UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB

(Mark One)

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

                For the quarterly period ended September 30, 2001


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

             For the transition period from __________ to __________



                        Commission file number: 333-73385



                               HCNB Bancorp, Inc.
        (Exact name of small business issuer as specified in its charter)

            Maryland                                  52-2083046
(State or other jurisdiction of                      (IRS Employer
incorporation  or organization)                   Identification No.)


                 1776 East Jefferson Street, Rockville, MD 20852
                    (Address of principal executive offices)

                                  301-468-8848
                           (Issuer's telephone number)

Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act during the last 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 [ ]


                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the latest  practical  date:  As of September  30, 2001,  700,213
shares of the small business issuer's common stock, par value of $.01 per share,
were issued and outstanding.


Transitional Small Business Disclosure Format (Check one): Yes [    ]   No [ x ]


                                       1
<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

<TABLE>
<CAPTION>
                                     HCNB BANCORP, INC. AND SUBSIDIARY
                                        CONSOLIDATED BALANCE SHEETS
                           SEPTEMBER 30, 2001 (UNAUDITED) AND DECEMBER 31, 2000

                                                                      September 30,           December 31,
                                                                           2001                  2000
                                                                      ------------           ------------
                                                                      (unaudited)              (audited)
<S>                                                                   <C>                    <C>
                                     ASSETS
Cash and cash equivalents:
     On-hand and due from banks                                       $  1,345,631           $    997,669
     Federal Funds sold                                                  6,835,715              5,276,180
Investment securities, held to maturity                                  6,854,975              1,600,575
Loans receivable (net of allowance for credit
     losses of $368,405 and $412,650, and deferred loan fees
     of $22,977 and $15,566)                                            11,992,821              8,634,181
Investment in Federal Reserve Bank stock, at cost                          180,000                180,000
Accrued interest receivable                                                120,567                125,696
Property and equipment, net                                                461,667                435,074
Other assets, net                                                          161,448                 83,433
                                                                      ------------           ------------

         Total assets                                                 $ 27,952,824           $ 17,332,808
                                                                      ------------           ------------


                      LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
     Deposits
         Non-interest bearing                                         $  2,431,334           $    840,859
         Interest bearing                                               20,711,739             11,214,242
     Accounts payable and accrued expenses                                 155,418                133,765
                                                                      ------------           ------------

         Total liabilities                                              23,298,491             12,188,866
                                                                      ------------           ------------

STOCKHOLDERS' EQUITY
     Preferred stock, par value $0.01 per share,
         1,000,000 shares authorized, 0 shares
         issued and outstanding                                               --                     --
     Common stock, par value $0.01 per share,
         9,000,000 shares authorized, 700,213 shares
         issued and outstanding                                              7,002                  7,002
     Additional paid-in capital                                          6,995,128              6,995,128
     Accumulated deficit                                                (2,347,797)            (1,858,188)
                                                                      ------------           ------------

         Total stockholders' equity                                      4,654,333              5,143,942
                                                                      ------------           ------------

         Total liabilities and stockholders' equity                   $ 27,952,824           $ 17,332,808
                                                                      ============           ============

See accompanying notes to consolidated financial statements.

                                                    2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                                  HCNB BANCORP, INC. AND SUBSIDIARY
                                                CONSOLIDATED STATEMENTS OF OPERATIONS
                               FOR THE NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 2001 AND 2000
                                                             (unaudited)

                                                       Nine months ended September 30,           Three months ended September 30,
                                                         2001                  2000                   2001                2000
                                                      -----------           -----------           -----------           -----------
<S>                                                   <C>                   <C>                   <C>                   <C>
INTEREST INCOME
     Interest income on loans                         $   749,642           $   276,495           $   255,226           $   173,371
     Interest income on investment securities             343,459               314,667               131,727                98,789
                                                      -----------           -----------           -----------           -----------
         Total interest income                          1,093,101               591,162               386,953               272,160

