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, 2000

                          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 [    ]      No [ X ]

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 $  2,386,349    .
                                               ----------------

The aggregate  market value of the voting and  non-voting  common equity held by
nonaffiliates of the Registrant (141,633 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, 2001: 158,000 shares of $.01 par value common stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Proxy Statement for the 2001 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 Merger  approved by the  stockholders,  all of the
outstanding  shares of common  stock of the Bank were  exchanged  for  shares of
common stock of the Company.  The Company presently engages in no other business
other  than that of owning  the  Bank,  has no  employees  and  operates  as one
business segment. The Company is subject to regulation by the Board of Governors
of the  Federal  Reserve  System  (the  "Federal  Reserve  Board").  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 its periodic securities
- related reports with the Federal Deposit Insurance Corporation. Beginning July
1, 1999,  with the  formation of the bank holding  company,  the Company  became
subject to the  informational  requirements  of the  Securities  Exchange Act of
1934.

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

The Company's  principal  offices are located at 202 Cashua Street,  Darlington,
South Carolina 29532. The Company's telephone number is (843) 395-1956. The 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,
                              ----------------------------------------------------------------------------------
                                                     2000                                      1999
                              ---------------------------------------   ----------------------------------------
                                  Average       Revenue/     Yield/        Average      Revenue/        Yield/
                                  balance        expense       rate         balance      expense          rate
                              --------------   ------------ ---------   -------------- -------------   ---------
<S>                           <C>            <C>            <C>         <C>            <C>             <C>
Interest earning assets
    Loans                     $   16,720,620 $    1,585,826      9.48%  $   16,366,000 $   1,477,742        9.03%
                              -------------- -------------- ---------   -------------- -------------
    Investment securities
      Taxable                      5,104,257        324,557      6.36        5,268,000       322,270        6.12
      Tax exempt                     797,980         34,266      4.29          996,000        45,865        4.60
                              -------------- -------------- ---------   -------------- -------------
        Total investment
          securities               5,902,237        358,823                  6,264,000       368,135        5.88

Federal funds sold and
    securities purchased
      under agreements
      to resell                    3,096,639        176,072      5.69        3,130,000       156,072        4.99
                              -------------- -------------- ---------   -------------- -------------
        Total average
          interest earning
          assets                  25,719,496      2,120,721      8.25       25,760,000     2,001,949        7.77
Non-interest earning assets
    Cash and due from banks          875,002                                 1,221,000
    Premises and equipment           889,197                                   900,000
    Other, less reserve for
      loan losses                    293,032                                   179,000
                              --------------                            --------------
        Total average non-
          interest earning
          assets                   2,057,231                                 2,300,000
                              --------------                            --------------
Total average assets          $   27,776,727                            $   28,060,000
                              ==============                            ==============

</TABLE>
                                       -2-


<PAGE>
<TABLE>
<CAPTION>

                                               Average Balances, Income and Expenses, and Rates

                                                                   December 31,
                              ----------------------------------------------------------------------------------
                                                     2000                                      1999
                              ---------------------------------------   ----------------------------------------
                                  Average       Revenue/     Yield/        Average      Revenue/        Yield/
                                  balance        expense       rate         balance      expense          rate
                              --------------   ------------ ---------   -------------- -------------   ---------
<S>                           <C>              <C>          <C>         <C>            <C>             <C>
Interest-bearing liabilities
    Deposits:
      Savings                 $    2,217,811 $       48,629      2.19%  $    3,054,000 $      69,503        2.28%
      NOW and money
        market                     7,049,743        153,199      2.17        7,339,000       162,568        2.22
      Time deposits                9,849,900        544,695      5.53        9,420,000       432,289        4.59
                              -------------- --------------             -------------- -------------
        Total interest-
          bearing deposits        19,117,454        746,523      3.90       19,813,000       664,360        3.35
Federal funds purchased
    and securities sold
    under agreements to
    repurchase                             -              -         -            2,000            92        4.87
                              -------------- -------------- ---------   -------------- -------------   ---------
Total interest bearing
    liabilities                   19,117,454        746,523      3.90       19,815,000       664,452        3.35
Non-interest bearing
    liabilities
    Demand deposits                5,163,931                                 4,997,000
    Other liabilities                114,582                                   129,000
                              --------------                            --------------
        Total non-interest
          bearing liabilities      5,278,513                                 5,126,000
Stockholders' equity               3,380,760                                 3,119,000
                              --------------                            --------------
Total average liabilities
    and stockholders'
    equity                    $   27,776,727                            $   28,060,000
                              ==============                            ==============
Net interest income                          $    1,374,198                            $   1,337,497
                                             ==============                            =============
Interest rate spread                                             4.35                                       4.42

Interest income/earning
    assets                                                       8.25                                       7.77
Interest expense/earning
    assets                                                       2.90                                       2.58
                                                            ---------                                  ---------
Net interest income/earning
    Assets (interest yield)                                      5.34%                                      5.19%
                                                            =========                                  =========
</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 2000 increased  $36,701 or 2.7% from net interest income
in 1999.  Interest  income on earning assets in 2000 increased  $118,772 or 5.9%
from  the   corresponding   amount   earned  in  1999.   Interest   expense   on
interest-bearing  liabilities in 2000 increased $82,071 or 12.4% from the amount
paid in 1999.  The net interest  yield  increased to 5.34% in 2000 from 5.19% in
1999.  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>
<TABLE>
<CAPTION>
Volume and Yields/Rate Variance

                                               2000 Compared to 1999                         1999  Compared to 1998
                                ---------------------------------------------    --------------------------------------------
                                                       Volume/                                           Volume/
                                Volume        Rate         Rate         Net        Volume         Rate      Rate      Net
                                --------   ---------   ---------  ------------   ---------    ---------  --------- ---------
<S>                             <C>        <C>         <C>       <C>          <C>            <C>         <C>        <C>
Interest income
    Loans                       $ 32,020   $  74,451   $  1,613  $  108,084   $   (31,663)   $(33,739)   $   692   $(64,710)
    Investment securities:
      Taxable                    (10,017)     12,699       (395)      2,287       112,658       1,955      1,066    115,679
      Tax exempt                  (9,119)     (3,096)       616     (11,599)       12,970      (5,864)    (1,872)     5,234
Federal funds sold and
    securities purchased
    under agreements to
    resell                        (1,663)     21,897       (234)     20,000      (62,796)      (5,549)     1,564    (66,781)
                                --------   ---------   --------  ----------   ----------     --------    -------    -------
        Total earning
          assets                  11,221     105,951      1,600     118,772        31,169     (43,197)     1,450    (10,578)
                                --------   ---------   --------  ----------   -----------    --------    -------    -------

