<PAGE>








                       COOPERATIVE
                     BANKSHARES, INC.
       Full-Service Community Banking for the Next Century












                      Annual Report
                     December 31, 1999
<PAGE>
<PAGE>
                  COOPERATIVE BANKSHARES, INC.

________________________________________________________________

PROFILE   Cooperative Bankshares, Inc., is the parent company
            of Cooperative Bank For Savings, Inc., SSB.  The
            Bank is chartered under the laws of the state of
            North Carolina to engage in general banking
            business.  Cooperative offers a wide range of retail
            and commercial banking services including numerous
            deposit services, banking cards and alternative
            investment products.  These funds are used for the
            extension of credit through home loans, commercial
            loans, consumer loans and other installment credit
            such as home equity, auto, boat loans and check
            reserve.

           Chartered in 1898, Cooperative's headquarters is
            located in Wilmington, North Carolina.  Cooperative
            operates 17 offices throughout the coastal and
            inland communities of eastern North Carolina from
            Corolla located on the Outer Banks of North Carolina
            to Tabor City located on the South Carolina border.

           The common stock of Cooperative Bankshares, Inc., is
            traded on the NASDAQ National Market under the
            symbol "COOP".

________________________________________________________________

MISSION   It is the mission of Cooperative to provide the
            maximum in safety and security for our depositors,
            an equitable rate of return for our stockholders,
            and excellent service for our customers.  We do this
            while operating in a fiscally sound and conservative
            manner, with fair pricing of our products and
            services, good working conditions, outstanding
            training and opportunities for our staff, along with
            a high level of corporate citizenship.

________________________________________________________________

Table Of
  Contents     Selected Financial and Other Data..................2
          President's Message................................3
          Management's Discussion & Analysis..............5-14
          Report of Independent Accountants.................15
          Consolidated Statements of Financial Condition....16
          Consolidated Statements of Operations.............17
          Consolidated Statements of Comprehensive Income...18
          Consolidated Statements of Stockholders' Equity...18
          Consolidated Statements of Cash Flows.............19
          Notes to Consolidated Financial Statements.....20-38
          Directors, Officers, and Office Locations.........39
          Corporate Information.............................40
            Capital Stock.....................................40

<PAGE>
<PAGE>
                SELECTED FINANCIAL AND OTHER DATA

<TABLE>
<CAPTION>
AT DECEMBER 31,                                    1999          1998          1997          1996          1995
__________________________________________________________________________________________________________________
<S>                                            <C>           <C>           <C>           <C>           <C>
                                                                    Dollars in Thousands
Selected Financial Condition Data:
  Assets. . . . . . . . . . . . . . . . . . .   $410,146    $   389,773      $369,121      $341,300       $311,843
  Loans receivable, net . . . . . . . . . . .    334,744        321,324       286,692       263,313        234,008
  Mortgage-backed and related securities. . .      6,564         10,551        12,856        28,825         30,907
  Cash, securities and other investments. . .     58,043         45,882        61,944        40,942         35,540
  Goodwill. . . . . . . . . . . . . . . . . .         --             --            --            --          3,602
  Deposits. . . . . . . . . . . . . . . . . .    304,834        301,656       288,691       278,139        270,071
  Borrowed funds. . . . . . . . . . . . . . .     75,106         55,109        50,226        35,435         10,089
  Stockholders' equity. . . . . . . . . . . .   $ 29,343    $    31,613      $ 28,294      $ 25,470       $ 29,083

<CAPTION>
YEAR ENDED DECEMBER 31,                           1999          1998          1997          1996          1995
__________________________________________________________________________________________________________________
<S>                                            <C>           <C>           <C>           <C>           <C>
                                                                    Dollars in Thousands
Selected Operations Data:
  Interest income. . . . . . . . . . . . . . .  $  28,449      $    28,411   $    26,093      $ 22,793   $   21,904
  Interest expense . . . . . . . . . . . . . .     16,422           17,212        15,732        13,630       13,701
  Net interest income. . . . . . . . . . . . .     12,027           11,199        10,361         9,163        8,203
  Provision for loan losses. . . . . . . . . .        210              330           153           156            3
  Non-interest income. . . . . . . . . . . . .      1,228            1,180           790           570          620
  Non-interest expenses (1). . . . . . . . . .      8,885            8,275         7,370        12,251        7,121
  Income (loss) before income taxes. . . . . .      4,160            3,774         3,628        (2,674)       1,699
  Net income (loss). . . . . . . . . . . . . .      2,680            2,385         2,234        (3,250)       1,024
____________________________________________________________________________________________________________________
Selected Financial Ratios and Other Data:
   Return on average assets. . . . . . . . . .       0.69%            0.62%         0.63%        (1.01)%       0.32%
   Return on average equity. . . . . . . . . .       8.88%            7.86%         8.26%       (11.27)%       3.62%
   Stockholders' equity to total assets  . . .       7.15%            8.11%         7.67%         7.46%        9.33%
   Non-performing assets to total assets . . .       0.35%            1.08%         0.08%         0.02%        0.25%
   Allowance for loan losses to total loans. .       0.39%            0.35%         0.28%         0.29%        0.31%
   Per Share Data (2)
   Earnings (loss) per:
       Common share  . . . . . . . . . . . . . $     0.95       $     0.79    $     0.75      $  (1.09)  $     0.34
       Common share - assuming dilution. . . . $     0.90       $     0.74    $     0.70      $  (1.09)  $     0.32
   Tangible book value . . . . . . . . . . . . $    10.92       $    10.38    $     9.48      $   8.54   $     8.54
   Number of common shares outstanding . . . .  2,687,919        3,046,284     2,984,396     2,983,396    2,983,396
____________________________________________________________________________________________________________________
<FN>
(1)  Includes one time special assessment for deposit insurance of $1.8 million and a charge-off of impaired
     goodwill of $3.4 million for the year ended December 31, 1996.
(2)  All per share amounts are adjusted for all stock dividends and splits.
</FN>
</TABLE>

                                  2
<PAGE>
<PAGE>
                     PRESIDENT'S MESSAGE


     The year 1999 was another good one for Cooperative
Bankshares, Inc.  Despite three hurricanes during the third
quarter and the threat of Y2K computer problems, our company has
posted yet another good year.  Net income for the year ended
December 31, 1999 rose 12.4% over the previous year to
$2,680,430 or $.90 per diluted share.  Income for the year ended
December 31, 1998 was $2,385,235 or $.74 per diluted share.
Thus, per share earnings actually increased 22% from 1998 to
1999.  Total assets at December 31, 1999, were $410.1 million.
Stockholders equity was $29.3 million, or $10.92 per share, and
represented 7.15% of assets.  On March 25th, 1999 we announced
the completion of our first stock repurchase program of
approximately 150,000 shares, or 5% of our outstanding stock.
We also announced a new repurchase program for an additional 5%
of outstanding stock.  This second stock repurchase program was
completed in the second quarter of 1999, thus reducing total
shares outstanding through the two stock repurchase programs by
302,000 shares.  We are currently in our third repurchase
program and anticipate completion by mid year.

During the year 536 mortgage loans were originated totaling
$62,311,810.  In addition, the Retail Banking Division
originated 839 commercial and consumer loans in the amount of
$87,641,698.  Despite this high level of loan volume we continue
to adhere to strict underwriting criteria.  At December 31,
1999, loans made by the Retail Banking Division comprised 35.4%
of our total loans as compared to 20.8% at December 31, 1998.
Continued growth in our banking operation impacts favorably our
net interest income as these loans generally carry a higher rate
of interest than one to four family mortgage loans.

The quality of our assets remains a top priority for the Bank.
As of December 31, 1999 non-performing loans and foreclosed real
estate owned stood at .35% of assets as compared to 1.08% of
assets at December 31, 1998.  The allowance for loan losses has
been increased to 1,306,000, and while this is considered to be
adequate at the present time to cover any potential loan loss
exposure, the Bank is continuing to add to this allowance to
further protect our investment in loans.

During 1999, we installed new ATMs at our Long Leaf and Ogden
offices in Wilmington, as well as our Wallace and Jacksonville
offices, raising our total ATMs to six.  Our Access 24 Phone
Banking System was installed during the third quarter and is
available for all customers seven days a week, 24 hours per day.

During September, Hurricane Floyd struck eastern North Carolina
changing lives and landscape for many years to come.  None of
our offices sustained significant damage.  Losses on loans due
to the hurricane were minimal.  We have assisted in recovery
efforts with both people and resources and continue to lend our
support as the region recovers economically from this
devastation.

