          =========       ==========   ========

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

                                                Deferred tax asset (liability)
                                              --------------------------------
                                                 1999                  1998
                                                 ----                  ----
 Allowance for loan losses                    $      70,938     $       64,621
 Accumulated depreciation                           (35,849)           (29,100)
 Unrealized gain on investment securities            52,879             (5,831)
 Other, net                                           5,202             (3,230)
                                                      -----             ------
                                              $      83,170     $       26,460
                                              =============     ==============

     The net  deferred  tax asset  (liability)  is reported  in the  appropriate
category of other assets or other  liabilities in the balance sheets at December
31, 1999 and 1998.

     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>

                                                  1999                    1998             1997
                                             ---------------        -------------      -------------
                                           Amount         %          Amount     %       Amount      %
                                           ------         -          ------     -       ------      -

<S>                                     <C>             <C>      <C>          <C>    <C>          <C>

 Tax expense at statutory rate          $   206,220     34.0%    $   209,200  34.0%  $ 193,910    34.0%
 Increase (decrease) in taxes
    resulting from:
    Tax exempt interest                     (21,975)    (3.6)        (20,245) (3.3)    (10,830)   (1.9)
    State bank tax (net of
      federal benefit)                       11,400      1.9          11,230   1.8      10,900     1.9
    Other - net                              (1,645)     (.3)          4,815    .8       4,520      .8
                                             ------      ---           -----    --       -----      --
      Tax provision                     $   194,000     32.0%    $   205,000  33.3%  $ 198,500    34.8%
                                        ===========     ====     ===========  ====   =========    ====
</TABLE>


                                      -12-
<PAGE>

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.

  Financial instruments whose contract amounts                   Contract
    represent credit risk at December 31, 1999:                   amount
    -------------------------------------------                   ------

      Commitments to extend credit                          $     3,610,361
                                                            ===============

     Of these commitments to extend credit, $2,990,111 are at variable rates and
$620,250 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 - RESTRICTIONS ON DIVIDENDS

     The  ability  of the  Company  to pay  cash  dividends  is  dependent  upon
receiving  cash in the form of  dividends  from the  Bank.  Banking  regulations
restrict  the  amount  of  dividends  that can be paid by the  Bank and  require
approval of the State Board of Financial Institutions.

NOTE 11 - 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, 1999 and 1998,  were
$290,579 and  $106,902,  respectively.  During 1999,  $210,000 in new loans were
made to this  group  and  repayments  of  $26,323  were  received.  Deposits  by
directors,  officers and their  related  interests,  as of December 31, 1999 and
1998, approximated $750,637 and $725,908, respectively.

NOTE 12 - 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 $25,035,  $17,100 and $24,449 for the
years ended December 31, 1999, 1998 and 1997, respectively.

                                      -13-
<PAGE>

NOTE 13 - 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, 1999, that
the Bank meets all capital adequacy requirements to which it is subject.

     As of  December  31,  1999,  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
                                                           ------                  -------                 -------
                                                 AMOUNT         RATIO       AMOUNT        RATIO         AMOUNT  RATIO
                                                 ------         -----       ------        -----         ------  -----
<S>                                              <C>              <C>      <C>               <C>    <C>             <C>

AS OF DECEMBER 31, 1999
   Total Capital (to risk weighted assets)       $    3,631        21.5%   $      1,354       8.0%  $    1,692      10.0%
   Tier I Capital (to risk weighted assets)           3,422        20.2             677       4.0        1,015       6.0
   Tier I Capital (to average assets)                 3,422        12.1           1,133       4.0        1,416       5.0

AS OF DECEMBER 31, 1998
   Total Capital (to risk weighted assets)       $    3,377        18.6%   $      1,450       8.0%  $    1,812      10.0%
   Tier I Capital (to risk weighted assets)           3,097        17.1             725       4.0        1,087       6.0
   Tier I Capital (to average assets)                 3,097        10.5           1,175       4.0        1,469       5.0