INTEREST EXPENSE ON DEPOSITS                              536,146               147,879               203,473                74,956
                                                      -----------           -----------           -----------           -----------
         Net interest income                              556,955               443,283               183,480               197,204

PROVISION FOR CREDIT LOSSES                                     0                90,705                     0                34,551
                                                      -----------           -----------           -----------           -----------
         Net interest income after
           provision for credit losses                    556,955               352,578               183,480               162,653


SERVICE FEES AND CHARGES                                   17,642                13,368                 5,539                 6,657
                                                      -----------           -----------           -----------           -----------
         Net interest income with service                 574,597               365,946               189,019               169,310
                                                      -----------           -----------           -----------           -----------
           fees and charges

OTHER OPERATING EXPENSES
      Salaries and benefits                               512,780               429,907               182,482               141,043
     Depreciation and amortization                         41,605                32,025                15,324                 8,694
     Occupancy expense, data processing
        and supplies                                      185,164               153,191                61,788
                                                                                                                             48,091
     Marketing                                             20,620                30,034                 6,451                 4,840
     Professional fees                                    213,692               153,352                68,420                45,521
     Other operating expenses                              90,325                91,880                35,699                29,845
                                                      -----------           -----------           -----------           -----------
         Total other operating expenses                 1,064,186               890,389               370,164               278,034
                                                      -----------           -----------           -----------           -----------
         Loss before provision for
           income taxes                                  (489,589)             (524,443)             (181,145)             (108,724)

PROVISION FOR INCOME TAXES                                      0                     0                     0                     0
                                                      -----------           -----------           -----------           -----------

Net Loss                                              $  (489,589)          $  (524,443)          $  (181,145)          $  (108.724)
                                                      -----------           -----------           -----------           -----------

NET LOSS PER SHARE -
       BOTH BASIC AND DILUTED                         ($     .699)          ($     .749)          ($     .259)          ($     .156)

WEIGHTED AVERAGE SHARES
       OUTSTANDING                                                   700,213                                  700,213

See accompanying notes to consolidated financial statements.

                                                                 3
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
                                   HCNB BANCORP, INC. AND SUBSIDIARY
                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                     FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2001 AND 2000
                                              (unaudited)

                                                                       2001                   2000
                                                                  ------------           ------------

<S>                                                               <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES

     Interest income                                              $  1,098,230           $    536,429
     Fees and service charges                                           17,642                 13,368
     Cash paid to employees and suppliers                           (1,078,963)              (791,200)
     Interest on deposits                                             (536,146)              (147,879)
                                                                  ------------           ------------

         Net cash used in operating activities                        (499,237)              (389,282)
                                                                  ------------           ------------

CASH FLOWS FROM INVESTING ACTIVITIES

     Securities held to maturity                                                            2,399,424
     Purchase of securities held to maturity                        (5,254,400)                     0
     Net Loan disbursements                                         (3,358,640)            (7,778,383)
     Purchase of property and equipment                                (68,198)               (24,554)
                                                                  ------------           ------------
         Net cash used in investing activities                      (8,681,238)            (5,403,513)
                                                                  ------------           ------------

CASH FLOWS FROM FINANCING ACTIVITIES

    Net increase in deposits                                        11,087,792              6,486,677
                                                                  ------------           ------------

         Net cash provided by financing activities                  11,087,972              6,486,677
                                                                  ------------           ------------

Net increase in cash and cash equivalents                            1,907,497                693,882

Cash and cash equivalents, beginning of period                       6,273,849              2,340,296
                                                                  ------------           ------------

Cash and cash equivalents, end of period                          $  8,181,346           $  3,034,178
                                                                  ------------           ------------


Reconciliation of net income to net cash
  provided by operating activities
         Net loss                                                 $   (489,589)          $   (524,443)
         Adjustments to reconcile net loss to
           net cash from operating activities
                  Provision for credit losses                                0                 90,705
                  Depreciation and amortization                         41,605                 32,025
         Effects of changes in operating assets
           and liabilities
                  Accrued interest receivable                            5,129                (54,733)
                  Other assets                                         (78,015)               (12,453)
                  Accounts payable and other liabilities                21,633                 79,617
                                                                  ------------           ------------

         Net cash used in operating activities                    $   (499,237)          $   (389,282)
                                                                  ------------           ------------
</TABLE>

See accompanying notes to consolidated financial statements.