Cooperative entered the year 2000 with virtually no glitches in
our computer systems.  The hard work of our Y2K Committee and
our Information Services staff, as well as hours of testing by
our employees, paid off as we passed through midnight and into
the new millennium with no problems.
                              3
<PAGE>
<PAGE>

                     PRESIDENT'S MESSAGE

The year 1999 was another busy one here at Cooperative.  We
completed two stock repurchase programs and initiated a third in
order to increase the value of the remaining shares of stock in
an effort to enhance the return to you, the stockholders.  We
installed four new ATMs and our Access 24 Phone Bank System in
order to increase customer service and continue our program of
increasing retail and commercial banking services to our
existing as well as new banking customers.  We also survived the
hurricanes and the millennium bug.  As we enter the new century,
I look forward to our future with a great deal of optimism.
Your continued support and confidence is appreciated.

Sincerely,

/s/ Frederick Willetts, III

Frederick Willetts, III
President

                              4
  
<PAGE>
<PAGE>
           MANAGEMENT'S DISCUSSION & ANALYSIS

GENERAL

     Cooperative Bankshares, Inc. (the "Company") is a
registered bank holding company incorporated in North Carolina
in 1994.  The Company was formed for the purpose of serving as
the holding company of Cooperative Bank For Savings, Inc., SSB,
("Cooperative Bank" or the "Bank") a North Carolina chartered
stock savings bank.  The Company's primary activities consist of
holding the stock of Cooperative Bank and operating the business
of the Bank.  Accordingly, the information set forth in this
report, including financial statements and related data, relates
primarily to Cooperative Bank.

     Cooperative Bank is chartered under the laws of the state
of North Carolina to engage in general banking business.  The
Bank offers a wide range of retail banking services including
deposit services, banking cards and alternative investment
products.  These funds are used for the extension of credit
through home loans, commercial loans, consumer loans and other
installment credit such as home equity, auto and boat loans and
check reserve.

     The Company conducts its operations through its main
office in Wilmington, North Carolina and 16 offices throughout
eastern North Carolina.  The Company considers its primary
market for savings and lending activities to be the communities
of eastern North Carolina extending from the Virginia to the
South Carolina borders.

     The following management's discussion and analysis is
presented to assist in understanding the Company's financial
condition and results of operations.  This discussion should be
read in conjunction with the consolidated financial statements
and accompanying notes presented in this report.

MANAGEMENT STRATEGY

     It is the mission of the Company to provide the maximum in
safety and security for our depositors, an equitable rate of
return for our stockholders, excellent service for our
customers, and to do so while operating in a fiscally sound and
conservative manner, with fair pricing of our products and
services, good working conditions, outstanding training and
opportunities for our staff, along with a high level of
corporate citizenship.

     Cooperative Bank's lending activities have concentrated on
the origination of conventional mortgage loans for the purpose
of constructing, financing or refinancing residential
properties.  As of December 31, 1999, $303.2 million, or 83.1%,
of the Bank's loan portfolio consisted of loans secured by
residential properties.  To a lesser extent, the Bank originates
nonresidential real estate loans, home equity line of credit
loans, secured and unsecured consumer and business loans.  While
continuing to place primary emphasis on residential mortgage
loans, the Bank is taking a more aggressive position in pursuing
business lending, and nonresidential real estate lending
involving loans secured by small commercial properties with
balances generally ranging from $100,000 to $1,000,000.  The
Bank's primary emphasis is to originate adjustable rate loans
with the fixed rate loan as an option.  As of December 31, 1999,
adjustable rate loans totaled 63.3%, and fixed rate loans
totaled 36.7% of the Bank's total loan portfolio.

INTEREST RATE SENSITIVITY ANALYSIS

     Interest rate sensitivity refers to the change in interest
spread resulting from changes in interest rates.  To the extent
that interest income and interest expense do not respond equally
to changes in interest rates, or that all rates do not change
uniformly, earnings will be affected.  Interest rate
sensitivity, at a point in time, can be analyzed using a static
gap analysis that measures the match in balances subject to
repricing between interest-earning assets and interest-bearing
liabilities. Gap is considered positive when the amount of
interest rate sensitive assets exceed the amount of interest
rate sensitive liabilities.
                              5
<PAGE>
           MANAGEMENT'S DISCUSSION & ANALYSIS

Gap is considered negative when the amount of interest rate
sensitive liabilities exceed the amount of interest rate
sensitive assets.  At December 31, 1999, Cooperative had a
one-year negative gap position of 9.5%.  During a period of
rising interest rates, a negative gap would tend to adversely
affect net interest income, while a positive gap would tend to
result in an increase in net interest income.  During a period
of falling interest rates, a negative gap would tend to result
in an increase in net interest income while a positive gap would
tend to adversely affect net interest income.  It is important
to note that certain shortcomings are inherent in static gap
analysis.  Although certain assets and liabilities may have
similar maturities or periods of repricing, they may react in
different degrees to changes in market interest rates.  For
example, a large part of the Company's adjustable-rate mortgage
loans are indexed to the National Monthly Median Cost of Funds
to SAIF-insured institutions.  This index is considered a
lagging index that may lag behind changes in market rates. The
one-year or less interest-bearing liabilities also include
checking, savings, and money market deposit accounts.
Experience has shown that the Company sees relatively modest
repricing of these transaction accounts.  Management takes this
into consideration in determining acceptable levels of interest
rate risk.

The following table indicates the time periods in which
interest-earning assets and interest-bearing liabilities will
mature or reprice in accordance with their contractual terms.
The table assumes prepayments and scheduled principal
amortization of fixed-rate loans and mortgage-backed securities,
and assumes that adjustable rate loans will reprice at
contractual repricing intervals.

<TABLE>
<CAPTION>
INTEREST RATE SENSITIVITY ANALYSIS            Over One   Over Five
                                    One Year   Through   Through   Over Ten
December 31, 1999                   or Less  Five Years  Ten Years   Years    Total
____________________________________________________________________________________
                                                (Dollars in thousands)
<S>                                 <C>       <C>        <C>       <C>      <C>
Interest-earning assets:
  Securities and other
    interest-earning assets. . . .  $ 23,219  $ 18,755   $ 10,000  $    -- $ 51,974
  Mortgage-backed and related
    securities . . . . . . . . . .     3,799     1,559        863      343    6,564
  Loan portfolio . . . . . . . . .   189,796   108,267     22,782   13,899  334,744
                                    -----------------------------------------------
        Total. . . . . . . . . . .  $216,814  $128,581   $ 33,645  $14,242 $393,282
                                    ===============================================

Interest-bearing liabilities:
    Deposits (1) . . . . . . . . .  $215,930  $ 78,378   $ 10,526  $    -- $304,834
    Borrowed funds . . . . . . . .    40,002    35,012         18       74   75,106
                                    -----------------------------------------------
        Total. . . . . . . . . . .  $255,932  $113,390   $ 10,544  $    74 $379,940
                                    ===============================================

Interest rate sensitivity gap. . .  $(39,118) $ 15,191   $ 23,101  $14,168 $ 13,342
                                    ===============================================

Cumulative interest rate
  sensitivity gap. . . . . . . . .  $(39,118) $(23,927)  $   (826) $13,342
                                    ======================================
Cumulative ratio of interest-
  earning assets to interest-
  bearing liabilities. . . . . . .      84.7%     93.5%      99.8%   103.5%
                                    ======================================
Ratio of cumulative gap to
  total assets . . . . . . . . . .      (9.5%)    (5.8%)     (0.2%)    3.3%
                                    ======================================
<FN>
___________
(1) Includes noninterest bearing checking accounts of $9,610,000
</FN>
</TABLE>

                            6
<PAGE>
<PAGE>
           MANAGEMENT'S DISCUSSION & ANALYSIS

MARKET RISK

     The Company's primary market risk is interest rate risk.
Interest rate risk is the result of differing maturities or
repricing intervals of interest earning assets and interest
bearing liabilities and the fact that rates on these financial
instruments do not change uniformly.  These conditions may
impact the earnings generated by the Company's interest bearing
assets or the cost of its interest bearing liabilities, thus
directly impacting the Company's overall earnings.  The
Company's management actively monitors and manages interest rate
risk.  One way this is accomplished is through the development
of and adherence to the Company's asset/liability policy.  This
policy sets forth management's strategy for matching the risk
characteristics of the Company's interest bearing assets and
liabilities so as to mitigate the effect of changes in the rate
environment.

     One way to measure the Company's potential exposure to
interest rate risk is to estimate the effect of a change in
rates on the Company's Economic Value of Equity ("EVE").  The
following table sets forth information relating to the Company's
EVE and the estimated changes under various interest rate change
scenarios.