Interest expense
    Savings                      (19,030)     (2,539)       695     (20,874)       (8,541)    (11,896)     1,144    (19,293)
    NOW and money
      market                      (6,407)     (3,083)       122      (9,369)       19,653     (28,118)    (3,172)   (11,637)
    Time deposits                 19,728      88,632      4,045     112,406        18,422     (68,126)    (2,590)   (52,294)
    Federal funds purchased
      and securities sold
      under agreements
      to repurchase                  (92)        (92)        92         (92)            -           -         92         92
                                --------   ---------   --------  ----------   -----------    --------    -------    -------
        Total interest-
          bearing liabilities     (5,801)     82,918      4,954      82,071        29,534     (108,140)   (4,526)   (83,132)
                                --------   ---------   --------  ----------   -----------    ---------    ------    -------


        Net interest income     $ 17,022   $  23,033   $ (3,354) $   36,701   $     1,635    $ 64,943    $ 5,976    $72,554
                                ========   =========   ========  ==========   ===========    ========    =======    =======
</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, 2000,  approximately
$2,020,673 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, 2000 and 1999:
<TABLE>
<CAPTION>

                                                              2000               1999
                                                       --------------     --------------
<S>                                                    <C>                <C>
Real estate - mortgage                                 $    7,408,000     $     7,473,000
Real estate - construction                                    602,000             329,000
Commercial and industrial                                   3,467,000           3,739,000
Loans to individuals for household, family and
    other consumer expenditures                             3,469,000           2,978,000
Agriculture                                                   759,000             992,000
All other loans, including overdrafts                         604,946             961,152
Deferred loan origination costs                                20,910              18,693
                                                       --------------     ---------------
                                                       $   16,330,856     $    16,490,845
                                                       ==============     ===============
</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,
2000, and 1999 the Bank had  approximately  $940,500 and $28,000 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 $174,341 for the year ended December 31, 2000 and
$11,719 for the year ended December 31, 1999.

As of December 31, 2000, 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, 2000 the Bank had $183,000
of impaired loans. As of December 31, 1999 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, 2000 and 1999,  the  allowance  for loan losses was $252,219 and
$208,642,  respectively. The ratio of the allowance for loan losses to net loans
outstanding  was 1.54% at  December  31, 2000 and 1.27% at  December  31,  1999.
During 2000, the Bank  experienced  net  charge-offs of $85,302  compared to net
charge-offs of $88,028 in the prior year.

The Bank made recoveries of loans previously  charged off of $17,666 and $16,921
for the years ended December 31, 2000 and 1999, respectively.

The Bank made provisions for loan losses of $111,213 for the year ended December
31, 2000. The Bank made no provision for loan losses for the year ended December
31, 1999 due to recoveries of $152,000 in 1998.

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.

                                            Summary of Loan Loss Experience
                                            for the years ended December 31,
                                              2000                     1999
                                         ---------------         ---------------
Balance at beginning of year             $       208,642         $      279,749
Charge-offs:
    Commercial and industrial                     (7,000)               (48,000)
    Consumer                                     (78,302)               (40,028)
                                         ---------------         ---------------
                                                 (85,302)               (88,028)
                                         ---------------         ---------------
Recoveries:
    Commercial and industrial                      9,000                  2,000
    Real estate                                        -                  4,000
    Consumer                                       8,666                 10,921
                                         ---------------         ---------------
                                                  17,666                 16,921
                                         ---------------         ---------------
Net charge-offs                                  (67,636)               (71,107)

Provision for loan losses                        111,213                      -
                                         ---------------         ---------------
Balance at end of year                   $       252,219         $      208,642
                                         ===============         ===============

The following  table presents the allocation of the allowance for loan losses at
December  31,  2000 and 1999,  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,
                                               ----------------------------------------------------------------
                                                            2000                               1999
                                               ----------------------------------------------------------------
                                                                    % of                                % of
                                                 Amount             loans             Amount             loans
                                               -------------    -----------       ---------------    ----------
<S>                                            <C>              <C>               <C>                <C>
Commercial and industrial                      $      53,545           21.2%      $        47,306          22.7%
Real estate - construction                             9,297            3.7                 4,163           2.0
Real estate - mortgage                               114,412           45.4                94,548          45.3
Consumer installment                                  74,965           29.7                62,625          30.0
                                               -------------    -----------       ---------------    ----------

    Total                                      $     252,219          100.0%      $       208,642         100.0%
                                               =============    ===========       ===============    ==========

</TABLE>
Management  considers the allowance for loan losses  adequate to cover  inherent
losses on loans  outstanding as of December 31, 2000 and 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:

                                                                            2000
                                                  ------------------------------

                                                     Amortized          Fair
                                                       cost            value
                                                  -------------    -------------
AVAILABLE FOR SALE
    Federal Agencies
        One to five years                         $   3,800,000    $   3,758,469
                                                  -------------    -------------
    Mortgage backed
        Less than one year                              178,029          176,485
        One to five years                               667,836          655,190
        After ten years                                  71,033           71,652
                                                  -------------    -------------
                                                        916,898          903,327
                                                  -------------    -------------
    Total available for sale                      $   4,716,898    $   4,661,796
                                                  =============    =============

HELD TO MATURITY
----------------
    State, county and municipal
        One to five years                         $     247,514    $     249,540
        Five to ten years                               472,761          464,005
                                                  -------------    -------------
    Total held to maturity                        $     720,275    $     713,545
                                                  =============    =============


                                                                            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
                                                  =============    =============


                                       -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
$1,172,000  ($1,149,000  fair value) and $1,200,000  ($1,184,000  fair value) at
December  31,  1999,  were  pledged  to  secure  public  deposits  and for other
purposes.

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

Deposits

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

The Bank's average interest-bearing deposits in 2000 were $19,117,454,  compared
to $19,813,000 in the prior year, a decrease of $695,500 or 3.51%.

The following tables  presents,  for the years ended December 31, 2000 and 1999,
the  average  amount  and  average  rate paid on each of the  following  deposit
categories:
<TABLE>
<CAPTION>

                                                              Average amount                   Average rate paid
                                                     ----------------------------------      ------------------------
                                                             2000               1999             2000         1999
                                                     ----------------   ---------------      ----------   -----------
<S>                                                  <C>                <C>                  <C>          <C>
Noninterest-bearing deposits                         $      5,163,931   $    4,997,345              -%             -%
Interest-bearing deposits
    Interest checking                                       6,645,888        7,088,868           2.11           2.20
    Savings deposits                                        2,217,811        3,054,208           2.19           2.28
    Money market                                              403,855          249,845           3.22           2.71
    Certificates of deposit                                 8,062,140        7,356,112           5.50           4.45
    Individual retirement accounts                          1,787,760        2,063,495           5.68           5.07
</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,  2000 and 1999,  certificate  of  deposits of $100,000 or more
totaled $1,998,000 and $2,045,853, respectively.