                                                  4
<PAGE>

                        HCNB BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

1.       ORGANIZATION

HCNB Bancorp, Inc. (the Company) was incorporated under the laws of the State of
Maryland on February 24, 1998,  primarily to hold all of the outstanding  shares
of capital stock of a national bank.

Effective  October,  1999, the Company completed an initial public offering (the
Offering)  in which it sold  700,213  shares of common  stock for $10 per share.
During 1999, the Company received proceeds from the Offering of $7,002,130.

On December 14, 1999, Harbor Capital National Bank (the Bank) received authority
from the Office of the  Comptroller  of the  Currency  and the  Federal  Deposit
Insurance Corporation to begin banking operations.

From  February 24, 1998 until  December 14, 1999,  the Company was  considered a
development stage enterprise.

The Company's  primary  operations are conducted by the Bank, which operates one
branch in Rockville,  Maryland.  The Bank is principally engaged in the business
of attracting  deposits and investing in commercial and consumer loans. The Bank
is subject to certain risks inherent in making loans and accepting deposits.  In
addition to these risks, the Company is currently operating at a loss. Growth in
operations  will be necessary  for the Company to be able to cover  overhead and
other operational costs.


2.       BASIS OF PRESENTATION

The accompanying  consolidated financial statements include the activity of HCNB
Bancorp, Inc. and its wholly owned subsidiary, Harbor Capital National Bank. All
intercompany transactions have been eliminated in consolidation.

The accompanying  consolidated  financial  statements for September 30, 2001 and
for the three and nine month periods ended September 30, 2001 and 2000 have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the  Securities  and  Exchange  Commission.  Certain  information  and  footnote
disclosures  normally  included in financial  statements  prepared in accordance
with accounting  principals  generally  accepted in the United States of America
have been condensed or omitted pursuant to such rules and regulations.  However,
the Company  believes that the  disclosures are adequate to make the information
presented not misleading.

These consolidated  financial  statements should be read in conjunction with the
financial  statements  and notes  thereto for the year ended  December 31, 2000,
included in the Company's  Annual Report to Stockholders  on Form 10-KSB,  filed
with the  Securities and Exchange  Commission.  The balance sheet as of December
31, 2000 has been derived from the audited financial statements at that date.

The unaudited  consolidated  financial  statements  included  herein reflect all
adjustments (which include only normal, recurring adjustments) which are, in the
opinion of management,  necessary to state fairly the financial  position of the
Company as of September 30, 2001 and the results of its operations for the three
and nine month periods ended  September 30, 2001 and 2000 and the cash flows for
the nine month periods ended September 30, 2001 and 2000. The results of interim
periods are not  necessarily  indicative  of the results  expected  for the full
fiscal year.




                                        5
<PAGE>




3.       RELATED PARTY TRANSACTIONS

The officers and directors of the Company and the Bank have deposits in the Bank
approximating $1,744,562 at September 30, 2001.

The officers and  directors  and their  related  entities of the Company and the
Bank have loans due to the Bank  approximating  $177,475 at September  30, 2001.
All loans made to officers  and  directors  are made on  substantially  the same
terms, including interest rates and collateral,  as those prevailing at the time
for comparable  transactions with unaffiliated  third parties and do not involve
more than the normal risk of repayment or present other unfavorable features.


4.       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 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  classification  are also
subject to  qualitative  judgments  by the  regulators  about  components,  risk
weighting and other factors.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Bank to maintain minimum amounts and ratios. Management believes, as
of September 30, 2001 that the Bank meets all capital  adequacy  requirements to
which it is subject.

The Bank  has  been  categorized  under  the  regulatory  framework  for  prompt
corrective action as "well capitalized".  To be categorized as well capitalized,
the Bank must maintain minimum total risk-based,  Tier I risk-based,  and Tier I
leverage ratios.