<TABLE>
<CAPTION>
   Change in                       Economic           Estimated     Estimated
  Interest Rates                Value of Equity       $ Change      % Change
-----------------------------------------------------------------------------
<S>                               <C>                 <C>            <C>
400 basis point rise              $13,771,000         (19,670,000)   -59%
300 basis point rise               20,502,000         (12,939,000)   -39%
200 basis point rise               25,381,000          (8,060,000)   -24%
100 basis point rise               29,276,000          (4,165,000)   -12%
Base Scenario                      33,441,000                  --
100 basis point decline            36,737,000           3,296,000     10%
200 basis point decline            39,395,000           5,954,000     18%
300 basis point decline            40,338,000           6,897,000     21%
400 basis point decline            42,954,000           9,513,000     28%

</TABLE>

LIQUIDITY
     The Company's goal is to maintain adequate liquidity to
meet potential funding needs of loan and deposit customers, pay
operating expenses, and meet regulatory liquidity requirements.
Maturing securities, principal repayments of loans and
securities, deposits, income from operations and borrowings are
the main sources of liquidity. Scheduled loan repayments are a
relatively predictable source of funds, unlike deposits and loan
prepayments that are significantly influenced by general
interest rates, economic conditions and competition.

     At December 31, 1999, the estimated market value of liquid
assets (cash, cash equivalents, and marketable securities) was
approximately, $63.7 million which represents 16.8% of deposits
and borrowed funds as compared to $56.2 million or 15.7% of
deposits and borrowed funds at December 31, 1998.  The increase
in liquid assets was primarily due to the increase in cash.
Cash was increased at the end of the year in preparation of Y2K.

     The Company's security portfolio consists of U.S.
Government agency, mortgage-backed and other permissible
securities.  The mortgage-backed securities are guaranteed by
the following agencies: Federal Home Loan Mortgage Corporation
("FHLMC"), Federal National Mortgage Association  ("FNMA"), and
the Government National Mortgage Association ("GNMA").
Mortgage-backed securities entitle the Company to receive a pro
rata portion of the cash flows from an identified pool of
mortgages.  Although mortgage-backed securities generally offer
lesser yields than the loans for which they are exchanged, they
present substantially lower credit risk by virtue of the
guarantees that back them.  Mortgage-backed

                            7
<PAGE>
<PAGE>
           MANAGEMENT'S DISCUSSION & ANALYSIS

securities are more liquid than individual mortgage loans, and
may be used to collateralize borrowings or other obligations of
the Company.

     The Company's investment in U. S. Government agency bonds
includes $5 million in Federal Home Loan Banks' Dual Indexed
Consolidated Bonds maturing August 4, 2003.  These bonds had an
8% interest rate from August 4, 1993, through August 3, 1995, at
which time the rate was adjusted to 3.485% based on an indexing
formula.  Subsequent interest rates will also be based on an
indexing formula and will adjust annually on February 4 and
August 4.  The indexing formula states that the interest rate
per annum will be equal to a rate determined by the 10-Year CMT
less the 6 month LIBOR plus a margin of 2.9% for August 4, 1995,
increasing 30 basis points annually to 5.0% for August 4, 2002.

     The mortgage-backed and related securities owned by the
Company are subject to repayment by the mortgagors of the
underlying collateral at any time.  These repayments may be
affected by a rising or declining interest rate environment.
During a rising or declining interest rate environment,
repayments and the interest rate caps may subject the Company's
mortgage-backed and related securities to yield and/or price
volatility.

     The Company's primary uses of liquidity are to fund loans
and to make investments.  At December 31, 1999, outstanding
off-balance sheet commitments to extend credit totaled $21.5
million, and the undisbursed portion of construction loans was
$27.5 million.  Management considers current liquidity levels
adequate to meet the Company's cash flow requirements.

CAPITAL

     Stockholders' equity at December 31, 1999, was $29.3
million, down 7.3% from $31.6 million at December 31, 1998.  The
reduction in capital is due to the Company's stock repurchase
program.  In 1999 the Company repurchased 381,789 shares of its
common stock at a cost of $4.6 million.  Stockholders' equity at
December 31, 1999 and December 31, 1998, includes unrealized
losses of $320 thousand and unrealized gains of $154 thousand,
respectively, net of tax, on securities available for sale
marked to estimated fair market value.

     Under the capital regulations of the FDIC, the Bank must
satisfy minimum leverage ratio requirements and risk-based
capital requirements.  Banks supervised by the FDIC must
maintain a minimum leverage ratio of core (Tier I) capital to
average adjusted assets ranging from 3% to 5%.  At December 31,
1999, the Bank's ratio of Tier I capital was 7.2%.  The FDIC's
risk-based capital rules require banks supervised by the FDIC to
maintain risk-based capital to risk-weighted assets of at least
8.00%.  Risk-based capital for the Bank is defined as Tier I
capital plus the balance of allowance for loan losses.  At
December 31, 1999, the Bank had a ratio of qualifying total
capital to risk-weighted assets of 12.0%.

     The Company, as a bank holding company, is also subject,
on a consolidated basis, to the capital adequacy guidelines of
the Board of Governors of the Federal Reserve (the "Federal
Reserve Board").  The capital requirements of the Federal
Reserve Board are similar to those of the FDIC governing the
Bank.

     The Company currently exceeds all of its capital
requirements.  Management expects the Company to continue to
exceed these capital requirements without altering current
operations or strategies. For further information, see Note 9 of
Notes to Consolidated Financial Statements.

<PAGE>
     On September 17, 1998, March 25, and October 22, 1999 the
Company's Board of Directors approved Stock Repurchase Programs.
Each Stock Repurchase Program authorized the Company to
repurchase up to 150,000, 152,000 and 138,000 shares,
respectively, or approximately 5% of the outstanding shares of
common stock at the time of approval.  The first purchase was
made February 5, 1999.  After the most recent purchase on
February 4, 2000, there remains approved for repurchase 53,211
common shares.

                            8
<PAGE>
<PAGE>
           MANAGEMENT'S DISCUSSION & ANALYSIS

     On January 27, 2000, the Company's Board of Directors
approved a quarterly cash dividend of $.05 per share.  The first
dividend will be payable on April 15, 2000 to stockholders of
record as of April 1, 2000.  Any future payment of dividends is
dependent on the financial condition, and capital needs of the
company, requirements of regulatory agencies, and economic
conditions in the marketplace.
     On September 23, 1999, Cooperative Bank's Board of
Directors approved a definitive agreement to sell its $8 million
deposit branch in Robersonville, North Carolina to Southern Bank
and Trust Company of Mount Olive, North Carolina.  Due to the
deteriorating economic conditions in Robersonville, the Bank's
management decided it was no longer feasible to continue in this
market area along with the two other banks.  Southern Bank is
within a city block of the Robersonville branch and the
customers of Cooperative can expect the same level of personal
service from Southern Bank that they are accustomed to
receiving.  This transaction should be completed in February
2000.
     During September 1999, Hurricane Floyd struck eastern
North Carolina-changing lives and landscape for many years to
come.  None of our offices sustained significant damage and, at
this point, it appears that losses on loans will be minimal.
Management considers the Bank's Reserve for Loan Losses of $1.3
million to be adequate to handle the probable losses without a
material effect on the Company's results of operations or its
financial position.

                            9
<PAGE>
<PAGE>
           MANAGEMENT'S DISCUSSION & ANALYSIS
      FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     AT DECEMBER 31, 1999 COMPARED TO DECEMBER 31, 1998

FINANCIAL CONDITION

     The Company's total assets increased 5.2% to $410.1
million at December 31, 1999, as compared to $389.8 million at
December 31, 1998.  The major changes in the assets are as
follows: an increase of $6.7 million (76.1%) in cash, an
increase of $5.0 million (38.3%) in held to maturity securities,
a decrease of $4.0 million (37.8%) in mortgage backed and
related securities available for sale, an increase of $13.4
million (4.2%) in loans receivable, and a decrease in foreclosed
real estate to $245 thousand from $2.4 million at December 31,
1998.  Borrowed funds, retail deposits and available liquid
assets funded the increase in assets during the current period.
Due to a high loan demand, the Bank sold $40 million in fixed
rate loans during the year ended December 31, 1999 and used the
funds to reinvest in new loans.  Although the Company has
concentrated its lending activities on the origination of
conventional mortgage loans for the purpose of the construction,
financing or refinancing of residential properties, it is
becoming more active in the origination of small loans secured
by commercial properties.  At December 31, 1999, approximately
16.9% of the Company's loan portfolio were loans other than
residential properties.  With a $3 million (1.1%) increase in
retail deposits, an additional $20 million borrowed funds from
the Federal Home Loan Bank ("FHLB"), and the sale of $40 million
in loans, the Bank had adequate funds to meet its loan demand.
Borrowed funds, collateralized through an agreement with the
FHLB for advances, are secured by the Bank's investment in FHLB
stock and qualifying first mortgage loans.  At December 31,
1999, $40.0 million in borrowed funds mature in 1 year and the
remaining amount of funds mature in 2 to 5 years. For further
information, see Note 8 of Notes to Consolidated Financial
Statements.