Return on Equity and Assets

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

                                                    Year ended December 31,
                                                  ---------------------------
                                                       2000            1999
                                                  --------------   ----------

Return on average total assets                          1.24%           1.47%
Return on average stockholders equity                  10.15%          13.23%
Cash dividend payout ratio                             36.87%          24.90%
Average equity to average assets ratio                 12.17%          11.12%

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
paid a cash  dividend of 80 cents per share in January 2000 to  stockholders  of
record as of December  31, 1999.  The Bank paid a cash  dividend of 65 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  $283,075  during  2000.  This is
comprised of $343,196 of net income and a $66,279  unrealized  gain on available
for sale securities  offset by $126,400 paid in dividends to  stockholders.  The
Bank's equity to asset ratio was 12.60 percent on December 31, 2000, as compared
to 12.07 percent on December 31, 1999.

The Federal Deposit  Insurance  Corporation has issued guidelines for risk-based
capital  requirements.  As of December  31,  2000,  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)             $     3,838       22.4%      $     1,712      10.0%      $     1,370       8.0%
Tier 1 capital (to risk
    weighted assets)                   3,624       21.2             1,027       6.0               685       4.0
Tier 1 capital (to average
    assets)                            3,624       12.5             1,444       5.0             1,155       4.0
</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.

                                      -10-
<PAGE>
At December 31, 2000, the Bank has an unused line of credit to purchase  Federal
funds from an  unrelated  bank  totaling  $2.5  million.  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.

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.
<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                    $     7,315     $      1,661      $    8,976    $       7,355      $    16,331
    Investment securities             4,420              248           4,668            5,184            9,852
                                -----------     ------------      ----------    -------------      -----------
      Total earning assets           11,735            1,909          13,644           12,539           26,183
    Percentage of total
      earning assets                  44.82%            7.29%          52.11%           47.89%          100.00%
Interest-bearing liabilities
    Certificates of deposits
      of $100,000 or more               622            1,376           1,998                -            1,998
    Other time and savings
      deposits                       11,787            5,602          17,389              561           17,950
                                -----------     ------------      ----------    -------------      -----------
      Total interest-bearing
        liabilities                  12,409            6,978          19,387              561           19,948
Other sources                             -                -               -            6,235            6,235
                                -----------     ------------      ----------    -------------      -----------
        Total sources           $    12,409     $      6,978      $   19,387    $       6,796      $    26,183
                                ===========     ============      ==========    =============      ===========
Percentage of total earning
    assets                            47.39%           26.65%          74.04%           25.96%          100.00%
Interest sensitive gap                 (674)          (5,069)         (5,743)           5,743                -
Cumulative interest sensitive
    gap                                (674)          (5,743)        (11,486)               -                -

</TABLE>




                                      -11-

<PAGE>
<TABLE>
<CAPTION>

                                                  Sources and Uses of Funds
                                    (Average Balances for Years Ended December 31 in Thousands)

                                                                               December 31,
                                                  -----------------------------------------------------------------
                                                              2000                                1999
                                                  ------------------------------       ----------------------------
                                                    Amount             Percent         Amount             Percent
<S>                                               <C>              <C>              <C>                 <C>
Composition of sources:
    Demand deposits                               $        5,164       18.59%       $        4,997         17.81%
Now and money market                                       7,050       25.38                 7,339         26.15
    Time and savings deposits                             12,068       43.45                12,474         44.45
    Short-term borrowings                                      -           -                     2          0.01
    Other non interest-bearing funds                         114         .41                   129          0.46
    Stockholders' equity                                   3,381       12.17                 3,119         11.12
                                                  -------------- -----------        --------------     ---------
        Total sources                             $       27,777      100.00%       $       28,060        100.00%
                                                  ============== ===========        ==============     =========
Composition of uses:
    Loans*                                        $      16,721        59.37%      $        16,366         58.33%
    Investment securities                                 5,902        21.25                 6,264         22.32
    Other earning assets                                  3,097        11.15                 3,130         11.15
Other assets                                              2,057         8.23                 2,300          8.20
                                                  -------------  -----------       ---------------     ---------
        Total uses                                $      27,777       100.00%      $        28,060        100.00%
                                                  =============  ===========       ===============        ======
</TABLE>

    *Loan balances stated net of unearned income

Sources of Funds

Average sources of funds  decreased  $283,000 to $27,777,000 in 2000 compared to
$28,060,000  in 1999.  This  represents  an  decrease  of 1.0% in total  average
sources of funds.  Average NOW and money  market  deposits  and time and savings
deposits decreased $289,000 or 3.94% and $406,000 or 3.25%,  respectively.  This
was  partially  offset by an increase of  $167,000 in demand  deposits,  a 3.34%
increase.  Average loans  increased  $355,000 or 2.17% while average  investment
securities and other earning assets  decreased  $362,000 or 5.78% and $33,000 or
1.05%, respectively,  to account for the overall decrease of total uses of funds
in 2000.

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.

                                      -12-
<PAGE>
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."

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.  Management does not believe that these regulations will have
a material adverse effect on the operations of the Bank.

Interstate Banking

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

                                      -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 were effective March 11, 2000,
banks  securities  firms  and  insurance  companies  are able to  structure  new
affiliations  through  a  holding  company  structure  or  through  a  financial
subsidiary.  The legislation creates a new type of bank holding company called a
"financial  holding  company" which has powers much more extensive than those of
standard holding companies. These expanded powers include authority to engage in
"financial  activities,"  which are activities that are (1) financial in nature;
(2) incidental to activities that are financial in nature;  or (3) 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  15  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, 2000 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, 2001,  the number of holders of record for the Company's  common
stock was 503.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
------- -----------------------------------------------------------------------
        OF OPERATION
        ------------

2000 Compared to 1999

Net income for the year ended  December 31, 2000 was  $343,196  compared to 1999
net income of  $412,528.  The  Company  earned  $2.17 per  common  share in 2000
compared  to $2.61  per  share in 1999.  The  decrease  in net  income is mainly
attributable to a $111,000 provision for loan losses in 2000 versus no provision
in 1999 and increases in general and administrative expenses during 2000.

Net interest  income,  which is the difference  between  interest  earned on the
Company's  interest  earning  assets  and  interest  paid  on  interest  bearing
liabilities,  was  $1,374,198  for the year ended  December 31, 2000 compared to
$1,337,497 for the year ended December 31, 1999. Net interest  income,  which is
the main driver of the Company's earnings increased $36,701 or 2.7% in 2000 over
1999.  Interest income increased in 2000 due to a combination of higher balances
and higher rates.

Average  earning  assets were  $25,719,000  or 92.6% of total average  assets as
compared to  $25,760,000  or 91.8% of total average  assets in 1999. The primary
types  of  earning  assets  are  loans,  investment  securities  and  short-term
investments.  Loans  comprised  approximately  65.0% of the Bank's total earning
assets, while investment  securities comprised 23.0% and short-term  investments
12.0% in 2000.

Average  loans  increased  $355,000 or 2.17%  during 2000 as compared to average
loans in 1999. However, gross loans at December 31, 2000 decreased in comparison
to balances at December 31, 1999 by approximately $160,000. At December 31, 2000
gross loans were $16,330,856.

