UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

|X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

      For the quarterly period ended September 30, 2002.

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

      For the transition period from _____________ to _____________________


                         Commission File Number 0-23971

                       Citizens South Banking Corporation
             (Exact name of registrant as specified in its charter)

              Delaware                                   54-2069979
   (State or other jurisdiction of                    (I.R.S. Employer
   incorporation or organization)                  Identification Number)

            245 West Main Avenue, Gastonia, North Carolina 28052-4140
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (704)-868-5200


Former name, former address and former fiscal year, if changed since last report

      Indicate by check |X| whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|

      Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:

                             Common stock, $0.01 par
                       value 9,062,752 shares outstanding
                            as of November 12, 2002.

<PAGE>

Citizens South Banking Corporation

                                      INDEX
                                                                            Page

PART I.  FINANCIAL INFORMATION

       Item 1.  Consolidated Financial Statements..........................    2

            Consolidated Statements of Financial Condition
                  September 30, 2002 and December 31, 2001 ................    2

            Consolidated Statements of Operations
                Three months ended September 30, 2002 and 2001
                and nine months ended September 30, 2002 and 2001 .........    3

            Consolidated Statements of Comprehensive Income
                Nine months ended September 30, 2002 and 2001 .............    4

            Consolidated Statements of Cash Flows
                Nine months ended September 30, 2002 and 2001 .............    5

            Notes to Consolidated Financial Statements ....................    6

       Item 2. Management's Discussion and Analysis of Financial Condition
               and Results of Operations ..................................    9

       Item 3. Quantitative and Qualitative Disclosures About Market Risk .   14

       Item 4. Controls and Procedures ....................................   15

PART II. OTHER INFORMATION ................................................   15

Exhibit 99.1  Statement of Chief Executive Officer Furnished
              Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ...   20

Exhibit 99.2 Statement of Chief Financial Officer Furnished
             Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ....   21


                                    1
<PAGE>

PART I. FINANCIAL INFORMATION

      ITEM 1. Consolidated Financial Statements

Citizens South Banking Corporation
Consolidated Statements of Financial Condition
(in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                              September 30,  December 31,
                                                                                  2002          2001
                                                                                  ----          ----
                                                                               (unaudited)
<S>                                                                             <C>          <C>
Assets:
Cash and due from banks .....................................................   $   6,448    $   6,047
Interest-earning bank balances ..............................................      93,412       14,892
                                                                                ---------    ---------
   Cash and cash equivalents ................................................      99,860       20,939
Investment securities available-for-sale, at fair value .....................      35,515       25,946
Mortgage-backed and related securities available-for-sale, at fair value ....      26,810       25,405
Loans, net ..................................................................     310,912      334,321
Real estate owned ...........................................................       1,298        1,470
Accrued interest receivable .................................................       2,120        1,727
Premises and equipment, net .................................................       8,628        8,640
Federal Home Loan Bank stock ................................................       3,390        3,893
Cash value of life insurance policies .......................................       6,746        6,479
Core deposit intangible .....................................................       1,639        2,447
Goodwill ....................................................................       6,630        6,581
Other assets ................................................................       6,249        9,733
                                                                                ---------    ---------
   Total assets .............................................................   $ 509,797    $ 447,581
                                                                                =========    =========

Liabilities and Stockholders' Equity:
Demand deposit accounts .....................................................   $  33,910    $  33,283
Money market deposit accounts ...............................................      29,320       29,489
Savings accounts ............................................................      43,893       44,011
Time deposits ...............................................................     234,574      246,909
                                                                                ---------    ---------
   Total deposits ...........................................................     341,697      353,692
Borrowed money ..............................................................      62,040       42,057
Advances from borrowers for taxes and insurance .............................       1,099          515
Accrued interest payable ....................................................         634          414
Other liabilities ...........................................................       8,456        9,273
                                                                                ---------    ---------
   Total liabilities ........................................................     413,926      405,951

Common stock, $0.01 par value, 20,000,000 shares authorized, 9,062,752 issued
   and outstanding at September 30, 2002, $1.00 par value, 20,000,000
   shares authorized, 4,581,034 shares issued at December 31, 2001 ..........          91        4,581
Additional paid-in-capital ..................................................      68,381       16,843
Unallocated common stock held by Employee Stock Ownership Plan ..............      (2,207)      (1,239)
Retained earnings, substantially restricted .................................      28,007       25,105
Accumulated unrealized gain on securities available-for-sale, net of tax ....       1,599        1,116
Treasury stock of 371,600 shares at cost at December 31, 2001 ...............           0       (4,776)
                                                                                ---------    ---------
   Total stockholders' equity ...............................................      95,871       41,630
                                                                                ---------    ---------

Total liabilities and stockholders' equity ..................................   $ 509,797    $ 447,581
                                                                                =========    =========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       2
<PAGE>

Citizens South Banking Corporation
Consolidated Statements of Operations (unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
                                                           Three Months          Nine Months
                                                        Ended September 30,   Ended September 30,
                                                        -------------------   -------------------
                                                           2002     2001        2002       2001
                                                           ----     ----        ----       ----
<S>                                                       <C>      <C>         <C>       <C>
Interest income:
Loans .................................................   $5,302   $3,091      $16,316   $ 9,393
Investment securities .................................      386      421        1,064     1,386
Interest-bearing deposits .............................      130      215          345       771
Mortgage-backed and related securities ................      336      363          921     1,127
                                                          ------   ------      -------   -------
  Total interest income ...............................    6,154    4,090       18,646    12,677

Interest Expense:
Deposits ..............................................    1,958    1,848        6,077     5,938
Borrowed funds ........................................      575      593        1,672     1,813
                                                          ------   ------      -------   -------
  Total interest expense ..............................    2,533    2,441        7,749     7,751
                                                          ------   ------      -------   -------

Net interest income ...................................    3,621    1,649       10,897     4,926