5.       INCOME TAXES

The Company uses the liability method of accounting for income taxes as required
by SFAS No. 109,  "Accounting  for Income  Taxes".  Under the liability  method,
deferred-tax  assets and liabilities are determined based on differences between
the financial  statement  carrying  amounts and the tax basis of existing assets
and  liabilities  and are  measured at the enacted  rates that will be in effect
when the differences  reverse.  Deferred income taxes will be recognized when it
is deemed more likely than not that the benefits of such  deferred  income taxes
will be realized;  accordingly,  no deferred income taxes or income tax benefits
have been recorded by the Company.






                                       6
<PAGE>


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

This discussion and analysis provides an overview of the financial condition and
results of operations  of HCNB  Bancorp,  Inc.  ("Company")  and Harbor  Capital
National Bank ("Bank") as of September 30, 2001 and for the three month and nine
month periods ended September 30, 2001 and 2000.

Some of the  information  in this  discussion  and  analysis  includes  "forward
looking statements". These statements use words such as "may", "will", "expect",
"anticipate",  "plan",  "estimate" or similar words, and they discuss our future
expectations, projections of financial results or strategies that are subject to
risks and uncertainties.  When you read a forward-looking  statement, you should
keep in mind the risk factors set forth in our Annual Report to  Stockholders on
Form 10-KSB for the year ended  December  31, 2000.  Our actual  results and the
actual outcome of our  expectations  and strategies could be different from what
have been described in this report because of these risks and uncertainties.


General
HCNB Bancorp,  Inc. was incorporated  under the laws of the State of Maryland on
February  24,  1998,  to  serve as a bank  holding  company  for a newly  formed
commercial  bank,  Harbor  Capital  National Bank. The Bank received its charter
from the Office of the  Comptroller  of the  Currency on  December  14, 1999 and
commenced  operations  that day from its sole  location  at 1776 East  Jefferson
Street, Rockville,  Maryland. The Bank is a member of the Federal Reserve System
and its deposits are insured by the Federal Deposit Insurance Corporation.

The Company  completed its initial  offering of its shares of common stock ($.01
par value) in October,  1999. In the initial offering,  700,213 shares were sold
at a price of $10 per share;  total proceeds from the offering were  $7,002,130.
After offering  expenses,  the net proceeds to the Company were $6,828,075.  The
Bank was initially capitalized by the Company in an amount of $6,000,000.


Financial Condition
As of September 30, 2001, assets were  $27,952,824.  This represents a growth of
$10,620,016  or 61.27% since  December 31, 2000.  Deposits at September 30, 2001
were  $23,143,073,  an increase since year-end 2000 of $11,087,972 or 91.98%. In
the third quarter 2001 alone, the increase in deposits totaled  $5,303,774.  The
increase in  deposits  is the direct  result of  increased  marketing  campaigns
targeted to the Rockville,  Maryland,  Chinese American Community. The continued
success of this marketing program has been to increase the amount of certificate
of  deposit  under  $100,000.  Management  has set the  interest  rates  paid on
deposits  to be  competitive  in the  market  and has  seen an  increase  in the
business development  activities of its directors and officers.  The Bank has no
brokered funds

Net loans  outstanding  at September  30, 2001 were  $11,992,821  as compared to
$8,634,181  at December 31,  2000,  which  reflects as increase of 38.90%.  This
growth in  business  activity  was  mostly  attributable  to  increased  calling
activities within the Bank's market area. In addition,  the Bank has developed a
growing niche in home equity lending.