Commercial,  financial  and  agricultural  loans  comprised  29.6%  of the  loan
portfolio as of December 31, 2000.  Loans secured by real estate comprised 49.0%
of the  portfolio,  while consumer and other loans  comprised  21.4% of the loan
portfolio as of year ended December 31, 2000.

The amount of net loans charged off in 2000 was  approximately  $68,000 compared
to $71,000 in 1999 and $75,000 in 1998. The ratio of net  charge-offs to average
loans, net of unearned  income,  for 2000 was 0.41% as compared to 0.43% in 1999
and (0.45%) in 1998.


                                      -16-
<PAGE>
Provision for loan losses in 2000 was $111,000. There was no provision for loans
losses made in 1999. The allowance for loan losses as a percentage of loans, net
of  unearned  income,  was  1.55% at  December  31,  2000 and 1.27% and 1.72% at
December 31, 1999 and 1998,  respectively.  The  increase in the  allowance as a
percentage of loans is due to an increase in  non-performing  assets at December
31, 2000. Loans greater than 60 days past due totaled $1,232,000 at December 31,
2000 compared to $1,058,000 at December 31, 1999. One loan totaling  $926,000 is
included in loans past due greater than 60 days.  This loan is  guaranteed up to
$740,000 by the U. S.  Government.  Management  believes  that the allowance for
loan losses is adequate to cover  losses  inherent in the loan  portfolio  as of
December 31, 2000.

Non-interest  income decreased $10,839 or 3.9% in 2000 to $265,628 from $276,467
in 1999.  Service charges on deposit  accounts  decreased  $20,112 or 7.9% while
other  service  charges and fees  increased  $6,273 or 30.0% in 2000 compared to
1999.  The decrease in service fees on deposit  accounts is due to a decrease in
overdraft charges. Overdraft charges decreased $29,600 or 14.6% in 2000 compared
to 1999.  This  decrease  was  partially  offset by  increases  in other fees on
deposit accounts. Life insurance commissions and credit card fees both increased
(a 17.2% increase and a 94.2% increase, respectively) in 2000 over 1999 levels.

Non-interest  expense increased  $61,100 or 6.1% in 2000.  Salaries and employee
benefits expense increased  $43,000 or 8.5% in 2000.  Office supplies  decreased
$8,000 or 15.1%,  which partially offset the increase in other operating expense
and data processing fees. Other operating expense increased  $$20,893 or 9.0% in
2000 mainly due to expenses related to  misappropriations  by a former employee.
Data processing fees increased 3.9% during the year ended December 31, 2000.

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 market value and  recognized  in the balance sheet as
assets  and  liabilities.  SFAS No.  138,  "Accounting  for  Certain  Derivative
Instruments and Certain  Hedging  Activities" was issued in June 2000 and amends
the  accounting and reporting  standards of SFAS No. 133 for certain  derivative
instruments  and  hedging  activities.  The  two  statements  are to be  adopted
concurrently  and are  effective for fiscal years and quarters  beginning  after
June 15,  2000.  The  adoption  of SFAS No.  133 and SFAS No. 138 did not have a
material  impact on the  presentation  of the  Company's  financial  results  or
financial position.

Inflation

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

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

                                      -17-
<PAGE>
ITEM 7. FINANCIAL STATEMENTS
------- --------------------

The following financial statements are filed with this report:

-    Independent Auditor's Report
-  Consolidated  Balance  Sheets as of December 31, 2000 and 1999 - Consolidated
Statements of Income for the years ended December 31, 2000,
     1999 and 1998
-    Consolidated  Statements  of  Stockholders'  Equity  for  the  years  ended
     December 31, 2000, 1999 and 1998
-    Consolidated  Statements  of Cash Flows for the years  ended  December  31,
     2000, 1999 and 1998
-    Notes to Consolidated Financial Statements

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 2001 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.

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
                                      -18-
<PAGE>


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 Bancshares, Inc.
              ----------------------------------
                      Name of Bank



By: /s/ W. B. McCown, III                 Date: March 30, 2001
    --------------------------------            ---------------------------
     W. B. McCown, III, President and
     Chief Executive Officer
    (Principal Executive Officer)



By: /s/ Albert L. James, III              Date: March 30, 2001
    --------------------------------            ----------------------------
    Albert L. James, III, Secretary and Treasurer
    (Principal Financial Officer)


                                      -19-
<PAGE>

SIGNATURES

In  accordance  with the Exchange  Act, this report has been signed below by the
following persons on behalf of the registrant in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
                              Signature                                   Title                     Date
-------------------------------------------------------------     ---------------------        --------------

<S>                                                               <C>                           <C>


/s/ R. E. Goodson, Sr.                                            Chairman of the Board         March 25, 2001
--------------------------------------------------------------
R. E. Goodson, Sr.


/s/ Hubert C. Baker                                               Director                      March 25, 2001
--------------------------------------------------------------
Hubert C. Baker


/s/ W. Edwin Dargan                                               Director                      March 25, 2001
--------------------------------------------------------------
W. Edwin Dargan


/s/ Raymond Galloway                                              Director                      March 25, 2001
--------------------------------------------------------------
Raymond Galloway


/s/ Charles G. Howard                                             Director                      March 25, 2001
--------------------------------------------------------------
Charles G. Howard


/s/ Albert L. James, III                                          Director                      March 25, 2001
--------------------------------------------------------------
Albert L. James, III


/s/ G. Clyde Scott                                                Director                      March 25, 2001
--------------------------------------------------------------
G. Clyde Scott


/s/ Eugene A. Vaughn                                              Director                      March 25, 2001
--------------------------------------------------------------
Eugene A. Vaughn


/s/ W. B. McCown, III                                             President and Chief           March 25, 2001
--------------------------------------------------------------    Executive Officer
W. B. McCown, III

</TABLE>



                                      -20-

<PAGE>







                DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY

                   REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998






<PAGE>


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


                                    CONTENTS


                                                                   PAGE

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                  F-1

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                          F-6 - F-17


<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, 2000 and
1999, and the related  consolidated  statements of income,  stockholders' equity
and cash flows for each of the three  years in the  period  ended  December  31,
2000. These  consolidated  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

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

             In our opinion,  the consolidated  financial statements referred to
above present  fairly,  in all material  respects,  the  consolidated  financial
position of Darlington County Bancshares, Inc. and Subsidiary as of December 31,
2000 and 1999 and the results of their operations and cash flows for each of the
three years in the period ended  December 31, 2000, in conformity  with auditing
standards generally accepted in the United States of America.