     The Company's non-performing assets (loans 90 days or more
delinquent and foreclosed real estate) were $1.4 million, or
 .35% of assets, at December 31, 1999, compared to $4.2 million,
or 1.08% of assets, at December 31, 1998.  The sale and
refinancing of three residential lot development loans totaling
approximately $3.1 million was the major factor for the decrease
in non-performing assets.  The Company assumes an aggressive
position in collecting delinquent loans and disposing of
foreclosed assets to minimize balances of non-performing assets
and continues to evaluate the loan and real estate portfolios to
provide loss reserves as considered necessary.  While there can
be no guarantee, in the opinion of management, the allowance for
loan losses of $1.3 million at December 31, 1999 is adequate to
cover probable losses.

RESULTS OF OPERATIONS

     The net income of the Company depends primarily upon net
interest income.  Net interest income is the difference between
the interest earned on loans and securities portfolios and
interest earning deposits and the cost of funds, consisting
principally of the interest paid on deposits and borrowings.
The Company's operations are materially affected by general
economic conditions, the monetary and fiscal policies of the
Federal government, and the policies of regulatory authorities.

NET INCOME

     Net income for the year ended December 31, 1999, increased
12.4% over the previous year to $2.7 million as compared to the
previous year of $2.4 million.  The increase in net income can
be attributed to a 7.4% increase in net interest income, a 4.1%
increase in noninterest income, and a 36.4% decrease in
provision for loan losses, offset in part by a 7.4% increase in
other operating expenses.

                            10
<PAGE>
<PAGE>
           MANAGEMENT'S DISCUSSION & ANALYSIS

INTEREST INCOME

     For the year ended December 31, 1999, interest income was
essentially unchanged as compared to the same period a year ago.
The average balance of interest-earning assets increased 1.9%
while average yield decreased 13 basis points as compared to the
same period a year ago.  The yield on average interest-earning
assets decreased to 7.58% as compared to 7.71% for the same
period a year ago. The increase in the average balance of
interest-earning assets had a positive effect on interest income
while the decrease in the yield on interest-earning assets had a
negative effect on interest income.

INTEREST EXPENSE

     Interest expense decreased 4.6% for the year ended
December 31, 1999, as compared to the year ended December 31,
1998.  Although there was a 2.0% increase in average
interest-bearing liabilities, the decrease in cost was the major
factor in causing interest expense to decrease.  The cost of
interest-bearing liabilities decreased 33 basis points to 4.70%
as compared to 5.03% for the same period last year.

NET INTEREST INCOME

     Net interest income for the year ended December 31, 1999,
as compared to the same period a year ago, increased 7.4%.
During the year ended December 31, 1999, the yield on average
interest-earning assets decreased 13 basis points, while the
cost of average interest-bearing liabilities decreased 33 basis
points as compared to the same period a year ago.  The increase
in net interest income is principally due to the higher volume
of loans (the highest yielding asset) and a decrease in the
interest rate paid on deposits.  Interest-earning assets
increased 1.9% while interest-bearing liabilities increased
2.0%.  The net interest rate spread increased to 2.87% as
compared to 2.68% for the same period a year ago.  The
percentage of average interest-earning assets to average
interest-bearing liabilities decreased to 107.5% for the year
ended December 31, 1999, as compared to 107.6% for the same
period in 1998.

                            11
<PAGE>
<PAGE>
           MANAGEMENT'S DISCUSSION & ANALYSIS

                AVERAGE YIELD/COST ANALYSIS

The following table contains information relating to the
Company's average balance sheet and reflects the average yield
on assets and average cost of liabilities for the periods
indicated.  Such annualized yields and costs are derived by
dividing income or expense by the average balances of assets or
liabilities, respectively, for the periods presented.

<TABLE>
<CAPTION>
                                                For The Year Ended
                             ------------------------------------------------------------
                                  DECEMBER 31, 1999                 December 31, 1998
                             ------------------------------  ----------------------------
(DOLLARS IN THOUSANDS)                             AVERAGE                       Average
                               AVERAGE              YIELD/   Average              Yield/
                               BALANCE   INTEREST    COST    Balance   Interest    Cost
                              ---------  --------  --------  --------  --------  --------
<S>                            <C>       <C>       <C>       <C>       <C>       <C>
Interest-earning assets:
  Securities and other
   interest-earning assets    $ 46,741   $ 2,628    5.62%   $ 55,344   $ 3,107    5.61%
Mortgage-backed and related
  securities                     9,219       547    5.93%     11,725       738    6.29%
Loan portfolio                 319,480    25,274    7.91%    301,412    24,566    8.15%
                              --------   -------            --------   -------
  Total interest-earning
    assets                     375,440    28,449    7.58%    368,481    28,411    7.71%
                                         -------                       -------
Non-interest earning assets     14,540                        13,370
                              --------                      --------
Total assets                  $389,980                      $381,851
                              ========                      ========
Interest-bearing liabilities:
   Deposits                   $292,174    12,838    4.39%   $290,851    13,891   4.78%
   Borrowed funds               57,036     3,584    6.28%     51,506     3,321   6.45%
                              --------   -------            --------   -------
    Total interest-bearing
      liabilities              349,210    16,422    4.70%    342,357    17,212   5.03%
                                         -------                       -------
Non-interest bearing
  liabilities                   10,598                         9,149
                              --------                      --------
    Total liabilities          359,808                       351,506
    Stockholders' equity        30,172                        30,345
                              --------                      --------
Total liabilities and
  stockholders' equity        $389,980                      $381,851
                              ========                      ========
Net interest income                      $12,027                       $11,199
                                         =======                       =======
Interest rate spread                                2.87%                        2.68%
                                                    ====                         ====
Net yield on interest-earning
  assets                                            3.20%                        3.04%

Percentage of average
  interest-earning assets
  to average interest-
  bearing liabilities                              107.5%                       107.6%
                                                   =====                        =====
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                 For The Year Ended
                             ------------------------------
                                  December 31, 1997
                             ------------------------------
(DOLLARS IN THOUSDANDS)                            Average
                               Average              Yield/
                               Balance   Interest    Cost
                              ---------  --------  --------
<S>                            <C>       <C>       <C>
Interest-earning assets:
  Securities and other
    interest-earning assets   $ 36,586   $ 2,102    5.75%
Mortgage-backed and related
  securities                    25,954     1,771    6.82%
Loan portfolio                 280,684    22,220    7.92%
                              --------   -------
  Total interest-earning
    assets                     343,224    26,093    7.60%
                                         -------
Non-interest earning assets     10,599
                              --------
Total assets                  $353,823
                              ========

Interest-bearing liabilities:
   Deposits                   $280,152    13,148    4.69%
   Borrowed funds               39,797     2,584    6.49%
                              --------   -------
    Total interest-bearing
      liabilities              319,949    15,732    4.92%
                                         -------
Non-interest bearing
  liabilities                    6,882
                              --------
    Total liabilities          326,831
    Stockholders' equity        26,992
                              --------
Total liabilities and
  stockholders' equity        $353,823
                              ========
Net interest income                      $10,361
                                         =======
Interest rate spread                                2.69%
                                                    ====
Net yield on interest-earning
  assets                                            3.02%

Percentage of average
  interest-earning assets
  to average interest-
  bearing liabilities                              107.3%
                                                   =====
</TABLE>
                           12
<PAGE>
<PAGE>
           MANAGEMENT'S DISCUSSION & ANALYSIS
                  RATE/VOLUME ANALYSIS

The table below provides information regarding changes in
interest income and interest expense for the period indicated.
For each category of interest-earning assets and
interest-bearing liabilities, information is provided on changes
attributable to (i) changes in volume (changes in volume
multiplied by old rate) and (ii) changes in rates (change in
rate multiplied by old volume).  The change attributable to
changes in rate-volume have been allocated to the other
categories based on absolute values.