Funds not  extended in loans are held in the  investment  portfolio  and Federal
funds sold. At September 30, 2001, the Bank had investment  securities  totaling
$6,854,975 which were short-term obligations of government agencies,  commercial
paper  rated A1, P1 and a $100,000  certificate  of deposit  which have all been
classified as held to maturity.  Federal funds sold totaled $6,835,715 and other
investments  included Federal Reserve Bank stock. Since the daily rate of return
on Federal  funds has steadily  declined due to actions by the Federal  Reserve,
the Bank has  decided to invest  more of its  short-term  funds into  investment
securities.  The investment  portfolio increased from $1,600,575 at the start of
the year to  $6,854,975 as of September 30, 2001.  The Bank has  constructed  an
investment  portfolio with maturities of one to five years. The Bank anticipates
this action will increase its average yield above the Federal funds rate by over
200  basis  points.  The Bank  plans to  continue  to  increase  its  investment
portfolio for the balance of the year.

Total capital at September  30, 2001 was  $4,654,333.  Management  believes this
capital will be adequate to fund the Company and Bank's operations.



                                       7
<PAGE>

Results of Operations
On a consolidated basis for the three and nine month periods ended September 30,
2001,  the Company  recorded a net loss of $181,145 and  $489,589  respectively.
This  compares  to a net  loss  of  $108,724  and  $524,443  for the  three  and
nine-month periods ended September 30, 2000.

Operating results for the year ending December 31, 2001 are projected to reflect
losses as loan and deposit growth is not expected to produce net interest income
sufficient  to cover  operating  expenses,  however it is expected that the Bank
will continue to reduce its losses in subsequent periods.


Net Interest Income
Net interest  income is the difference  between income on assets and the cost of
funds  supporting those assets.  Earning assets are composed  primarily of loans
and  investments;   interest  bearing  deposits  make  up  the  cost  of  funds.
Non-interest  bearing deposits and capital are also funding sources.  Changes in
the volume and mix of earning  assets and funding  sources along with changes in
associated interest rates determine changes in net interest income.

The net interest income after provision for credit loses for the three-month and
nine-month  periods  ended  September  30,  2001 was  $189,019  and  $574,597 as
compared  to $169,310  and  $365,946  for the same  period in 2000.  Most of the
growth came as a result of an increase in the loan portfolio whereby interest on
loans totaled  $255,226 and $749,642 for the three and nine-month  periods ended
September  30,  2001.  This  compares to $173,371 and $276,495 for the three and
nine-month periods ended September 30, 2000.

Growth in the loan  portfolio  resulted  in greater  contributions  to  interest
income in the third quarter of 2001, because the yields on loans are normally 2%
to 5% higher than yields on investment  securities.  At September 30, 2001,  the
nine month  weighted  average yield on the loan  portfolio  was 9.52%;  the nine
month weighted average yield on the investment portfolio was 4.39%.

The Bank is located in a competitive  environment and the rates of interest paid
on  its  deposits  are  somewhat  driven  by  those  paid  by  other  depository
institutions.  Management  has taken a  position  to be  competitive  within the
market,  normally placing the Bank in the upper  one-quarter of those depository
institutions competing with it for deposits. However, the Bank has chosen not to
aggressively  compete for jumbo  certificates  of deposits  that are highly rate
sensitive.  At September 30, 2001, the Bank's weighted  average cost of deposits
was 4.16%.  It is  anticipated  that both the volume of  deposits  and  interest
expense will increase during the next  twelve-month  period based upon increased
marketing activities.


Allowance and Provision for Credit Losses
The provision for credit losses  represents an expense to fund the allowance for
credit losses.  These funds are set aside in  anticipation  of potential  credit
losses in the current  loan  portfolio.  The amount  allocated  is based on many
factors which are considered in  management's  assessment of the loan portfolio.
These factors are generally defined by regulatory directives and include lending
policies and procedures,  local economic and business conditions, the nature and
volume of the loan portfolio,  the Bank's lending management and staff, past-due
history,  the Bank's loan review system,  concentrations  of credit and external
factors which may  adversely  affect the credit risk of the loan  portfolio.  In
addition to the overall  analysis of the portfolio,  management  evaluates every
major credit and may assign a risk adjustment, based upon the specific credit.