                                           /s/ Elliott Davis & Company LLP

January 11, 2001


                                      F-1
<PAGE>
<TABLE>
<CAPTION>

                  DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
                             CONSOLIDATED BALANCE SHEETS

                                                                          December 31,
                                                               ---------------------------------
                                                                   2000                  1999
                                                               -----------           -----------
<S>                                                            <C>                   <C>
ASSETS

CASH AND DUE FROM BANKS                                        $ 1,089,597           $ 1,409,349
FEDERAL FUNDS SOLD                                               4,420,000             1,960,000
INVESTMENT SECURITIES HELD TO MATURITY
     (fair value $713,545 in 2000 and $989,850 in 1999)            720,275             1,022,646
INVESTMENT SECURITIES AVAILABLE FOR SALE                         4,661,796             5,180,640
OTHER INVESTMENTS, AT COST                                          50,405                50,405
LOANS                                                           16,330,856            16,490,845
     Less allowance for loan losses                               (252,219)             (208,642)
                                                               -----------           -----------
            Net loans                                           16,078,637            16,282,203
PREMISES AND EQUIPMENT                                             875,051               914,260
ACCRUED INTEREST RECEIVABLE                                        421,380               398,394
OTHER ASSETS                                                       152,624               149,080
                                                               -----------           -----------
                                                               $28,469,765           $27,366,977
                                                               ===========           ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS
     Demand                                                    $ 4,788,254           $ 4,645,315
     Savings and NOW                                             9,245,878             9,850,149
     Other time                                                 10,715,949             9,439,007
                                                               -----------           -----------
            Total deposits                                      24,750,081            23,934,471
OTHER LIABILITIES                                                  132,727               128,624
                                                               -----------           -----------
            Total liabilities                                   24,882,808            24,063,095
                                                               -----------           -----------

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,
         2000 and 1999                                              1,580                 1,580
     Capital in excess of par value of stock                    1,617,920             1,617,920
     Retained earnings                                          2,003,826             1,787,030
     Accumulated other comprehensive loss                         (36,369)             (102,648)
                                                              -----------           -----------
            Total stockholders' equity                          3,586,957             3,303,882
                                                              -----------           -----------

                                                              $28,469,765           $27,366,977
                                                              ===========           ===========
</TABLE>

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

                                      F-2
<PAGE>
<TABLE>
<CAPTION>

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


                                                                                           For the years ended December 31,
                                                                         ----------------------------------------------------------
                                                                                2000                1999               1998
                                                                         -------------------   ----------------  ------------------
<S>                                                                      <C>                   <C>               <C>
INTEREST INCOME
     Loans                                                                      $ 1,585,826         $1,477,742         $ 1,542,452
     Investment securities
         Taxable                                                                    322,026            317,797             204,211
         Exempt from federal income taxes                                            34,266             45,865              40,631
                                                                         -------------------   ----------------  ------------------
            Total interest on investment securities                                 356,292            363,662             244,842
     Federal funds sold                                                             176,072            156,072             222,853
     Other                                                                            2,531              4,473               2,380
                                                                         -------------------   ----------------  ------------------
            Total interest income                                                 2,120,721          2,001,949           2,012,527
INTEREST EXPENSE
     Deposits                                                                       746,523            664,452             747,584
                                                                         -------------------   ----------------  ------------------
            Net interest income                                                   1,374,198          1,337,497           1,264,943
PROVISION FOR LOAN LOSSES                                                           111,213                  -              22,183
                                                                         -------------------   ----------------  ------------------
            Net interest income after provision for loan losses                   1,262,985          1,337,497           1,242,760
NONINTEREST INCOME
     Service charges on deposit accounts                                            238,422            255,534             231,409
     Other service charges and fees                                                  27,206             20,933              26,841
                                                                         -------------------   ----------------  ------------------
            Total noninterest income                                                265,628            276,467             258,250
NONINTEREST EXPENSES
     Salaries and employee benefits                                                 549,827            506,880             464,131
     Occupancy                                                                       64,951             62,587              51,168
     Furniture and equipment                                                         63,283             63,802              56,525
     Office supplies                                                                 45,549             53,628              46,583
     Data processing fees                                                            93,014             89,484              64,942
     Other operating                                                                251,948            231,055             202,445
                                                                         -------------------   ----------------  ------------------
            Total noninterest expenses                                            1,068,572          1,007,436             885,794
                                                                         -------------------   ----------------  ------------------
            Income before income taxes                                              460,041            606,528             615,216
PROVISION FOR INCOME TAXES                                                          116,845            194,000             205,000
                                                                         -------------------   ----------------  ------------------
            Net income                                                          $   343,196        $   412,528         $   410,216
                                                                         ===================   ================  ==================
NET INCOME PER SHARE OF COMMON STOCK                                            $      2.17        $      2.61         $      2.60
                                                                         ===================   ================  ==================
</TABLE>

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

                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                                           DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
                                            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                         For the years ended December 31, 2000, 1999, and 1998

                                                                       Capital in                     Accumulated        Total
                                                 Common Stock           excess of                     other com-         stock-
                                            -----------------------     par value       Retained      prehensive        holders'
                                              Shares        Amount      of stock        earnings     income (loss)       equity
                                            ----------    ---------   --------------  -------------  --------------  ---------------
<S>                                         <C>           <C>         <C>             <C>             <C>            <C>
BALANCE, DECEMBER 31, 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 tax benefit 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
                                                                                                                        ------------
    Net income                                                                             343,196                          343,196
    Other comprehensive income, net of
       income tax benefit of $34,145:
       Unrealized gain on securities
           available for sale                                                                               66,279           66,279
                                                                                                                        ------------
       Comprehensive income                                                                                                 409,475
    Cash dividend, $.80 per share                                                         (126,400)                        (126,400)
                                            ----------- ------------  --------------  -------------  --------------     ------------

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

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

                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                                           DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
                                                 CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                              For the years ended December 31,
                                                                              ------------------------------------------------------
                                                                                    2000               1999               1998
                                                                              -----------------  ------------------  ---------------
<S>                                                                           <C>                <C>                 <C>
OPERATING ACTIVITIES
     Net income                                                                      $ 343,196           $ 412,528        $ 410,216
     Adjustments to reconcile net income to
        net cash provided by operating activities
        Depreciation                                                                    60,889              58,806           43,649
        Amortization and accretion                                                         356               4,690            6,180
        Provision for loan losses                                                      111,213                   -           22,183
        Benefit for deferred income taxes                                              (12,865)             (8,000)         (45,700)
        Changes in assets and liabilities:
          (Increase) decrease in accrued interest receivable                           (22,986)            (58,956)           4,706
          (Increase) decrease in other assets                                          (24,825)            (62,406)          80,921
          Increase (decrease) in other liabilities                                       4,103             (65,186)         (33,708)
                                                                              -----------------  ------------------  ---------------
            Cash provided by operating activities                                      459,081             281,476          488,447
                                                                              -----------------  ------------------  ---------------
INVESTING ACTIVITIES
     Decrease (increase) in federal funds sold                                      (2,460,000)          5,310,000       (3,890,000)
     Proceeds from maturities of investment securities
        held to maturity                                                               300,000             204,000                -
     Proceeds from maturities of investment securities
        available for sale                                                             921,283           1,064,738        2,940,842
     Purchase of investment securities held to maturity                                      -            (471,370)               -
     Purchase of investment securities available for sale                             (300,000)         (2,000,000)      (4,112,563)
     Net (increase) decrease in loans                                                   92,354            (335,004)         (96,260)
     Purchases of premises and equipment                                               (21,680)            (85,666)        (349,233)
     Net decrease in foreclosed real estate                                                  -              67,669           15,000
                                                                              -----------------  ------------------  ---------------
            Cash provided by (used for) investing activities                        (1,468,043)          3,754,367       (5,492,214)
                                                                              -----------------  ------------------  ---------------
FINANCING ACTIVITIES
     Dividends declared                                                               (126,400)           (102,700)         (86,900)
     Increase (decrease) in deposits                                                   815,610          (3,395,601)       4,997,478
                                                                              -----------------  ------------------  ---------------
            Cash provided by (used for) financing activities                           689,210          (3,498,301)       4,910,578
                                                                              -----------------  ------------------  ---------------
            Increase (decrease) in cash and due from banks                            (319,752)            537,542          (93,189)
                                                                              -----------------  ------------------  ---------------
CASH AND DUE FROM BANKS, BEGINNING OF YEAR                                           1,409,349             871,807          964,996
                                                                              -----------------  ------------------  ---------------
CASH AND DUE FROM BANKS, END OF YEAR                                                $1,089,597        $  1,409,349      $   871,807
                                                                              =================  ==================  ===============
SUPPLEMENTAL DISCLOSURES
     Schedule of cash paid for:
        Interest                                                                    $  719,539        $    677,933      $   752,614
                                                                              =================  ==================  ===============
        Income taxes                                                                $  129,320             290,915          237,155
                                                                              ================   ==================  ===============