<TABLE>
<CAPTION>
                        DECEMBER 31, 1998 VS. DECEMBER 31, 1999  December 31, 1997 vs. December 31, 1998
                                      INCREASE (DECREASE)              Increase (Decrease)
                                             DUE TO                           Due to
                        ______________________________________   _______________________________________
(DOLLARS IN THOUSANDS)
                         VOLUME         RATE          TOTAL       Volume          Rate         Total
                        _______        ______        _________   ________       ________     __________
<S>                      <C>            <C>           <C>         <C>             <C>          <C>
Interest income:
  Securities and other
   interest-earning
   assets . . . . . . . .$ (484)        $     5       $  (479)    $1,054         $ (49)       $ 1,005
Mortgage-backed and
 related securities . . .  (151)            (40)         (191)      (905)         (128)        (1,033)
Loan portfolio. . . . . . 1,444            (736)          708      1,675           671          2,346
                         ------         -------       --------    ------         -----        --------
    Total interest-
      earning assets. . .   809            (771)           38      1,824           494          2,318
                         ------         -------       --------    ------         -----        --------

Interest expense:
  Deposits. . . . . . . .    63          (1,116)       (1,053)       508           235            743
  Borrowed funds. . . . .   350             (87)          263        755           (18)           737
                         ------         -------       --------    ------         -----        --------
    Total interest-bearing
     liabilities . . . .    413          (1,203)         (790)     1,263           217          1,480
                         ------         -------       --------    ------         -----        --------
Net interest income. . . $  396         $   432       $   828     $  561         $ 277        $   838
                         ======         =======       ========    ======         =====        ========
</TABLE>

RESERVE FOR LOAN LOSSES

     The reserve for loan losses increased to $1.3 million as
of December 31, 1999, as compared to $1.2 million for the same
period a year ago.  The Company added $210 thousand to the
reserve and had net charge-offs of $82 thousand for the year
ended December 31, 1999.  The increase in the reserve was
necessary due to the 4.2% increase in net loans receivable.  At
December 31, 1999, the loan loss reserve was 0.39% of net loans
as compared to 0.37% for the same period a year ago.  Management
considers this level to be appropriate based on lending volume,
the current level of delinquencies and other non-performing
assets, overall economic conditions and other factors.  Future
increases to the allowance may be necessary, however, due to
changes in loan composition or loan volume, changes in economic
or market area conditions and other factors.

NONINTEREST INCOME

     During the year ended December 31, 1999, the Bank sold $40
million in fixed rate mortgage loans at a gain of $161,000 as
compared to the sale of $14 million at a gain of $270,000 for
the same period a year ago.  The funds from the loan sales were
used in the operation of the Bank to extend credit to home and
commercial loan customers.  The balance in real estate owned
expense represents operating expense and further reduction of
the carrying amount of foreclosed real estate owned.  For the
years 1999 and 1998 the Bank aggressively pursued disposal of
the foreclosed real estate owned, thereby incurring various
charges in the sales of these properties.  Loan fees for the
year ended December 31, 1999 as compared to last year increased
5.4% due to an increase in the volume of loans serviced.  For
the same period, fee income from deposit operations increased
13.3% due to an increase in the volume of checking accounts.

                           13
<PAGE>
<PAGE>
           MANAGEMENT'S DISCUSSION & ANALYSIS

NONINTEREST EXPENSE

     For the year ended December 31, 1999, noninterest expense
increased 7.4% as compared to the same period last year.
Compensation and related costs increased 6.5% due to normal
increases in salaries and benefits, and additional employees
needed to handle the 5.2% growth in assets.  Occupancy and
equipment expense increased 6.4%. This increase can be
attributed to additional maintenance necessary to keep the
buildings in good repair, depreciation on the new
teller/platform system, and depreciation on the new
Elizabethtown office.  The new teller/platform system and the
new Elizabethtown office were put in service during the third
quarter of 1998.  Advertising increased 10.1% due to a more
aggressive advertising campaign.  Other operating expense
increased 10.7%.  This increase can be attributed to costs
associated with the processing of a larger volume of transaction
accounts and normal increases in other operating costs.

INCOME TAXES

     The effective tax rates for the years ended December 31,
1999 and 1998 approximate the statutory rate after giving effect
to nontaxable interest, other permanent tax differences, and
adjustments to certain deferred tax liabilities.

                             14
<PAGE>
<PAGE>

            REPORT OF INDEPENDENT ACCOUNTANTS


The Board of Directors and stockholders
Cooperative Bankshares, Inc.
Wilmington, North Carolina


In our opinion, the accompanying consolidated statements of
financial condition and the related consolidated statements of
operations, of comprehensive income, of stockholders' equity and
of cash flows present fairly, in all material respects, the
financial position of Cooperative Bankshares, Inc. and its
subsidiary at December 31, 1999 and 1998 and the results of
their operations and their cash flows for each of the three
years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States.
These financial statements are the responsibility of the
Company's management; our responsibility is to express an
opinion on these financial statements based on our audits.  We
conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States which
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed
above.

/s/ Pricewaterhouse Coopers LLP


Raleigh, North Carolina
January 21, 2000

                             15
<PAGE>
<PAGE>
          CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
               December 31, 1999 and 1998

<TABLE>
<CAPTION>
                                                           1999            1998
                                                        ------------   ------------
<S>                                                     <C>            <C>
                               ASSETS
Cash and cash equivalents                               $ 15,592,010  $  8,856,389
Securities:
  Available for sale                                      20,671,572    21,163,133
  Held to maturity (estimated market value
    of $17,114,381 in 1999 and $12,779,690
    in 1998)                                              18,024,581    13,034,264
Mortgage-backed and related securities available
  for sale                                                 6,564,413    10,550,692
Other investments                                          3,755,300     2,828,000
Loans receivable, net                                    334,743,526   321,324,146
Other real estate owned                                      244,626     2,439,158
Accrued interest receivable                                2,471,459     2,286,657
Premises and equipment, net                                6,244,551     6,372,456
Prepaid expenses and other assets                          1,833,807       918,311
                                                        ------------  ------------
                                                        $410,145,845  $389,773,206
                                                        ============  ============

           LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits                                                $304,834,455  $301,656,204
Borrowed funds                                            75,105,567    55,109,439
Escrow deposits                                              349,450       337,474
Accrued interest payable on deposits                          50,945        79,263
Deferred income taxes, net                                   154,798       738,623
Accrued expenses and other liabilities                       307,330       239,053
                                                        ------------  ------------
       Total liabilities                                 380,802,545   358,160,056
                                                        ------------  ------------

Commitments and contingencies (Notes 5, 9 and 17)

Stockholders' equity:
  Preferred stock, $1 par value: 3,000,000 shares
    authorized, no shares issued and outstanding                  --            --
  Common stock, $1 par value: 7,000,000 shares
    authorized, 2,687,919 and 3,046,284
    issued and outstanding                                 2,687,919     3,046,284
  Additional paid-in capital                               2,531,998     6,649,374
  Accumulated other comprehensive income
    (loss), net                                             (320,488)      154,051
  Retained earnings                                       24,443,871    21,763,441
                                                        ------------  ------------
       Total stockholders' equity                         29,343,300    31,613,150
                                                        ------------  ------------
                                                        $410,145,845  $389,773,206
                                                        ============  ============
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.

                             16
<PAGE>
<PAGE>
                CONSOLIDATED STATEMENTS OF OPERATIONS
        for the years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
                                                  1999         1998        1997
                                             ------------  -----------  -----------
<S>                                            <C>           <C>        <C>
Interest income:
  Loans receivable                           $25,274,397   $24,566,039  $22,220,197
  Mortgage-backed and related securities         546,849       737,697    1,771,023
  Securities                                   2,628,162     3,106,807    2,102,462
                                             -----------   -----------  -----------
       Total interest income                  28,449,408    28,410,543   26,093,682
                                             -----------   -----------  -----------
Interest expense:
  Deposits                                    12,837,966    13,891,244   13,148,297
  Borrowed funds                               3,583,825     3,320,583    2,584,143
                                             -----------   -----------  -----------
       Total interest expense                 16,421,791    17,211,827   15,732,440
                                             -----------   -----------  -----------
Net interest income                           12,027,617    11,198,716   10,361,242
Provision for loan losses                        210,000       330,000      153,000
                                             -----------   -----------  -----------
       Net interest income after provision
         for loan losses                      11,817,617    10,868,716   10,208,242
                                             -----------   -----------  -----------
Noninterest income:
  Net gains on sale of loans and mortgage-
    backed and related securities                161,365       269,666       51,026
  Real estate owned expenses and losses          (29,123)      (79,729)     (18,154)
  Loan fees                                      322,146       305,582      262,654
  Deposit and related fees                       778,367       686,950      488,257
  Net gains on sale of securities                    938            --           --
  Other income, net                               (6,085)       (2,671)       6,299
                                             -----------   -----------  -----------
       Total noninterest income                1,227,608     1,179,798      790,082
                                             -----------   -----------  -----------
Other operating expenses:
  Compensation and fringe benefits             4,670,391     4,383,537    4,004,589
  Occupancy and equipment                      1,739,950     1,635,148    1,428,944
  Federal insurance premiums                     176,334       177,588      218,811
  Advertising                                    444,521       403,582      434,454
  Other                                        1,854,008     1,674,719    1,283,858
                                             -----------   -----------  -----------
       Total other operating expenses          8,885,204     8,274,574    7,370,656
                                             -----------   -----------  -----------
Income before income taxes                     4,160,021     3,773,940    3,627,668