Based upon management's analysis of the loan portfolio as of September 30, 2001,
management  reduced the provision for credit  losses.  As of September 30, 2001,
the  allowance  for  credit  losses  totaled  $368,405.  This  amount was deemed
adequate  by  management  and the Board of  Directors  based  upon the  analysis
methodology  used by the Bank and as  suggested  by  regulatory  directives.  At
September  30, 2001,  the  allowance  for credit losses was 2.98% of total loans
outstanding.  Through  September 30, 2001,  two loans have been charged off. The
Bank is in the process of  recovering a  substantial  portion of the charged off
amounts. The number and amount of overdue loans is not considered significant.




                                       8
<PAGE>


The level of the allowance for credit losses  reflects a higher than normal risk
exposure.  This exposure is mostly due to loan underwriting and structure issues
as well as credit administration concerns.  Management is committed to improving
its lending  practices and  operations.  During the second  quarter of 2001, two
lending  professionals with extensive  backgrounds in community bank lending and
the local markets were  employed.  In the third quarter of 2001, an  experienced
credit  analysis was added to the staff.  All three  additions to the staff have
been addressing the regulatory concerns as well as seeking new business.

Non-Interest Income
Non-interest  income is primarily  deposit  account service charges and fees for
ancillary  services such as ATM access and safe deposit  rentals.  For the three
and nine month periods ended September 30, 2001, the Bank realized  non-interest
income in the amount of $5,539 and $17,642.  This compares to $6,657 and $13,368
for the three and nine  month  periods of 2000.  These  fees are volume  driven,
based mostly on the deposit  customer  base and should  increase as the customer
base increases.  The Bank has seen increased use of its automated teller machine
especially  by  consumers  holding  debit/ATM  cards  issued by other  financial
institutions.

Non-Interest Expense
Non-interest  expense for the three and nine month periods  ended  September 30,
2001 were  $370,164 and  $1,064,186.  This compares to $278,034 and $890,389 for
the  corresponding  periods of 2000.  The  largest  portion  of these  operating
expenses  were  salaries  and  employee  benefits.  For the three and nine month
periods ended  September 30, 2001,  salary and employee  benefits  expenses were
$182,482  and  $512,780.  This  represents  49% and 48% of all  other  operating
expenses. For the three and nine month periods ending September 30, 2000, salary
and employee benefits  expenses were $141,043 and $429,907.  This represents 51%
and 48% of all other operating expenses.

It is  anticipated  that  operating  expenses  will  increase  but  it  is  also
anticipated that net interest income will increase in subsequent periods.

Liquidity and Capital Resources
Stockholders' equity at September 30, 2001 was $4,654,333 compared to $5,143,942
at  December  31,  2000.  The  decline  in  stockholders'  equity  is due to the
operating  results of the Bank.  No cash  dividends  have been  declared  by the
Company since its inception.

Banking  regulatory  authorities  have  implemented  strict  capital  guidelines
directly  related to the credit risk  associated with an  institution's  assets.
Banks and bank holding  companies are required to maintain  capital levels based
on their  "risk  adjusted"  assets  so that  categories  of assets  with  higher
"defined"  credit risks will require more capital support than assets with lower
risks.  The Bank has exceeded its capital  adequacy  requirements to date and is
considered to be "well capitalized", under regulatory standards.

The Bank's liquidity is provided by its cash and cash equivalents, which are its
cash on hand and on deposit with other  financial  institutions  and its federal
funds sold. The levels of such assets are dependent  upon the Bank's  operating,
financing and investment  activities at any given time.  Variations in levels of
cash and cash  equivalents  are  mostly  influenced  by  deposit  flows and loan
activity.  At  September  30,  2001,  the Bank  held  cash and cash  equivalents
totaling  $1,345,631 and Federal funds sold of $6,835,715.  Management  believes
that this liquidity level is adequate to meet the anticipated needs of the Bank.