</TABLE>






                                      -14-


<PAGE>

NOTE 14 - PARENT COMPANY FINANCIAL INFORMATION

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


                             CONDENSED BALANCE SHEET
                                December 31, 1999
                                -----------------

ASSETS
   Investment in Bank subsidiary                              $      3,319,127
                                                              ================

LIABILITIES AND STOCKHOLDERS' EQUITY
   Due to Bank subsidiary                                     $         15,245
   Stockholders' equity                                              3,303,882
                                                                     ---------
                                                              $      3,319,127
                                                              ================


                          CONDENSED STATEMENT OF INCOME
                          -----------------------------

                                                              For the year ended
                                                               December 31, 1999

INCOME                                                         $             -
EXPENSES
   Legal fees                                                           15,245
                                                                        ------
LOSS BEFORE EQUITY IN UNDISTRIBUTED
   NET INCOME OF BANK SUBSIDIARY
                                                                       (15,245)
EQUITY IN UNDISTRIBUTED NET INCOME OF
   BANK SUBSIDIARY                                                     427,773
                                                                       -------
       Net income                                             $        412,528
                                                              ================

                        CONDENSED STATEMENT OF CASH FLOWS
                        ---------------------------------

                                                            For the year ended
                                                             December 31, 1999
                                                             -----------------

OPERATING ACTIVITIES
   Net income                                                 $        412,528
   Adjustments to reconcile net income to net cash
     provided by operating activities
     Equity in undistributed net income of Bank subsidiary            (427,773)
     Increase in due to Bank subsidiary                                 15,245
                                                               ---------------

         Net cash provided by operating activities                           -
                                                               ---------------

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

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





                                      -15-



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

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



ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
------------------------------------------------------------
        PERSONS COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
        ---------------------------------------------------------

The  information  set forth  under the  captions  "ELECTION  OF  DIRECTORS"  and
"SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE" in the Proxy Statement
to be used in  conjunction  with the 1999 Annual  Meeting of  Shareholders  (the
"Proxy  Statement"),  which was filed within 120 days of the Bank's  fiscal year
end, is incorporated herein by reference.

ITEM 10. EXECUTIVE COMPENSATION
-------------------------------

The  information  set forth under the caption  "EXECUTIVE  COMPENSATION"  in the
Proxy Statement is incorporated herein by reference.





                                      -17-


<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-----------------------------------------------------------------------

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  TRANSACTIONS" in the Proxy
Statement is incorporated herein by reference.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------

(a)       Exhibits

               None

(b)       Reports

               None


SIGNATURES

Under the requirements of the Securities Exchange Act of 1934, the Bank has duly
caused this report to be signed on its behalf by the undersigned  thereunto duly
authorized.



         Darlington County Bank
         ----------------------
              Name of Bank



By:  /s/ W. B. McCown, III                  Date:   March 29, 2000
     --------------------------------               ----------------------
     W. B. McCown, III, President and
     Chief Executive Officer



By:  /s/ Ellen T. Berry                     Date:   March 29, 2000
     --------------------------------               ----------------------
     Ellen T. Berry, Vice President and Cashier









                                      -18-
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.


 Signature                             Title                        Date



s/ R. E. Goodson, Sr.              Chairman of the Board         March 29, 2000
---------------------------
R. E. Goodson, Sr.


s/ Hubert C. Baker                 Director                      March 29, 2000
---------------------------
Hubert C. Baker


                                   Director
W. Edwin Dargan


                                   Director
Raymond Galloway


                                   Director
Charles G. Howard


s/ Albert L. James, III            Director                      March 29, 2000
----------------------------
Albert L. James, III


s/ G. Clyde Scott                  Director                      March 29, 2000
----------------------------
G. Clyde Scott


s/ Eugene A. Vaughn                Director                      March 29, 2000
----------------------------
Eugene A. Vaughn


s/ W. B. McCown, III               President and Chief           March 29, 2000
----------------------------       Executive Officer
W. B. McCown, III

                                      -19-