Provision for loan losses .............................       70       30          205        90
                                                          ------   ------      -------   -------

  Net interest income after provision for loan losses .    3,551    1,619       10,692     4,836

Noninterest Income:
Service charges and fee income on deposit accounts ....      598      459        1,691     1,301
Income on mortgage banking and other lending activities      183       84          497       294
Dividends on Federal Home Loan Bank stock .............       45       25          144       113
Commissions on sale of financial products .............       30       40          123       111
Gain on sale of assets ................................       11        0          119         0
Other income ..........................................      199      131          414       335
                                                          ------   ------      -------   -------
Total noninterest income ..............................    1,066      739        2,988     2,154

Noninterest Expense:
Compensation and benefits .............................    1,333      940        3,980     2,710
Occupancy .............................................      353      179        1,062       510
Federal deposit insurance premiums ....................       15        9           47        25
Professional services .................................       52       46          230       146
Data processing expense ...............................       37       39          170       125
Advertising and promotions ............................      104       42          285       128
Amortization of intangible assets .....................      200        0          808         0
Loss on sale of assets ................................        0        0           17         9
Prepayment fee on FHLB advances .......................        0        0           65         0
Other expenses ........................................      672      412        1,846     1,165
                                                          ------   ------      -------   -------
  Total noninterest expense ...........................    2,766    1,667        8,510     4,818

Income before income taxes ............................    1,851      691        5,170     2,172

Provision for income taxes ............................      651      230        1,847       689
                                                          ------   ------      -------   -------

Net income ............................................   $1,200   $  461      $ 3,323   $ 1,483
                                                          ======   ======      =======   =======

Per Share Data:
Net income - basic ....................................   $ 0.14   $ 0.05      $  0.38   $  0.17
Net income - diluted ..................................     0.13     0.05         0.37      0.17
Cash dividends paid ...................................    0.037    0.035        0.111     0.105
Book value ............................................    10.37     9.74        10.37      9.74
</TABLE>

See accompanying notes to consolidated financial statements.


                                      3
<PAGE>

Citizens South Banking Corporation
Consolidated Statements of Comprehensive Income (unaudited)
(in thousands)

<TABLE>
<CAPTION>
                                                                                Nine Months Ended
                                                                                  September 30,
                                                                                -----------------
                                                                                  2002       2001
                                                                                  ----       ----

<S>                                                                             <C>        <C>
Net income ..................................................................   $ 3,323    $1,483
Other comprehensive income, net of tax:
    Unrealized gains on securities available for sale:
        Unrealized holding gains arising during period ......................       528       804
        Reclassification adjustment for (gains) losses included in net income       (45)        6
                                                                                -------    ------
    Other comprehensive income ..............................................       483       810
                                                                                -------    ------

Comprehensive income ........................................................   $ 3,806    $2,293
                                                                                -------    ------
</TABLE>

See accompanying notes to consolidated financial statements.


                                       4

<PAGE>

Citizens South Banking Corporation
Consolidated Statements of Cash Flows (unaudited)
(in thousands)

<TABLE>
<CAPTION>
                                                                                        Nine Months Ended
                                                                                           September 30,
                                                                                        -----------------
                                                                                        2002         2001
                                                                                        ----         ----

<S>                                                                                   <C>         <C>
Cash flows from operating activities:
  Net income ......................................................................   $  3,323    $  1,483
  Adjustments to reconcile net income to net cash provided by operating activities:
      Provision for loan losses ...................................................        205          90
      Depreciation ................................................................        609         302
      (Gain) loss on sale of investments, available for sale ......................        (70)          9
      (Gain) on sale of other assets ..............................................        (33)          0
      Purchase of bank-owned life insurance .......................................          0      (2,578)
      Deferred loan origination fees ..............................................        (26)        (72)
      Allocation of shares to the ESOP ............................................         85          85
      (Increase) decrease in accrued interest receivable ..........................       (393)         49
      Amortization of intangible assets ...........................................        808           0
      (Increase) decrease in other assets .........................................      2,734         (45)
      (Decrease) in other liabilities .............................................       (597)       (228)
                                                                                      --------    --------
        Net cash provided by (used for) operating activities ......................      6,645        (905)

Cash flows from investing activities:
  Net (increase) decrease in loans receivable .....................................     21,837      (6,942)
  Proceeds from the sale of loans .................................................      1,418           0
  Proceeds from the sale of investment securities .................................      2,000           0
  Proceeds from the sale of mortgage-backed securities ............................      3,066       1,257
  Proceeds from the sale of other assets ..........................................        327         196
  Maturities and prepayments of investment securities .............................      3,902      10,720
  Maturities and prepayments of mortgage-backed securities ........................      9,746       5,716
  Purchases of investments ........................................................    (15,000)     (5,420)
  Purchases of mortgage-backed securities .........................................    (13,826)     (9,041)
  Sale of FHLB stock ..............................................................        503           0
  Net cash flows from other investing activities ..................................       (620)     (1,192)
                                                                                      --------    --------
        Net cash provided by (used for) investment activities .....................     13,353      (4,706)

Cash flows from financing activities:
  Net increase (decrease) in deposits .............................................    (11,995)     12,224
  Issuance of additional common stock .............................................     50,483           0
  Dividends paid to stockholders ..................................................       (421)       (398)
  Repurchase of common stock ......................................................          0        (115)
  Exercise of stock options .......................................................        289           0
  Net increase (decrease) in borrowed money .......................................     19,984        (579)
  Increase in advances from borrowers for insurance and taxes .....................        583         566
                                                                                      --------    --------
        Net cash provided by financing activities .................................     58,923      11,698

Net increase in cash and cash equivalents .........................................     78,921       6,087

Cash and cash equivalents at beginning of period ..................................     20,939      26,709
                                                                                      --------    --------

Cash and cash equivalents at end of period ........................................   $ 99,860    $ 32,796
                                                                                      ========    ========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       5
<PAGE>

                       CITIZENS SOUTH BANKING CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note A - Basis of Presentation

      In management's opinion, the accompanying consolidated financial
statements, which are unaudited, reflect all adjustments, consisting solely of
normal recurring accruals, necessary for a fair presentation of the financial
information as of and for the three and nine month periods ended September 30,
2002 and 2001, in conformity with generally accepted accounting principles.
Results for the nine months ended September 30, 2002 are not necessarily
indicative of the results that may be expected for the year ended December 31,
2002.