                                       9
<PAGE>





                           PART II - OTHER INFORMATION

Item 1.           Legal Proceedings

                           None


Item 2.           Changes in Securities and Use of Proceeds

                  (a)      Not applicable

                  (b)      Not applicable

                  (c)      Not applicable

                  (d)      Not applicable


Item 3            Defaults Upon Senior Securities

                           Not Applicable


Item 4            Submission of Matters to a Vote of Security Holders

                           Not Applicable


Item 5            Other Information

                  On March  8,  2001,  the Bank  entered  into a  Memorandum  of
                  Understanding   ("Memorandum")   with   the   Office   of  the
                  Comptroller of the Currency, the Bank's primary regulator,  as
                  a result of the  OCC's  examination  of the Bank in  December,
                  2000.  The  Memorandum is an informal  agreement  with the OCC
                  that is not  enforceable by the OCC; entry into the Memorandum
                  was a voluntary act by the Bank. The Bank agreed,  among other
                  things, to take the following actions:
                    o    Retain  a  senior  lending  officer  with   appropriate
                         qualifications;
                    o    Review and revise the Bank's loan  policy,  so that the
                         policy more  clearly  identifies  acceptable  levels of
                         risk,  administrative  responsibilities  and acceptable
                         underwriting and documentation standards;
                    o    Correct  certain  credit and  collateral  exceptions on
                         loans  that have  such  deficiencies,  and make  future
                         grants, extensions, renewals or restructuring of credit
                         only after a formal  credit  analysis is performed  and
                         all necessary credit information is obtained;
                    o    Retain  an  independent   person  or  firm  to  perform
                         on-going  loan review and develop a loan review  system
                         that will contain certain information  requested by the
                         OCC; and,
                    o    Develop and adhere to written  programs,  including  an
                         asset  diversification  program,  a  program  regarding
                         maintenance of an adequate allowance for loan and lease
                         losses,   a  program  to  improve   construction   loan
                         underwriting   standards  and  a  consumer   compliance
                         program.

                  The Bank has  established a Compliance  Committee of the Board
                  of  Directors  to  address  the issues in the  Memorandum,  to
                  ensure the compliance with all regulatory issues and to report
                  findings  to the  Board of  Directors  on a  quarterly  basis.
                  Management  is committed  to  complying  with the terms of the
                  Memorandum as quickly as possible.


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<PAGE>

                  The Bank has retained an experienced  community bank lender to
                  serve  as its  Senior  Lending  Officer  and  as an  executive
                  officer  of the Bank  subject  to  approval  of the OCC.  This
                  individual does have sufficient authority to ensure the Bank's
                  compliance with the Memorandum of  Understanding  and the safe
                  and sound  operation  of the Bank's  lending  function.  As is
                  required  by  regulation,  this  individual's  background  and
                  experience in light of the executive  management position held
                  in a de novo bank and the  requirements  of the  Memorandum of
                  Understanding  are  being  evaluated  by  the  Bank's  primary
                  regulator, The Office of the Comptroller of the Currency.

                  The Bank's Senior  Lending  Officer is actively  involved in a
                  review of the Bank's  lending  policies and  practices and has
                  made  recommendations  to specifically  address the regulatory
                  concerns expressed in the Report of Examination and Memorandum
                  and to  effectively  manage  the  risks  associated  with  the
                  extensions of credit.

                  The Bank has retained an outside vendor to provide loan review
                  services,  as is  required by the  Memorandum,  and the formal
                  external loan review process has begun.

                  An  Allowance  for Credit  Losses  Program was  developed  and
                  approved by the Board of  Directors of the Bank in April 2001,
                  as was a Consumer Compliance Program

                  The OCC conducted a follow up interim  review during the third
                  quarter.  The results of the interim  review will be discussed
                  with the Bank's  management  in the fourth  quarter.  The Bank
                  will   continue   to   operate   under   the   memorandum   of
                  understanding.

Item 6            Exhibits

                  (a)      None





                                   Signatures

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                                  HCNB Bancorp, Inc.
                                  (Registrant)

Date November 14, 2001            /s/ Michael J. Burke
                                  Michael J. Burke, Chairman/President
                                  (Principal Executive Officer)

Date November 14, 2001            /s/ Li-Min Lee
                                  Li-Min Lee, Treasurer
                                  (Principal Accounting and Financial Officer)







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