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

                                      F-5
<PAGE>

                DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED 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 than that of
      owning the Bank,  has no employees  and operates as one business  segment.
      The Company is subject to  regulations 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 of 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,  accumulated  other  comprehensive  loss,  net of deferred  income
      taxes.  Securities  classified  as held to  maturity  are carried at cost,
      adjusted for the  amortization of premiums and the accretion of discounts.
      In order to qualify as held to maturity, the Bank must have the ability to
      hold the securities to maturity.  Trading securities are carried at market
      value. The Bank has no trading securities.  Gains or losses on disposition
      of securities are based on the difference between the net proceeds and the
      adjusted  carrying  amount of the  securities  sold,  using  the  specific
      identification method.

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

                                                                     (Continued)
                                       F-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.  Allowances  for loan  losses  are  subject to review by
      various regulatory authorities and may be subject to adjustment upon their
      examination.

    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.

    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)

                                       F-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  shares in 2000,  1999 and
      1998. 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
      No. 133,  "Accounting for Derivative  Instruments and Hedging Activities."
      All  derivatives are to be measured at fair market value and recognized in
      the balance sheet as assets and liabilities. SFAS No. 138, "Accounting for
      Certain Derivative  Instruments and Certain Hedging Activities" was issued
      in June 2000 and amends the accounting and reporting standards of SFAS No.
      133 for certain  derivative  instruments and hedging  activities.  The two
      statements  are to be adopted  concurrently  and are  effective for fiscal
      years and quarters beginning after June 15, 2000. The adoption of SFAS No.
      133 and SFAS No. 138 did not have a material impact on the presentation of
      the Company's financial results or financial position.

      Other  accounting  standards  that have been  issued  or  proposed  by the
      Financial  Accounting Standards Board that do not require adoption until a
      future date are not expected to have a material impact on the consolidated
      financial statements upon adoption.

    Reclassifications
      Certain  previously  reported amounts have been reclassified to conform to
      the current year  presentation.  Such changes had no effect on  previously
      reported net loss or shareholders' equity.

    Risks and uncertainties
      In  the  normal  course  of  its  business,  the  Company  encounters  two
      significant types of risk:  economic and regulatory.  There are three main
      components of economic  risk:  interest rate risk,  credit risk and market
      risk.  The Company is subject to interest rate risk to the degree that its
      interest-bearing  liabilities mature or reprice at different speeds, or on
      different bases, than its interest earning assets.

      Credit risk is the risk of default on the Company's  loan  portfolio  that
      results  from  the   borrowers'   inability  or   unwillingness   to  make
      contractually  required  payments.  Credit risk also applies to investment
      securities  should the issuer of the security be unable to make  principal
      and  interest  payments.  Market  risk  reflects  changes  in the value of
      collateral underlying loans receivable,  the valuation of real estate held
      by the Company and the valuation of investment securities.

                                                                     (Continued)

                                       F-8
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES, Continued

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

      In preparing  the  financial  statements,  management  is required to make
      estimates and assumptions  that affect the reported  amounts of assets and
      liabilities and disclosures of contingent assets and liabilities as of the
      dates of the balance  sheets and  revenues  and  expenses  for the periods
      covered.  Actual results could differ  significantly  from those estimates
      and assumptions.


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, 2000 and 1999 were
approximately $245,000 and $197,000, respectively.


NOTE 3 - INVESTMENT SECURITIES

          The  amortized   cost  and   approximate   fair  value  of  investment
securities, including maturities, are summarized as follows at December 31:
<TABLE>
<CAPTION>

                                                              2000
                                    -------------------------------------------------------
                                                          Gross unrealized
                                        Amortized     -----------------------       Fair
                                          cost           gains        losses        value
                                    ---------------   ----------   ----------   ------------
<S>                                 <C>               <C>          <C>          <C>
AVAILABLE FOR SALE
   Federal Agencies
     One to five years              $     3,800,000   $    1,031   $   42,562   $  3,758,469
                                    ---------------   ----------   ----------   ------------
   Mortgage backed
     Less than one year                     178,029            -        1,544        176,485
     One to five years                      667,836            -       12,646        655,190
     After ten years                         71,033          619            -         71,652
                                    ---------------   ----------   ----------   ------------
                                            916,898          619       14,190        903,327
                                    ---------------   ----------   ----------   ------------
   Total available for sale         $     4,716,898   $    1,650   $   56,752   $  4,661,796
                                    ===============   ==========   ==========   ============
HELD TO MATURITY
----------------
   State, county and municipal
     One to five years              $       247,514   $    2,026   $        -   $   249,540
     Five to ten years                      472,761            -        8,756       464,005
                                    ---------------   ----------   ----------   -----------
Total held to maturity              $       720,275   $    2,026   $    8,756   $   713,545
                                    ===============   ==========   ==========   ===========

</TABLE>




                                                                     (Continued)

                                       F-9
<PAGE>
NOTE 3 - INVESTMENT SECURITIES, Continued
<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
     Five to ten years                    472,002            -       33,327        438,675
                                  ---------------   ----------   ----------  -------------
Total held to maturity            $     1,022,646   $      531   $   33,327  $     989,850
                                  ===============   ==========   ==========  =============
</TABLE>

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

          Investment   securities   with   an   aggregate   amortized   cost  of
approximately  $1,172,000  ($1,149,000  fair  value) at  December  31,  2000 and
$1,200,000  ($1,184,000 fair value) at December 31, 1999, 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:
<TABLE>
<CAPTION>