      The consolidated financial statements include the accounts of Citizens
South Banking Corporation (the "Company") and the Company's wholly-owned
subsidiary, Citizens South Bank (the "Bank").

      Per share amounts and average shares outstanding have been adjusted to
reflect the 2.1408-for-1 exchange ratio used in the stock offering that closed
on September 30, 2002, discussed in Note B.

      The organization and business of the Company, accounting policies
followed, and other related information are contained in the notes to the
consolidated financial statements of the Company as of and for the years ended
December 31, 2001 and 2000, filed as part of the Company's annual report on Form
10-KSB. These consolidated financial statements should be read in conjunction
with the annual consolidated financial statements.

      The Company's critical accounting policy relates to the evaluation of the
allowance for loan losses which is based on management's opinion of an amount
that is adequate to absorb losses in the Company's existing portfolio. The
allowance for loan losses is established through a provision for loan losses
based on available information including the composition of the loan portfolio,
historical loan losses, specific impaired loans, availability and quality of
collateral, age of the various portfolios, changes in local economic conditions,
and loan performance and quality of the portfolio. Different assumptions used in
evaluating the adequacy of the Company's allowance for loan losses could result
in material changes in the Company's consolidated financial condition or
consolidated financial results of operations. The Company's policies with
respect to the methodology for determining the allowance for loan losses involve
a higher degree of complexity and require management to make subjective
judgments that often require assumptions or estimates about uncertain matters.
These critical policies and their assumptions are periodically reviewed with the
Board of Directors.

Note B - Mutual-to-Stock Conversion and Related Stock Offering

      On September 30, 2002, the mutual-to-stock conversion of Citizens South
Holdings, MHC, the mutual holding company (the "Mutual Holding Company") of
Citizens South Banking Corporation, the predecessor of the Company, and the
related stock offering of the Mutual Holding Company's ownership in Citizens
South Banking Corporation were completed. In conjunction with the stock
offering, the Company sold 5,259,945 shares of common stock at $10.00 per share,
which represented the "super maximum" range of the stock offering. As a result
of the stock offering, the Company now has 9,062,752 shares of common stock
outstanding. Net proceeds from the stock offering amounted to $45.6 million.

      Prior to the completion of the conversion, the Mutual Holding Company
owned 2,457,007 shares, or approximately 58.4% of the outstanding shares of
capital stock in Citizens South Banking Corporation. Upon conversion, each share
of the par value common stock of Citizens South Banking Corporation held by the
public was exchanged for 2.1408 shares of $0.01 par value common stock of the
Company which


                                       6

<PAGE>

preserved the previous shareholders' interest in Citizens South Banking
Corporation. As a result, all historical financial information that is based on
or derived from the actual or average number of outstanding shares of common
stock during any period prior to September 30, 2002, has been appropriately
adjusted to reflect the exchange ratio of 2.1408-to-1. The conversion was
accounted for as a change in corporate form with no subsequent change in
historical basis for the Company's assets, liabilities, and equity.

Note C - Earnings per Share

      Earnings per share has been determined under the provisions of the
Statement of Financial Accounting Standards No. 128, Earnings Per Share. For the
quarters ended September 30, 2002 and 2001, basic earnings per share has been
computed based upon the weighted average common shares outstanding of 8,790,445
and 8,710,005, respectively. For the nine months ended September 30, 2002 and
2001, basic earnings per share has been computed based upon the weighted average
common shares outstanding of 8,779,548 and 8,734,725, respectively.

      The only potential stock of the Company as defined in the Statement of
Financial Accounting Standards No. 128, Earnings Per Share, is stock options
granted to various directors and officers of the Bank. The following is a
summary of the diluted earnings per share calculation for the three and nine
months ended September 30, 2002 and 2001 (in thousands, except share data):

<TABLE>
<CAPTION>
                                         Three Months Ended         Nine Months Ended
                                           September 30,              September 30,
                                           -------------              -------------
                                         2002           2001        2002         2001
                                         -----         -----        ----         ----

<S>                                   <C>          <C>          <C>          <C>
Net income ........................   $    1,200   $      461   $    3,323   $    1,483

Weighted average outstanding shares    8,790,445    8,710,005    8,779,548    8,734,725
Dilutive effect of stock options ..      154,741       67,943       83,493       24,836
                                      ----------   ----------   ----------   ----------
Weighted average diluted shares ...    8,945,186    8,777,948    8,863,041    8,759,561

Diluted  earnings per share .......   $     0.13   $     0.05   $     0.37   $     0.17
</TABLE>

Note D - Stock Compensation Plans

      On April 12, 1999, the Company's shareholders approved the Citizens South
Bank 1999 Stock Option Plan that provided for the issuance of 452,425 options
for directors and officers to purchase the Company's common stock. As of
September 30, 2002, 380,401 options had been awarded under the plan at a
weighted average exercise price of $5.72, determined based on the fair market
value of the Company's stock on the award date, and at a weighted average
contractual life of 81 months. There were 294,451 options fully vested as of
September 30, 2002, of which 64% were incentive and 36% were non-statutory stock
options. The Company applies the provisions of Accounting Principles Board
Opinion No. 25 in accounting for the Stock Option Plan described above and,
accordingly, no compensation expense has been recognized in connection with the
granting of the stock options.