Income tax expense                             1,479,591     1,388,705    1,393,930
                                             -----------   -----------  -----------
Net income                                   $ 2,680,430   $ 2,385,235  $ 2,233,738
                                             ===========   ===========  ===========
Net income per share:
  Basic                                      $       .95   $       .79  $       .75
                                             ===========   ===========  ===========
  Diluted                                    $       .90   $       .74  $       .70
                                             ===========   ===========  ===========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
                           17
<PAGE>
<PAGE>
          CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
        for the years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
                                                  1999       1998        1997
                                               ------------------------------------
<S>                                            <C>          <C>         <C>
Net income                                     $2,680,430   $2,385,235  $ 2,233,738

Realized gains on available for sale
  securities                                         (938)          --           --
Unrealized gain (loss) on available for
  sale securities                                (776,995)     264,006      627,620
Income tax (expense) benefit relating to
  unrealized gain (loss) on available for
  sale securities                                 303,394     (103,292)    (262,018)
                                               ----------   ----------  -----------
Other comprehensive income (loss)                (474,539)     160,714      365,602
                                               ----------   ----------  -----------
Comprehensive income                           $2,205,891   $2,545,949  $ 2,599,340
                                               ==========   ==========  ===========
</TABLE>

          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
        for the years ended December 31, 1999, 1998 and 1997

<TABLE>
<CAPTION>
                                                                      ACCUMULATED
                                                                         OTHER
                                           ADDITIONAL   UNEARNED     COMPREHENSIVE                   TOTAL
                                 COMMON     PAID-IN       ESOP       INCOME, (LOSS)    RETAINED   STOCKHOLDERS'
                                  STOCK     CAPITAL      SHARES           NET              EARNINGS      EQUITY
                                --------  -----------   --------      ------------     --------   -----------
<S>                             <C>         <C>         <C>           <C>            <C>           <C>
Balance, December 31,1996       $1,491,698  $6,003,111   $(289,160)     $(372,265)   $18,636,166   $25,469,550

  Two for one stock split,
    in the form of a
    stock dividend               1,491,698           -           -              -     (1,491,698)            -

  Exercise of stock options          1,000       7,679           -              -              -         8,679

  Other comprehensive income
    net of taxes                         -           -           -        365,602              -       365,602

  Release of ESOP shares                 -      11,664     204,336              -              -       216,000

  Net income for year                    -           -           -              -      2,233,738     2,233,738
                                ----------  ----------   ---------      ---------    -----------   -----------
Balance, December 31, 1997       2,984,396   6,022,454     (84,824)        (6,663)    19,378,206    28,293,569

  Exercise of stock options         61,888     501,540           -              -              -       563,428

  Other comprehensive income
    net of taxes                         -           -           -        160,714              -       160,714

  Release of ESOP shares                 -     125,380      84,824              -              -       210,204

  Net income for year                    -           -           -              -      2,385,235     2,385,235
                                ----------  ----------   ---------      ---------    -----------   -----------
Balance, December 31, 1998       3,046,284   6,649,374           -        154,051     21,763,441    31,613,150

  Exercise of stock options         23,424      95,373           -              -              -       118,797

  Repurchase of stock
    (381,789 shares)              (381,789) (4,212,749)          -              -              -    (4,594,538)

  Other comprehensive loss,
    net of taxes                         -           -           -       (474,539)             -      (474,539)

  Net income for year                    -           -           -              -      2,680,430     2,680,430
                                ----------  ----------   ---------      ---------    -----------   -----------
Balance, December 31, 1999      $2,687,919  $2,531,998   $       -      $(320,488)   $24,443,871   $29,343,300
                                ==========  ==========   =========      =========    ===========   ===========

</TABLE>

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

                            18
<PAGE>
<PAGE>
              CONSOLIDATED STATEMENTS OF CASH FLOWS
      For the years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
                                                     1999       1998          1997
                                                 ----------  -----------   -----------
<S>                                              <C>         <C>           <C>
Operating activities:
  Net income                                     $2,680,430 $  2,385,235   $  2,233,738
  Adjustments to reconcile net income
   to net cash provided by operating activities:
    Net accretion, amortization, and
      depreciation                                  781,906      705,478        591,844
    Net gain on sales of loans and securities      (162,303)    (269,666)       (51,026)
    Benefit from deferred income taxes             (280,431)    (416,469)      (286,101)
    Release of ESOP shares                               --      125,380         11,664
    Loss (gain) on sales of premises and
      equipment                                       7,783        7,483         (3,345)
    Loss on sales of foreclosed real estate          16,974        2,498            725
    Valuation losses on foreclosed real
     estate                                          10,000       62,300         10,653
    Provision for loan losses                       210,000      330,000        153,000
    Changes in assets and liabilities:
        Accrued interest receivable                (184,802)    (114,322)      (254,888)
        Prepaid expenses and other assets          (924,337)    (584,995)     1,109,408
        Accrued interest payable on deposits        (28,318)     (46,892)      (225,140)
        Accrued expenses and other liabilities       68,277      223,135         96,233
                                                -----------  -----------    -----------
          Net cash provided by operating
             activities                           2,195,179    2,409,165      3,386,765
                                                -----------  -----------    -----------
Investing activities:
  Purchases of securities available for sale     (1,999,375) (15,000,000)   (17,000,000)
  Purchases of securities held to maturity       (5,000,000)          --             --
  Proceeds from maturity of securities available
    for sale                                             --   15,000,000      2,000,000
  Proceeds from sale of securities available
    for sale                                      2,000,938           --             --
  Proceeds from sale of mortgage-backed and
    related securities available for sale                --           --     15,038,128
  Proceeds from maturities of securities
    held to maturity                                     --    8,000,000             --
  Proceeds from principal repayments of
    mortgage-backed and related securities
    available for sale                            3,600,089    2,327,315      1,429,317
  Proceeds from sales of loans                   39,923,328   13,998,895     14,028,855
  Loan originations, net of principal
    repayments                                  (51,386,357) (51,092,429)   (38,117,697)
  Proceeds from disposals of foreclosed real
    estate                                          193,452      258,147        387,456
  Purchases of premises and equipment              (544,567)  (2,120,263)      (562,349)
  Proceeds from sales of premises and
    equipment                                           500           --             --
  Net expenditures on foreclosed real estate        (30,880)    (110,139)            --
  Purchases of other investments                   (927,300)    (139,800)      (253,200)
                                                -----------  -----------    -----------
          Net cash used in investing
            activities                          (14,170,172) (28,878,274)   (23,049,490)
                                                -----------  -----------    -----------
Financing activities:
  Net increase in deposits                        3,178,251   12,965,570     10,551,725
  Proceeds from borrowed funds                   52,000,000   15,000,000     25,000,000
  Principal payments on borrowed funds          (32,003,872) (10,031,563)   (10,004,360)
  Proceeds from issuance of common stock            118,797      274,223          8,679
  Purchase and retirement of common stock        (4,594,538)          --             --
  Net change in escrow deposits                      11,976      (90,509)      (192,825)
                                                -----------  -----------    -----------
          Net cash provided by
            financing activities                 18,710,614   18,117,721     25,363,219

<PAGE>
Increase (decrease) in cash and cash
  equivalents                                     6,735,621   (8,351,388)     5,700,494
Cash and cash equivalents:
  Beginning of year                               8,856,389   17,207,777     11,507,283
                                                -----------  -----------    -----------
  End of year                                   $15,592,010  $ 8,856,389    $17,207,777
                                                ===========  ===========    ===========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.

                            19
<PAGE>
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

     Basis of Presentation - The consolidated financial
     ---------------------
     statements include the accounts and transactions of
     Cooperative Bankshares, Inc. (the "Company"), a bank
     holding company incorporated under the laws of the State
     of North Carolina, and its wholly-owned subsidiary
     Cooperative Bank for Savings, Inc., SSB, (the "Bank") and
     its wholly-owned subsidiary CS&L Services, Inc.  All
     significant intercompany transactions have been
     eliminated.

     Nature of Operations - The Company operates 17 offices
     --------------------
     (including 16 full service branches) in Eastern North
     Carolina and offers a wide range of banking services
     including deposits, bank cards, and alternative investment
     products.  The funds are used for the extension of credit
     through home loans, commercial loans, consumer loans, and
     other installment credit such as home equity loans, auto
     and boat loans, and check reserves.  The Company's primary
     sources of revenue are its loan and securities portfolios.