                                                                   December 31,
                                                    ----------------------------------
                                                          2000                1999
                                                    ---------------     --------------
<S>                                                 <C>                 <C>
Real estate - mortgage                              $     7,408,000     $    7,473,000
Real estate - construction                                  602,000            329,000
Commercial and industrial                                 3,467,000          3,739,000
Loans to individuals for household, family and
               other consumer expenditures                3,469,000          2,978,000
Agriculture                                                 759,000            992,000
All other loans, including overdrafts                       604,946            961,152
Deferred loan origination costs                              20,910             18,693
                                                    ---------------     --------------
                                                    $    16,330,856     $   16,490,845
                                                    ===============     ==============
</TABLE>

                                                                     (Continued)

                                      F-10
<PAGE>

NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES, Continued

           Changes in the  allowance  for loan losses are  summarized as follows
for the years ended December 31,:
<TABLE>
<CAPTION>
                                                                            2000             1999             1998
                                                                    -----------------   -------------     --------------
<S>                                                                 <C>               <C>                 <C>
Balance, beginning of year                                          $      208,642    $       279,749     $      182,802
Recoveries of loans previously charged
           against the allowance                                            17,666             16,921            151,614
Provision for loan losses                                                  111,213                  -             22,183
Loans charged against the allowance                                        (85,302)           (88,028)           (76,850)
                                                                    ---------------   ---------------     --------------
        Balance, end of year                                        $      252,219    $       208,642     $      279,749
                                                                    ==============    ===============     ==============
</TABLE>

          At December 31, 2000 and 1999, non-accrual loans totaled approximately
     $940,500 and $28,000,  respectively.  The gross interest income which would
     have  been  recorded  under the  original  terms of the  non-accrual  loans
     amounted  to  $174,341  in 2000,  $11,719 in 1999 and  $15,088 in 1998.  No
     interest was recorded on  nonaccrual  loans in 2000,  1999 and 1998.  As of
     December 31, 2000 the Bank had $183,000 of impaired  loans.  As of December
     31, 1999 the Bank had no impaired loans.

NOTE 5 -  PREMISES AND EQUIPMENT

           Premises and equipment at December 31 is summarized as follows:
<TABLE>
<CAPTION>

                                                                  2000             1999
                                                          -------------------- -------------
        <S>                                               <C>                 <C>

        Land and buildings                                $       964,580     $      954,850
        Furniture, fixtures and equipment                         500,609            488,659
                                                          ---------------     --------------

                                                                1,465,189          1,443,509
          Less accumulated depreciation and amortization          590,138            529,249
                                                          ---------------     --------------

                                                          $       875,051     $      914,260
                                                          ===============     ==============
</TABLE>

           Depreciation and amortization of bank premises and equipment  charged
to operating  expense  totaled  $60,889 in 2000,  $58,806 in 1999 and $43,649 in
1998.

NOTE 6 - DEPOSITS

           At December 31, 2000 and 1999, certificates of deposit of $100,000 or
more totaled  approximately  $1,998,000 and $2,046,000,  respectively.  Interest
expense on these  deposits was $105,302 in 2000,  $75,263 in 1999 and $63,864 in
1998.

           At December 31, 2000,  the scheduled  maturities of  certificates  of
deposit are as follows:

        2001                                  $    10,155,143
        2002                                          471,243
        2003                                           89,563
                                              ---------------
                                              $    10,715,949


                                      F-11
<PAGE>
NOTE 7 - UNUSED LINES OF CREDIT

           At  December  31,  2000,  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.


NOTE 8 - INCOME TAXES

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

                                                                            2000                 1999            1998
                                                                    --------------    ---------------      -------------
    <S>                                                             <C>                  <C>               <C>
    Income taxes currently payable
        Federal                                                       $    119,460       $    183,000      $     232,200
        State                                                               10,250             19,000             18,500
                                                                    --------------    ---------------
                                                                           129,710            202,000            250,700
                                                                    --------------    ---------------     --------------
    Tax consequences of differences
        Loan losses                                                        (14,816)                 -            (37,202)
        Depreciation                                                        (1,344)             1,630             (5,275)
        Other                                                                3,295             (9,630)            (3,223)
                                                                   ---------------    ---------------    ---------------

                                                                           (12,865)            (8,000)           (45,700)
                                                                    --------------    ---------------     --------------

               Provision                                            $      116,845    $       194,000     $      205,000
                                                                    ==============    ===============     ==============
</TABLE>

           The income tax effect of cumulative temporary differences at December
31, are as follows:
<TABLE>
<CAPTION>
                                                        Deferred tax asset (liability)
                                                      ----------------------------------
                                                            2000             1999
                                                      ---------------     --------------
    <S>                                               <C>                 <C>
    Allowance for loan losses                         $        85,754     $       70,938
    Accumulated depreciation                                  (34,505)           (35,849)
    Unrealized loss on investment securities                   18,734             52,879
    Other, net                                                (23,823)             5,202
                                                      ---------------     --------------
                                                      $        46,160     $       93,170
                                                      ===============     ==============
</TABLE>

           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, 2000 and 1999.








                                                                     (Continued)

                                      F-12
<PAGE>
NOTE 8 - INCOME TAXES, Continued

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

                                                            2000                      1999                      1998
                                                     --------------------     --------------------      -------------------
                                                          Amount      %            Amount     %            Amount      %
                                                     -----------   ------     -----------  -------      ---------   -------
    <S>                                              <C>           <C>        <C>          <C>          <C>         <C>
    Tax expense at statutory rate                    $   156,414     34.0%    $   206,220      34.0%   $  209,200     34.0%
    Increase (decrease) in taxes
        resulting from:
        Tax exempt interest                              (17,221)    (3.7)        (21,975)     (3.6)      (20,245)    (3.3)
        State bank tax (net of
          federal benefit)                                 9,201      2.0          11,400       1.9        11,230      1.8
    Other - net                                          (31,549)    (6.9)         (1,645)      (.3)        4,815       .8
                                                     -----------   ------     -----------  --------    ----------   -------
          Tax provision                              $   116,845     25.4%    $   194,000      32.0%   $  205,000     33.3%
                                                     ===========   ======     ===========  ========    ==========   ======
</TABLE>

NOTE 9 - FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK

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

    Financial instruments whose contract amounts                    Contract
        represent credit risk at December 31, 2000:                  amount
                                                                ---------------
          Commitments to extend credit                          $     4,214,000
                                                                ===============

    Of these commitments to extend credit,  $3,790,000 are at variable rates and
$424,000 are at fixed rates.