                                       7

<PAGE>

Note E - Dividend Declaration

      On October 21, 2002, the Board of Directors of the Company approved and
declared a regular cash dividend of $0.05 per share of common stock to
shareholders of record as of November 1, 2002, and payable on November 15, 2002.

Note F - Impact of Recently Adopted Accounting Standards

      Effective January 1, 2002, the Company adopted the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other
Intangible Assets". SFAS No. 142 requires that goodwill and intangible assets
with indefinite useful lives no longer be amortized, but instead tested for
impairment at least annually in accordance with its provisions. SFAS 142 also
requires that intangible assets with definite useful lives be amortized over
their respective estimated useful lives to their estimated residual values. In
connection with adoption of SFAS 142, the Company is required to perform an
initial assessment of whether there is an indication that goodwill is impaired.
During the second quarter of 2002, the Company completed its initial analysis of
potential impairment under the provisions of SFAS No. 142, and determined based
on that analysis that goodwill was not impaired. Goodwill will be tested for
impairment annually, or between annual tests if an event occurs or circumstances
change that would more likely than not reduce the fair value of a reporting unit
below its carrying amount. The Company had no goodwill related to acquisitions
initiated prior to July 1, 2001, or other intangible assets recorded prior to
the adoption of the provisions of SFAS No. 142 whose carrying amounts or
amortization were changed by the adoptions of the provisions of SFAS No. 142.

      SFAS 144, "Accounting for the Impairment or Disposal of Long-lived
Assets", was issued in August 2001 and supersedes SFAS No. 121. SFAS No. 144
establishes standards for the financial accounting and reporting requirements
for the impairment or disposal of long-lived assets. The provisions of SFAS No.
144 were adopted effective January 1, 2002. The adoption of the provisions of
SFAS No. 144 did not have a material impact on the consolidated financial
statements of the Company.


                                       8
<PAGE>

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

Forward Looking Statements

      From time to time, 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 provided that the Company notes that a variety of
factors could cause the Company's actual results to differ materially from the
anticipated results expressed in the Company's forward-looking statements.
Factors that may cause actual results to differ materially from those projected
in the forward looking statements include, but are not limited to, general
economic conditions that are less favorable than expected, changes in market
interest rates that result in reduced interest margins, risks in the loan
portfolio, including prepayments, are greater than expected, legislation or
regulatory changes that have a less than favorable impact on the business of the
Company are enacted, and competitive pressures increase significantly.
Statements included in this report should be read in conjunction with the
Company's Annual Report on Form 10-KSB which is incorporated into this
discussion by this reference. Forward looking statements speak only as of the
date they are made and the Company does not undertake to update forward-looking
statements to reflect circumstances or events that occur after the date of the
forward looking statements or to reflect the occurrence of unanticipated events.
Accordingly, past results and trends should not be used by investors to
anticipate future results or trends.

Recent Events

      On September 30, 2002, the mutual-to-stock conversion of the Mutual
Holding Company and the related stock offering of the Mutual Holding Company's
ownership in Citizens South Banking Corporation, a federal corporation
("Citizens South") were completed. Prior to the completion of the conversion,
the Mutual Holding Company owned 2,457,007 shares, or approximately 58.4% of the
outstanding shares of common stock in Citizens South. Upon conversion, each
share of Citizens South's common stock currently held by the public were
exchanged for 2.1408 shares of the Company, which preserved the previous
shareholders' interest in the Company. The name and Nasdaq trading symbol for
Citizens South did not change. The operations of the Mutual Holding Company were
discontinued. In conjunction with the stock offering, the Company sold 5,259,945
shares of common stock at $10.00 per share, which represented the "super
maximum" range of the stock offering. Net proceeds raised were $45.6 million. As
a result of the stock offering, the Company had 9,062,752 shares of common stock
outstanding as of September 30, 2002. Net proceeds will be used for general
corporate purposes and may be used to pay cash dividends, repurchase common
stock, increase lending activities in existing markets, or expand the Company's
business opportunities through acquisitions of financial services companies or
establishing new branches. Initially these funds will be used to purchase
short-term investment securities and mortgage-backed securities.

Comparison of Financial Condition

      Assets. Total assets of the Company increased by $62.2 million, or 13.9%,
from $447.6 million as of December 31, 2001, to $509.8 million as of September
30, 2002. This increase was primarily due to the receipt of $69.9 million in
orders for the stock offering that was completed on September 30, 2002. This
amount includes $23.0 million in over-subscriptions which were returned to
investors after the close of the stock offering and will result in a subsequent
decrease in assets. The net proceeds received in the offering amounted to $45.6
million, based on the sale of $52.6 million in stock and $1.2 million in costs
associated with the conversion.


                                       9

<PAGE>

      During the period, cash and cash equivalents increased by $78.9 million to
$99.9 million due to the recently completed stock offering. Investment
securities increased by $9.6 million to $35.5 million and mortgage-backed
securities increased by $1.4 million to $26.8 million. These increases were
primarily funded by higher than normal loan prepayments. Net loans decreased by
$23.4 million to $310.9 million due to accelerated prepayments as many borrowers
refinanced their loans due to the historically low interest rate environment.
Most of these prepayments were concentrated in the one-to-four family dwelling
portfolio which decreased by $33.8 million, or 15.9%, to $179.3 million. The
portfolio of one-to-four family residential loans decreased due to the fact that
management typically originates all new fixed-rate residential loans in the name
of various third party investors. By closing and funding these loans in the name
of a third party, Company reduces its overall vulnerability to rising interest
rates and immediately recognizes fee income from the origination of these loans.
In addition, this program allows the Bank to offer a broader range of mortgage
loan products to its customers. During the same period, the combined gross
portfolios for all other loans, including multifamily residential, commercial
mortgage, land, commercial business, and consumer loans, increased by $9.6
million, or 7.4%, to $139.3 million. Management will continue to seek to grow
these loan portfolios in a safe and sound manner with an emphasis on
adjustable-rate loans or shorter-term fixed rate loans.