     Use of Estimates in the Preparation of Financial
     ------------------------------------------------
     Statements - The preparation of financial statements in
     ----------
     conformity with generally accepted accounting principles
     requires management to make estimates and assumptions that
     affect the reported amounts of assets and liabilities and
     disclosure of contingent assets and liabilities in the
     financial statements and accompanying notes.  Actual
     results could differ from those estimates.

     Reclassifications - Certain items included in the 1998
     -----------------
     financial statements have been reclassified to conform to
     the 1999 presentation.  These reclassifications have no
     effect on the net income or stockholders' equity
     previously reported.

     Significant Accounting Policies - The significant
     -------------------------------
     accounting policies of the Company are summarized below:

     a.   Cash and Cash Equivalents - Cash and cash equivalents
          -------------------------
          include demand and time deposits (with original
          maturities of ninety days or less) at other
          institutions.  Interest-bearing deposits aggregated
          $9,522,187 and $4,250,591 at December 31, 1999 and
          1998, respectively.

          Federal regulations require institutions to set aside
          specified amounts of cash as reserves against
          transaction and time deposits.  As of December 31,
          1999, the daily average gross reserve requirement was
          $619,000.

     b.   Securities and Mortgage-Backed and Related Securities-
          -----------------------------------------------------
          Investments in certain securities are classified into
          three categories and accounted for as follows:  (1)
          debt securities that the entity has the positive
          intent and the ability to hold to maturity are
          classified as held to maturity and reported at
          amortized cost;  (2) debt and equity securities that
          are bought and held principally for the purpose of
          selling them in the near term are classified as
          trading securities and reported at fair value, with
          unrealized gains and losses included in earnings; (3)
          debt and equity securities not classified as either
          held to maturity securities or trading securities are
          classified as available for sale securities and
          reported at fair value, with unrealized gains and
          losses excluded from net income and reported
          as other comprehensive income and included as a
          separate component of stockholders' equity.

                            20
<PAGE>
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

          The Company has adopted the provisions of SFAS No.
          134, "Accounting for Mortgage-Backed Securities
          Retained after the Securitization of Mortgage Loans
          Held for Sale by a Mortgage Banking Enterprise" ("SFAS
          No. 134"), effective January 1, 1999.  This Statement
          amends existing classification and accounting
          treatment of mortgage-backed securities, retained
          after mortgage loans held for sale are securitized,
          for entities engaged in mortgage banking activities.
          These securities previously were classified and
          accounted for as trading and now may be classified as
          held to maturity or available for sale, also.  SFAS
          No. 134 did not have a material effect on the
          Company's consolidated financial statements.

          Other investments are carried at cost, which
          approximates market value.  Premiums are amortized and
          discounts are accreted using the effective interest
          method over the remaining terms of the related
          securities.  Gains and losses on the sales of
          securities are determined using the specific-
          identification method and are included in non-interest
          income at the time of sale.

     c.   Loans Receivable and Allowance for Loan Losses - Loans
          ----------------------------------------------
          receivable are stated at the amount of unpaid
          principal, reduced by an allowance for loan losses,
          unearned discounts and net deferred loan origination
          fees and costs.  Interest income on loans is recorded
          on the accrual basis based upon the principal amount
          outstanding.  Deferred loan fees and costs and
          unearned discounts are amortized to interest income
          over the contractual life of the loan using the
          interest method.

          The Company evaluates its loan portfolio in accordance
          with Statement of Financial Accounting Standards
          ("SFAS") No. 114, "Accounting by Creditors for
          Impairment of a Loan"" as amended by SFAS No. 118,
          "Accounting by Creditors for Impairment of a Loan -
          Income Recognition and Disclosure".  Under
          these standards, a loan is considered impaired, based
          on current information and events, if it is probable
          that the Company will be unable to collect the
          scheduled payments of principal and interest when due
          according to the contractual terms of the loan
          agreement.  Uncollateralized loans are measured for
          impairment based on the present value of expected
          future cash flows discounted at the original
          contractual interest rate, while all collateral-
          dependent loans are measured for impairment based on
          the fair value of the collateral.  As permitted by the
          statement, smaller-balance homogeneous loans which
          consist primarily of residential mortgages and
          consumer loans are evaluated collectively and reserves
          are established based on historical loss experience.

          The Company uses several factors in determining if a
          loan is impaired.  The internal asset classification
          procedures include a thorough review of significant
          loans and lending relationships and the accumulation
          of related data.  This data includes loan payment
          status, borrowers' financial data and borrowers'
          operating factors such as cash flows and operating
          income or loss.

          The allowance for loan losses is established through a
          provision charged to income.  The allowance is an
          amount that management believes will be adequate to
          absorb probable losses on existing loans that may
          become uncollectible, based on the evaluations of the
          collectibility of loans and prior loan loss
          experience.  The evaluations take into consideration
          such factors as changes in the nature and volume of
          the loan portfolio quality, review of specific problem
          loans, and current economic conditions and trends that
          may affect the borrowers' ability to pay.  It is
          possible that such factors in management's evaluations
          of the adequacy of the allowance for loan losses will
          change.

                            21
<PAGE>
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     d.   Income Recognition on Impaired and Nonaccrual Loans -
          ---------------------------------------------------
          Loans, including impaired loans, are generally
          classified as nonaccrual if they are past due for a
          payment of principal or interest for a period of more
          than 90 days, unless such loans are well-secured and
          in the process of collection.  If a loan or a portion
          of a loan is classified as doubtful or is partially
          charged off, the loan is generally classified as
          nonaccrual.  Loans that are on a current payment
          status or past due less than 90 days may also be
          classified as nonaccrual if repayment in full of
          principal and/or interest is in doubt.

          Loans may be returned to accrual status when all
          principal and interest amounts contractually due
          (including arrearages) are reasonably assured of
          repayment within an acceptable period of time, and
          there is a sustained period of repayment performance
          (generally a minimum of six months) by the borrower,
          in accordance with the contractual terms of interest
          and principal.

          While a loan is classified as nonaccrual and the
          future collectibility of the recorded loan balance is
          doubtful, collections of interest and principal are
          generally applied as a reduction to the principal
          outstanding, except in the case of loans with
          scheduled amortization where the payment is generally
          applied to the oldest payment due.

          When the future collectibility of the recorded loan
          balance is expected, interest income may be recognized
          on a cash basis.  In the case where a nonaccrual loan
          had been partially charged-off, recognition of
          interest on a cash basis is limited to that which
          would have been recognized on the recorded loan
          balance at the contractual interest rate.  Receipts in
          excess of that amount are recorded as recoveries to
          the allowance for loan losses until prior charge-offs
          have been fully recovered.

     e.   Transfers and Servicing of Financial Assets - The
          -------------------------------------------
          Company recognizes, as separate assets, rights to
          service mortgage loans for others.  There were no
          purchases of servicing rights during 1999 or 1998.
          Fees on loans sold in 1999 and 1998 are considered to
          adequately compensate the Company, therefore no
          servicing assets were recorded on those sales.

     f.   Other Real Estate Owned - Other real estate owned is
          -----------------------
          recorded initially at the lower of the loan balance or
          estimated fair value of the property less estimated
          costs to sell at the date of foreclosure and
          subsequently reduced by additional allowances which
          are charged to earnings if the estimated fair value
          declines below its initial value plus any capitalized
          costs.  Costs related to the improvement of the
          property are capitalized, whereas those related to
          holding the property are expensed.

     g.   Premises and Equipment - Premises and equipment are
          ----------------------
          carried at cost less accumulated depreciation and
          amortization.  The provision for depreciation is
          computed using the straight-line method over the
          estimated useful lives of the various classes of
          assets.  Useful lives range from 15 to 40 years for
          buildings and 5 to 10 years for furniture and
          equipment.  The cost of leasehold improvements is
          amortized on the straight-line method over the lesser
          of the lives of the improvements or the terms of the
          leases.  Repairs and maintenance are charged to
          expense as incurred.

                            22
<PAGE>
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     h.   Income Taxes - Deferred tax asset and liability
          ------------
          balances are determined by application to temporary
          differences of the tax rate expected to be in effect
          when taxes become payable or receivable.  Temporary
          differences are differences between the tax basis of
          assets and liabilities and their reported amounts in
          the consolidated financial statements that will result
          in taxable or deductible amounts in future years.

     i.   Comprehensive Income - The Company reports as
          --------------------
          comprehensive income all changes in stockholders'
          equity during the year from non-owner sources.  Other
          comprehensive income refers to all components
          (revenues, expenses, gains, and losses) of
          comprehensive income that are excluded from net
          income.

     j.   Segment Information - During the year ended December
          -------------------
          31, 1998, the Company adopted the provisions of
          Statement of Financial Accounting Standards No. 131
          "Disclosures about Segments of an Enterprise and
          Related Information".  The Statement requires that
          public business enterprises report certain information
          about operating segments in their annual financial
          statements and in condensed financial statements of
          interim periods issued to shareholders.  It also
          requires that the public business enterprises report
          related disclosures and descriptive information about
          products and services provided by significant
          segments, geographic areas, and major customers,
          differences between the measurements used in reporting
          segment and those used in the enterprise's
          general-purpose financial statements, and changes in
          the measurement of segment amounts from period to
          period.