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

NOTE 10 - CARRYING AMOUNTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

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

                                                                     (Continued)

                                      F-13
<PAGE>
NOTE 10 - CARRYING AMOUNTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS, Continued

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

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

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

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

            The carrying  amounts and  calculated  fair values of the  Company's
financial instruments are as follows:
<TABLE>
<CAPTION>

                                                                                        December 31,
                                                           ------------------------------------------------------------------
                                                                        2000                              1999
                                                           ------------------------------     -------------------------------
                                                              Carrying        Calculated         Carrying        Calculated
                                                               amount         fair value          amount         fair value
                                                           --------------   -------------     -------------   ---------------
   <S>                                                     <C>              <C>               <C>              <C>
   Financial assets:
     Cash and due from banks                               $    1,089,597   $   1,089,597     $   1,409,349    $    1,409,349
     Federal funds sold                                         4,420,000       4,420,000         1,960,000         1,960,000
     Investment securities held to maturity                       720,275         713,545         1,022,646           989,850
     Investment securities available for sale                   4,661,796       4,661,796         5,180,640         5,180,640
     Other investments                                             50,405          50,405            50,406            50,405
     Loans                                                     16,078,637      16,778,058        16,282,204        16,550,860
   Financial liabilities:
     Deposits                                                  24,750,081      23,722,953        23,934,471        23,886,602
</TABLE>

            The  Company  had   $4,214,000  of   off-balance   sheet   financial
commitments,  which are  commitments  to  originate  loans and  unused  lines of
credit.  Since these obligations are based on current market rates, the carrying
amount is considered to be a reasonable estimate of fair value.

            Fair value estimates are made at a specific point in time,  based on
relevant  market  information and  information  about the financial  instrument.
These  estimates  do not reflect any premium or discount  that could result from
offering  for sale the  Company's  entire  holdings  of a  particular  financial
instrument.  Because no active market  exists for a  significant  portion of the
Company's  financial  instruments,  fair value  estimates are based on judgments
regarding future expected loss experience,  current economic conditions, current
interest rates and prepayment trends, risk  characteristics of various financial
instruments  and other  factors.  These  estimates are  subjective in nature and
involve  uncertainties and matters of significant  judgment and therefore cannot
be  determined  with  precision.  Changes  in any of these  assumptions  used in
calculating fair value would also significantly  affect the estimates.  Further,
the fair value  estimates  were  calculated  as of  December  31, 2000 and 1999.
Changes in market interest rates and prepayment  assumptions could significantly
change  the fair  value.  Therefore,  management  believes  that  the  foregoing
information  is of limited  value and has no basis for  determining  whether the
fair value  presented would be indicative of the value which could be negotiated
during an actual sale.

                                                                     (Continued)
                                      F-14
<PAGE>
NOTE 10 - CARRYING AMOUNTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS, Continued

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


NOTE 11 - 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 12 - TRANSACTIONS WITH DIRECTORS, OFFICERS AND ASSOCIATES

            Directors and officers of the Company and associates of such persons
are customers of and had  transactions  with the Bank in the ordinary  course of
business.  Additional  transactions may be expected to take place in the future.
Also,  included in the loan  transactions are outstanding loans and commitments,
all of which  were  made on  comparable  terms,  including  interest  rates  and
collateral, as those prevailing at the time for other customers of the Bank, and
did not  involve  more than  normal  risk of  collectibility  or  present  other
unfavorable  features.  Total loans to all  officers  and  directors,  including
immediate  family and business  interests,  at December 31, 2000 and 1999,  were
$1,031,840 and $290,579,  respectively.  During 2000, $888,265 in new loans were
made to this  group and  repayments  of  $147,004  were  received.  Deposits  by
directors,  officers and their  related  interests,  as of December 31, 2000 and
1999, approximated $894,185 and $750,637, respectively.

NOTE 13 - RETIREMENT PLAN

            The Bank  sponsors  Simplified  Employee  Pension  (SEP)  individual
retirement  accounts  for all  officers and  employees  meeting  certain age and
service  requirements.  Contributions  are at the  discretion of and  determined
annually  by the Board of  Directors  and are not to exceed the  maximum  amount
deductible under the applicable  section of the Internal Revenue Code.  Included
in expenses are  contributions  to the retirement  plan of $19,191,  $25,035 and
$17,100 for the years ended December 31, 2000, 1999 and 1998, respectively.

NOTE 14 - 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.


                                                                     (Continued)
                                      F-15
<PAGE>
NOTE 14 - REGULATORY MATTERS, Continued

            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, 2000,
that the Bank meets all capital adequacy requirements to which it is subject.

            As of December 31, 2000, 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, 2000
   Total Capital (to risk weighted assets)       $    3,838        22.4%   $      1,370      8.0%   $    1,712     10.0%
   Tier I Capital (to risk weighted assets)           3,624        21.2             685      4.0         1,027      6.0
   Tier I Capital (to average assets)                 3,624        12.5           1,155      4.0         1,444      5.0
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

</TABLE>

NOTE 15 - PARENT COMPANY FINANCIAL INFORMATION

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

                             CONDENSED BALANCE SHEET

                                                            December 31,
                                                       2000             1999
                                                 --------------    -------------
ASSETS
   Investment in Bank subsidiary                 $    3,586,957    $   3,319,127
                                                 ==============    =============

LIABILITIES AND STOCKHOLDERS' EQUITY
   Due to Bank subsidiary                        $            -    $      15,245
   Stockholders' equity                               3,586,957        3,303,882
                                                 --------------    -------------

                                                 $    3,586,957    $   3,319,127
                                                 ==============    =============

                                                                     (Continued)

                                      F-16
<PAGE>
NOTE 15 - PARENT COMPANY FINANCIAL INFORMATION, Continued

<TABLE>
<CAPTION>
                          CONDENSED STATEMENT OF INCOME

                                                                December 31,
                                                        -------------------------------
                                                             2000             1999
                                                        --------------    -------------
<S>                                                     <C>               <C>
INCOME                                                  $      141,645    $           -
EXPENSES
   Legal fees                                                        -           15,245
                                                        --------------    -------------
INCOME (LOSS) BEFORE EQUITY IN UNDISTRIBUTED
   NET INCOME OF BANK SUBSIDIARY                               141,645          (15,245)
EQUITY IN UNDISTRIBUTED NET INCOME OF
   BANK SUBSIDIARY                                             201,551          427,773
                                                        --------------    -------------
    Net income                                          $      343,196      $    412,528
                                                        ==============    ==============
</TABLE>
<TABLE>
<CAPTION>

                        CONDENSED STATEMENT OF CASH FLOWS

                                                                          December 31,
                                                                -------------------------------
                                                                     2000             1999
                                                                --------------    -------------
<S>                                                             <C>               <C>
OPERATING ACTIVITIES
   Net income                                                   $      343,196    $     412,528
   Adjustments to reconcile net income to net cash
     provided by operating activities
     Equity in undistributed net income of Bank subsidiary            (201,551)        (427,773)
     Increase (decrease) in due to Bank subsidiary                     (15,245)          15,245
                                                                --------------    -------------

         Net cash provided by operating activities                     126,400                -

FINANCING ACTIVITY
   Dividends paid                                                     (126,400)               -
CASH AND DUE FROM BANKS, BEGINNING OF YEAR                                   -                -
                                                                --------------    -------------

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


</TABLE>







                                      F-17