      As of September 30, 2002, nonperforming loans amounted to $710,000, or
0.22% of gross loans, and nonperforming assets amounted to $2.0 million, or
0.39% of total assets, compared to nonperforming loans of $836,000, or 0.25% of
gross loans and nonperforming assets of $2.3 million, or 0.52% of total assets,
as of December 31, 2001. The Company's allowance for loan loss reserves amounted
to $3.0 million, or 0.93% of gross loans as of September 30, 2002, compared to
$3.1 million, or 0.91% of gross loans as of December 31, 2001.

      Liabilities. Total liabilities increased by $8.0 million, or 2.0%, from
$405.9 million as of December 31, 2001, to $413.9 million as of September 30,
2002. This increase was primarily due to the $23.0 million in stock
over-subscriptions which were reported as borrowed money. These funds were
returned to the investors after the close of the stock offering. This increase
was partially offset by the prepayment of a $1.5 million Federal Home Loan Bank
advance and a decrease in total deposits of $12.0 million, or 3.4%, to $341.7
million as of September 30, 2002. A large portion of this decrease in deposits
was attributable to the withdrawal of $4.7 million for the purchase of stock in
the Company's stock offering. Most of the remaining decrease in deposits was
concentrated in higher-costing time deposits. During the nine month period ended
September 30, 2002, time deposits decreased by $12.3 million, or 5.1%, to 234.6
million. Core deposits, including checking accounts, savings accounts, and money
market deposit accounts, increased by $340,000, or 0.3%, to $107.1 million.
Management plans to continue in its efforts to gain deposit market share through
new product development and branch expansion with an emphasis on core deposits.

      Borrowed money, excluding the stock over-subscriptions, was comprised of
$39.0 million in various callable and fixed-term Federal Home Loan Bank advances
and $1.7 million in repurchase agreements as of September 30, 2002, compared to
$40.5 million in Federal Home Loan Bank advances and $1.6 million in repurchase
agreements as of December 31, 2001.

      Equity. Total equity increased by $54.2 million, or 130.3%, from $41.6
million as of December 31, 2001, to $95.9 million as of September 30, 2002. This
increase was primarily due to sale of 5,259,945 shares of common stock for
$10.00 per share in conjunction with the mutual-to-stock conversion that was
competed on September 30, 2002. Existing public shares in the Citizens South
were exchanged for new shares in the Company at a 2.1408-to-1 ratio, resulting
in a total of 9,062,752 outstanding shares with a $0.01 par value. Included in
the stock sale were 105,199 shares purchased for the Company's ESOP,
representing 2.0% of the


                                       10
<PAGE>

total stock sold. Also during the period the Company recognized $3.3 million in
earnings and a $482,000 increase in accumulated unrealized gains on
available-for-sale securities. The Company also paid $421,000 in cash dividends
which resulted in a decrease in equity.

Comparison of Results of Operations for the Three Months Ended September 30,
2002 and 2001

      General. Net income for the Company for the three months ended September
30, 2002, amounted to $1.2 million, or $0.14 per share, as compared to $461,000,
or $0.05 per share, for the three months ended September 30, 2001.

      Net interest income. Net interest income increased by $2.0 million, or
119.6%, to $3.6 million for the three months ended September 30, 2002. This
increase was primarily due to the acquisition of Innes Street Financial
Corporation on December 31, 2001, the effects of which were partially offset by
lower market interest rates during 2002. Interest income increased by $2.1
million, or 50.5%. This increase was the result of a $166.5 million, or 67.5%,
increase in average interest-earning assets to $413.2 million. This increase was
partially offset by a 50 basis point decrease in the average yield on earning
assets to 6.08%. Interest expense decreased by $92,000, or 3.8%, during the
period. This reduction in interest expense was due to a 196 basis point
reduction in the average cost of funds to 2.59%. The effects of the decrease in
the average cost of funds was significantly offset by a $175.4 million, or
82.4%, increase in average interest-bearing liabilities to $388.1 million. The
net interest margin for the Company was 3.17% for the quarter ended September
30, 2002, compared to 2.47% for the quarter ended September 30, 2001.

      Provision for loan losses. The provision for loan losses amounted to
$70,000 for the three months ended September 30, 2002, compared to $30,000 for
the three months ended September 30, 2001. The amount of the provision for loan
losses was increased, in part, due to the increased loan volume resulting from
the acquisition of Innes Street and a continued emphasis on commercial and
consumer loans, rather than residential mortgage loans. Management establishes
the provision for loan losses based on available information including the
composition of the loan portfolio, historical loan losses, specific impaired
loans, availability and quality of collateral, age of the various portfolios,
changes in local economic conditions, and loan performance and quality of the
portfolio. There have been no material changes in management's methods for
determining the provision for loan losses during the past year. The allowance
for loan losses was $3.0 million, or 0.93% of gross loans, as of September 30,
2002, compared to $1.6 million, or 0.93% of gross loans, as of September 30,
2001. Future loan loss provisions will be made based on management's analysis
and review of the information cited above.

      Noninterest income. Noninterest income amounted to $1.1 million for the
three months ended September 30, 2002, as compared to $739,000 for the three
months ended September 30, 2001. This increase of $327,000, or 44.3%, was
primarily due to increased fees generated by the Bank's mortgage banking
department and additional fee income derived from deposit products. Fee income
derived from lending and mortgage banking activities increased $99,000, or
117.9%, due to higher residential loan originations resulting from historically
low interest rates. These loans are generally originated on behalf of a third
party and all fees collected are recognized as current period income. Income on
deposit accounts increased $139,000, or 30.3%, due, in part, to the increased
number of fee-generating demand deposit accounts resulting from the acquisition
of three full-service branch offices. Management plans to continue in its
efforts to increase its outstanding balance of fee-generating demand deposit
accounts through targeted advertising and branch


                                       11
<PAGE>

expansion. Total demand deposit accounts increased by $9.6 million, or 39.6%,
during the past 12 months to $33.9 million as of September 30, 2002.

      During the quarter ended September 30, 2002, the Company recognized a gain
of $11,000 from the sale of $57,000 in loan participations, and $171,000 in real
estate owned. There were no gains on sales of assets during the quarter ended
September 30, 2001.

      Noninterest expense. Noninterest expense amounted to $2.8 million for the
quarter ended September 30, 2002, compared to $1.7 million for the quarter ended
September 30, 2001, an increase of $1.1 million, or 65.9%. This increase was
primarily due to $393,000 in higher compensation and $174,000 in increased
occupancy expenses associated with the Company's acquisition of three
full-service branch offices. Also, the Company incurred $200,000 in amortization
of intangible assets during the quarter ended September 30, 2002, compared to no
such expense for the comparable period of 2001. This expense was related to the
amortization of the core deposit premium, created as a result of the Company's
acquisition of Innes Street Financial Corporation in December 2001. The core
deposit intangible is being amortized over a seven year period using the
accelerated method. In addition, the Company had increased expenses associated
with servicing its growing demand deposit account portfolio during the quarter
ended September 30, 2002. There were no losses on sale of assets during either
of the quarters.

      Income taxes. Income taxes amounted to $651,000, or 35.2% of taxable
income, for the quarter ended September 30, 2002, as compared to $230,000, or
33.3% of taxable income, for the quarter ended September 30, 2001. The increase
in the overall tax rate was due to a lower percentage of income being derived
from tax-advantaged assets such as municipal securities, bank-owned life
insurance, and government agency securities.

Comparison of Results of Operations for the Nine Months Ended September 30, 2002
and 2001

      General. Net income for the Company for the nine months ended September
30, 2002, amounted to $3.3 million, or $0.38 per share, as compared to $1.4
million, or $0.17 per share, for the nine months ended September 30, 2001.

      Net interest income. Net interest income increased by $6.0 million, or
121.2%, to $10.9 million for the nine months ended September 30, 2002. This
increase was primarily due to the acquisition of Innes Street Financial
Corporation on December 31, 2001, the effects of which were partially offset by
lower market interest rates during 2002. Interest income increased by $6.0
million, or 47.1%. This increase was the result of a $159.3 million, or 65.2%,
increase in average interest-earning assets to $403.8 million, the effects of
which were partially offset by a 68 basis point decrease in the average yield on
earning assets to 6.24%. Interest expense remained flat at $7.7 million during
the periods. Average interest-bearing liabilities increased by $172.5 million,
or 81.5%, to $384.3 million. The effects of the increase in average
interest-bearing liabilities were significantly offset by a 222 basis point
reduction in the cost of funds to 2.70%. The net interest margin for the Company
was 3.24% for the nine month period ended September 30, 2002, compared to 2.49%
for the nine month period ended September 30, 2001.

      Provision for loan losses. The provision for loan losses amounted to
$205,000 for the nine months ended September 30, 2002, compared to $90,000 for
the nine months ended September 30, 2001. The amount of the provision for loan
losses was increased, in part, due to the increased loan volume resulting from
the acquisition of Innes Street and a continued emphasis on commercial and
consumer loans, rather than residential mortgage loans.


                                       12

<PAGE>

      Noninterest income. Noninterest income amounted to $3.0 million for the
nine months ended September 30, 2002, as compared to $2.2 million for the nine
months ended September 30, 2001. This increase of $834,000, or 38.7%, was
primarily due to increased fees generated by the Company's mortgage banking
department and additional fee income derived from deposit products. Fee income
derived from lending and mortgage banking activities increased $203,000, or
69.0%, due to higher residential loan originations resulting from historically
low interest rates. Income on deposit accounts increased $390,000, or 30.0%,
due, in part, to the increased number of fee-generating demand deposit accounts
resulting from the acquisition of three full-service branch offices.

      During the nine month period ended September 30, 2002, the Company
recognized a gain of $119,000 from the sale of $3.1 million in mortgage-backed
securities, $2.0 million in investment securities, $1.3 million in loans and
miscellaneous real estate owned and fixed assets. There were no gains on sale of
assets during the nine month period ended September 30, 2001.

      Noninterest expense. Noninterest expense amounted to $8.5 million for the
nine months ended September 30, 2002, compared to $4.8 million for the nine
months ended September 30, 2001. This increase of $3.7 million was primarily due
to a $1.3 million increase in compensation and a $552,000 increase in occupancy
expense associated the operation of three additional full-service branch
offices. Also, the Company incurred increased expenses associated with servicing
its growing demand deposit account portfolio. There were additional costs
incurred during 2002 related to the acquisition of Innes Street, including
changing the name of the Company and the Bank, converting the acquired bank's
computer system to the Company's core processing system, and consolidating the
back-office operations of the two companies. The consolidation of the
back-office operations and the conversion of the computer systems were completed
during the first quarter of 2002.

      During the nine month period ended September 30, 2002, the Company
recognized a loss of $17,000 from the sale of miscellaneous fixed assets and
real estate owned. During the nine month period ended September 30, 2001, the
Company recognized a loss of $9,000 from the sale of $1.3 million in investment
securities and miscellaneous fixed assets.

      Income taxes. Income taxes amounted to $1.8 million, or 35.7% of taxable
income, for the nine months ended September 30, 2002, as compared to $689,000,
or 31.7% of taxable income, for the nine months ended September 30, 2001. The
increase in the overall tax rate was due to a lower percentage of income being
derived from tax-advantaged assets such as municipal securities, bank-owned life
insurance, and government agency securities.

Liquidity, Market Risk, and Capital Resources

      The objective of the Company's liquidity management policy is to ensure
the availability of sufficient funds to meet the cash needs of borrowers and
depositors and to provide funds necessary to maintain the normal operations of
the Company. The Company's liquidity is primarily affected by fluctuations in
deposit and lending activities, maturities of investments and borrowed money,
and investments in capital improvements and market expansion. Its liquidity is
also impacted by certain off-balance sheet items such as loan commitments,
unfunded portions of construction loans, and unused lines of credit. At
September 30, 2002, the Company had loan commitments of $11.6 million,
undisbursed portions of construction loans of $5.4 million, and unused lines of
credit of $58.5 million. Neither the Company nor its subsidiaries have incurred
off-balance sheet obligations through the use of or investment in derivative
financial instruments or structured finance or special purpose entities
organized as corporations, partnerships, limited liability companies, or trusts.


                                       13

<PAGE>

      The Company's primary sources of internally generated funds are principal
and interest payments on loans receivable, cash flows generated from operations,
cash flows generated by investment and mortgage-backed securities, and growth in
core deposits. As of September 30, 2002, the Company's cash and due from banks
and interest-earning bank balances totaled $99.9 million compared to $20.9
million as of December 31, 2001. This $79.0 million increase was largely due to
a $58.9 million increase in net cash provided by financing activities. These
financing activities included the issuance of $50.5 million in common stock, a
$20.0 million increase in borrowed money, and a $12.0 million decrease in
deposits. The Company also generated $6.6 million in cash provided by operating
activities, including $3.3 million in net income, and provided an additional
$13.4 million in cash from investment activities. The funds received from
investment activities included a $21.8 million decrease in loans, $15.0 million
in purchases of investment securities, and $13.8 million in purchases of
mortgage-backed securities. The Company refunded $23.0 million in stock
over-subscriptions after the close of the stock offering on September 30, 2002.
These funds were reported as borrowed money as of September 30, 2002.

      The Company's external sources of funds include increases in large
denomination wholesale deposits and advances from the Federal Home Loan Bank of
Atlanta ("FHLB"). If the Company requires funds beyond its internal funding
capabilities, the Company has $88.5 million in additional advances available
from its line of credit with the FHLB. These FHLB advances are secured by a
blanket lien on first mortgage residential loans held by the Company. Given the
Company's current liquidity position, availability of credit, and cash flows
from internal sources, management believes that the Company has the ability to
meet deposit withdrawals on demand or at contractual maturity, to repay
borrowings as they mature, and to fund new loans and commitments as
opportunities arise.

      The Company's most significant form of market risk is interest rate risk,
as the Company's assets and liabilities are sensitive to changes in interest
rates. The Company's Asset / Liability Committee ("ALCO") is responsible for
monitoring its level of interest rate risk and ensuring compliance with
Board-adopted limits. During the 2002 fiscal year, the Company sold $50.5
million in common stock which was held in interest-bearing bank deposits as of
September 30, 2002. There were no other changes in the Company's asset or
liability composition that could result in a material change in the Company's
analysis of interest rate sensitivity as discussed in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 2001.

      The Bank is subject to various regulatory capital requirements
administered by the banking regulatory agencies. As of September 30, 2002,
Citizens South Bank's level of capital exceeded all applicable regulatory
requirements. Citizens South Bank's Tier I capital was $56.2 million, or 11.27%
of adjusted assets. The minimum Tier I capital ratio is 4.00%. Failure to meet
minimum capital requirements can initiate certain mandatory and possibly
discretionary actions by the 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 subject to qualitative judgments by the regulators about
components, risk-weightings, and other factors.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

      The information required by this item is included above in Item 2,
Management's Discussion and Analysis, under the caption "Liquidity, Market Risk,
and Capital Resources."


                                       14

<PAGE>

ITEM 4. Controls and Procedures

      (a) Evaluation of disclosure controls and procedures.

            Under the supervision and with the participation of the Company's
      management, including the Company's Chief Executive Officer and Chief
      Financial Officer, the Company evaluated the effectiveness of the design
      and operation of the Company's disclosure controls and procedures (as
      defined in Rule 13a-14(c) under the Exchange Act) within 90 days prior to
      the filing date of this report. Based upon that evaluation, the Chief
      Executive Officer and Chief Financial Officer concluded that the Company's
      disclosure controls and procedures were effective in timely alerting them
      to the material information relating to the Company and its subsidiaries
      required to be included in the Company's periodic SEC filings.

      (b) Changes in internal controls.

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

PART II.  OTHER INFORMATION

Legal Proceedings

      There are various claims and lawsuits in which the Bank is periodically
involved incidental to the Company's business. In the opinion of management, no
material loss is expected from any of such pending claims or lawsuits.

Changes in Securities and Use of Proceeds

      A Plan of Conversion and Reorganization ("the Plan") to convert Citizens
South Holdings, MHC (the "Mutual Holding Company") from mutual to stock form and
to sell shares of common stock representing the Mutual Holding Company's
interest in Citizens South was approved by the stockholders of Citizens South
and the depositors of Citizens South Bank on September 25, 2002. The Company is
a new Delaware corporation and is the successor of the previous Citizens South
Banking Corporation, a federally-chartered company ("the Predecessor Company").
In connection with the Plan, the rights of the stockholders of the Company were
changed from those of the Predecessor Company. A comparison of such stockholder
rights was set forth in the Company's prospectus included in its registration
statement on Form S-1 (Commission File Number 333-91498).

      Pursuant to the registration statement mentioned in the previous
paragraph, the Company sold 5,259,945 shares of common stock at a price of
$10.00 per share. In accordance with the Plan and pursuant to the registration
statement, the stock was first offered to eligible depositors of Citizens South
Bank. Such depositors subscribed for all the stock offered for sale. Keefe,
Bruyette, and Woods, Inc. was engaged to assist in the marketing of the common
stock. The stock offering was completed on


                                       15

<PAGE>

September 30, 2002, and resulted in gross proceeds of $52.6 million. Expenses
related to the offering amounted to approximately $1.2 million, including the
fees paid to Keefe, Bruyette, and Woods, Inc. Of the proceeds, $4.7 million were
obtained from deposit withdrawals from the Bank and $1.1 million were used to
purchase stock for the Bank's Employee Stock Ownership Plan. Net proceeds of
the offering were approximately $45.6 million. An additional 3,802,807 shares
were issued to existing shareholders based on an exchange ratio of 2.1408 new
shares of common stock for each existing share. Cash was paid in lieu of
fractional shares. Upon completion of the offering and exchange of shares,
9,062,752 shares were outstanding. The net assets of the Mutual Holding Company
were transferred to Citizens South Bank upon completion of the conversion.

      Half of the net proceeds of the offering were placed in the Company and
half were placed in Citizens South Bank. These funds will be used for general
corporate purposes and may be used to pay cash dividends, repurchase common
stock, increase lending activities in existing markets, or expand the Company's
business opportunities through acquisitions of financial services companies or
establishing new branches. Initially these funds will be used to purchase
short-term investment securities and mortgage-backed securities.

Defaults Upon Senior Securities

      Not applicable.

Submission of Matters to a Vote of Security Holders

      The Company held a Special Meeting of Stockholders on September 25, 2002.
The purpose of the meeting was to vote on the plan of conversion and
reorganization pursuant to which Citizens South Holdings, MHC would be merged
into Citizens South Bank, and Citizens South would be succeeded by the Company.
As part of the conversion, shares of common stock representing Citizens South
Holdings, MHC's ownership interest in Citizens South were offered for sale in a
subscription and public offering. Common stock of Citizens South previously held
by public shareholders at the time of conversion would be converted into new
shares of the Company pursuant to an exchange ratio that would ensure that
stockholders at the time of conversion would own the same percentage of the
Company after the conversion as was held prior thereto, exclusive of any shares
purchased by the stockholder in the offering and cash received in lieu of
fractional shares. The Inspector of Election certified that the number of shares
entitled to vote was 4,209,434 and that the number of shares present thereat in
person or by proxy was 3,416,465. The votes were cast as follows:

      For       3,414,642
      Against       1,823
      Abstain           0

No other business came before the meeting.

Exhibits and Report on Form 8-K.

(a) Exhibits:

      99.1 Written statement of Chief Executive Officer furnished pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

      99.2 Written statement of Chief Financial Officer furnished pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

(b) There were no reports filed on Form 8-K with the SEC during the quarter
ended September 30, 2002.


                                       16
<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.


                                      Citizens South Banking Corporation


Date: November 13, 2002               By:   /s/ Kim S. Price
                                           -------------------------------------
                                           Kim S. Price
                                           President and Chief Executive Officer


Date: November 13, 2002               By:   /s/ Gary F. Hoskins
                                           -------------------------------------
                                           Gary F. Hoskins
                                           Senior Vice President, Chief
                                           Financial Officer and Treasurer


                                       17
<PAGE>

                    Certification of Chief Executive Officer
            Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Kim S. Price, President and Chief Executive Officer, certify that:

(1)   I have reviewed this quarterly report on Form 10-Q of Citizens South
      Banking Corporation;

(2)   Based on my knowledge, this quarterly report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;

(3)   Based on my knowledge, the financial statements and other financial
      information included in this quarterly report fairly present in all
      material respects the financial condition, results of operations and cash
      flows of the registrant as of, and for, the periods presented in this
      quarterly report;

(4)   The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
      have:

      a)    designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this
            quarterly report is being prepared;

      b)    evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this quarterly report (the "Evaluation Date"); and

      c)    presented in this quarterly report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

(5)   The registrant's other certifying officers and I have disclosed, based on
      our most recent evaluation, to the registrant's auditors and the audit
      committee of registrant's board of directors (or persons performing the
      equivalent functions):

      a)    all significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize and report financial data and have
            identified for the registrant's auditors any material weaknesses in
            internal controls; and

      b)    any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and

(6)   The registrant's other certifying officers and I have indicated in this
      quarterly report whether there were significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation, including
      any corrective actions with regard to significant deficiencies and
      material weaknesses.


November 13, 2002                          /s/ Kim S. Price
-----------------                          -----------------------------------
Date                                       Kim S. Price
                                           President and Chief Executive Officer


                                       18
<PAGE>

                    Certification of Chief Financial Officer
            Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Gary F. Hoskins, Chief Financial Officer, certify that:

(1)   I have reviewed this quarterly report on Form 10-Q of Citizens South
      Banking Corporation;

(2)   Based on my knowledge, this quarterly report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;

(3)   Based on my knowledge, the financial statements and other financial
      information included in this quarterly report fairly present in all
      material respects the financial condition, results of operations and cash
      flows of the registrant as of, and for, the periods presented in this
      quarterly report;

(4)   The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
      have:

      a)    designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this
            quarterly report is being prepared;

      b)    evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this quarterly report (the "Evaluation Date"); and

      c)    presented in this quarterly report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

(5)   The registrant's other certifying officers and I have disclosed, based on
      our most recent evaluation, to the registrant's auditors and the audit
      committee of registrant's board of directors (or persons performing the
      equivalent functions):

      a)    all significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize and report financial data and have
            identified for the registrant's auditors any material weaknesses in
            internal controls; and

      b)    any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and

(6)   The registrant's other certifying officers and I have indicated in this
      quarterly report whether there were significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation, including
      any corrective actions with regard to significant deficiencies and
      material weaknesses.


November 13, 2002                                    /s/ Gary F. Hoskins
-----------------                                    ---------------------------
Date                                                 Gary F. Hoskins
                                                     Chief Financial Officer


                                       19