          Operating segments are components of an enterprise
          about which separate financial information is
          available that is evaluated regularly by the chief
          operating decision maker in deciding how to allocate
          resources and in assessing performance.  The Company
          has determined that it has one significant operating
          segment, the providing of general commercial financial
          services to customers located in the single geographic
          area of Eastern North Carolina.  The various products
          are those generally offered by community banks, and
          the allocation of resources is based on the overall
          performance of the institution, versus the individual
          branches or products.

          There are no differences between the measurements used
          in reporting segment information and those used in the
          enterprise's general-purpose financial statements, and
          the measurement of segment amounts has not changed for
          1999 from prior years.

     k.   New Accounting Pronouncements - The Company will adopt
          -----------------------------
          the provisions of SFAS No. 133 "Accounting for
          Derivative Instruments and Hedging Activities" ("SFAS
          No. 133") effective with the fiscal quarter beginning
          July 1, 2000.  This statement establishes accounting
          and reporting standards for derivative instruments and
          for hedging activities.  It requires that derivatives
          be recognized as either assets or liabilities in the
          statement of financial position and be measured at
          fair value.  The accounting for changes in the fair
          value of a derivative depends on the intended use of
          the derivative and whether or not the derivative is
          designated as a hedging instrument.  SFAS No. 133 is
          not expected to have a material effect on the
          Company's consolidated financial statements.

                            23
<PAGE>
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.   SECURITIES

     Securities as December 31, 1999 and 1998 are summarized as
     follows:


<TABLE>
<CAPTION>
                                                      GROSS      GROSS    ESTIMATED
                                        AMORTIZED   UNREALIZED  UNREALIZED  MARKET
                                          COST        GAINS       LOSSES     VALUE
                                        ---------   ----------  ---------- ---------
<S>                                    <C>          <C>         <C>        <C>
1999:
   U.S. Government and agency
     securities:
     Held to maturity                  $18,024,581  $     --  $  910,200 $17,114,381
     Available for sale                 21,001,441        --     329,869  20,671,572
                                       -----------  --------  ---------- -----------
                                       $39,026,022  $     --  $1,240,069 $37,785,953
                                       ===========  ========  ========== ===========
1998:
   U.S. Government and agency
     securities:
     Held to maturity                  $13,034,264  $     --    $254,574 $12,779,690
     Available for sale                 21,002,205   174,988      14,060  21,163,133
                                       -----------  --------    -------- -----------
                                       $34,036,469  $174,988    $268,634 $33,942,823
                                       ===========  ========    ======== ===========
</TABLE>
     The maturities of securities at December 31, 1999 are
     summarized as follows:

<TABLE>
<CAPTION>
                                                      ESTIMATED
                                        AMORTIZED       MARKET
                                          COST          VALUE
                                        -----------  -----------
<S>                                     <C>          <C>
Held to maturity:
     After 3 years through 5 years      $ 8,024,581  $ 7,585,315
     After 5 years through 10 years      10,000,000    9,529,066
                                        -----------  -----------
                     Total              $18,024,581  $17,114,381
                                        ===========  ===========
Available for sale:
     Within 1 year                      $ 5,000,000  $ 4,942,190
     After 1 year through 5 years        16,001,441   15,729,382
                                        -----------  -----------
                                        $21,001,441  $20,671,572
                                        ===========  ===========
</TABLE>

     For the three years ended December 31, 1999, the Company
     had gross realized gains on sale of securities of $938 in
     1999, and no gross realized losses in any period.

                            24
<PAGE>
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.   MORTGAGE-BACKED AND RELATED SECURITIES

     Mortgage-backed and related securities available for sale
     at December 31, 1999 and 1998 are summarized as follows:
<TABLE>
<CAPTION>
                                                   GROSS      GROSS    ESTIMATED
                                    AMORTIZED   UNREALIZED  UNREALIZED  MARKET
                                       COST       GAINS       LOSSES     VALUE
                                    ---------   ----------  ---------- ---------
<S>                                 <C>          <C>        <C>        <C>
1999:
   GNMA certificates                $ 3,567,845  $     --  $ 81,463    $ 3,486,382
   FNMA certificates                  3,192,090     9,711   123,770      3,078,031
                                    -----------  --------  --------    -----------
            Total                   $ 6,759,935  $  9,711  $205,233    $ 6,564,413
                                    ===========  ========  ========    ===========
1998:
   GNMA certificates                $ 4,936,517  $134,587  $     --    $ 5,071,104
   FNMA certificates                  4,224,080     5,572    57,204      4,172,448
   FHLMC certificates                 1,298,481     8,659        --      1,307,140
                                    -----------  --------  --------    -----------
            Total                   $10,459,078  $148,818  $ 57,204    $10,550,692
                                    ===========  ========  ========    ===========

</TABLE>
     During the three years ended December 31, 1999 the
     Company realized gross gains of $9,375 and gross
     losses of $9,387 in 1997 on sales of mortgage-backed
     and related securities.

     Expected maturities for mortgage-backed and related
     securities will differ from contractual maturities
     because borrowers have the right to call or prepay
     obligations with or without call or prepayment
     penalties.

4.   OTHER INVESTMENTS

     Other investments at December 31, 1999 and 1998
     consist of Federal Home Loan Bank of Atlanta ("FHLB")
     stock.  The cost and estimated market value of the
     FHLB stock was $3,755,300 and $2,828,000 at December
     31, 1999 and 1998, respectively.

     The Company, as member of the Federal Home Loan Bank
     System, is required to maintain an investment in
     capital stock of the FHLB in an amount equal to the
     greater of 1% of its outstanding home loans or 5% of
     its outstanding FHLB advances.  No ready market
     exists for FHLB stock, and it has no quoted market
     value.

                            25
<PAGE>
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5.   LOANS RECEIVABLE

     Loans receivable at December 31, 1999 and 1998 are
     summarized as follows (in thousands):
<TABLE>
<CAPTION>
                                                          1999            1998
                                                      ----------       ---------
<S>                                                    <C>             <C>
Mortgage loans collateralized by real estate:
     1-4 family residential properties                 $204,208        $235,644
     Multi-family residential properties                  5,523           5,575
     Nonresidential properties                            2,215           3,697
     1-4 family residential properties under
         construction                                    23,689          25,244
Installment loans collateralized by real estate:
     1-4 family residential properties                   28,021          18,737
     Multi-family residential properties                  8,771           7,649
     Nonresidential properties                           28,045          12,940
     Multi-family residential properties under
       construction                                      10,166           1,128
     1-4 family residential properties under
       construction                                      22,832           8,810
     Nonresidential properties under construction        15,104          11,735
Consumer loans                                            5,446           5,073
Business loans                                            9,763           4,021
Consumer and business construction loans                    930             964
                                                      ---------        --------
                    Total loans                         364,713         341,217
Less:
     Undisbursed portion of construction loans           27,481          17,499
     Unearned discounts and net deferred fees             1,182           1,216
     Loan loss reserve                                    1,306           1,178
                                                       --------        --------
                    Net loans                          $334,744        $321,324
                                                       ========        ========
</TABLE>

     In the normal course of business, the Company originates
     loans to related parties.  Related parties include
     directors, executive officers, principal shareholders of
     equity securities, or any associate of such persons.  The
     activity with respect to related party loans is summarized
     below:

     Balance at beginning of year                   $2,461,237
     New loans                                         320,500
     Repayments                                       (711,829)
                                                    ----------
     Balance at end of year                         $2,069,908
                                                    ==========

                            26
<PAGE>
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Activity in the allowance for loan losses for the years
     ended December 31, 1999, 1998 and 1997 is summarized as
     follows:

<TABLE>
<CAPTION>
                                          1999          1998          1997
                                      ----------      --------      --------
<S>                                   <C>            <C>           <C>
Balance at beginning of year          $1,178,242    $  873,802      $807,539
Provision for loan losses                210,000       330,000       153,000
Loans charged-off                        (94,034)      (28,330)      (86,737)
Recoveries                                12,173         2,770            --
                                      ----------    ----------      --------
Balance at end of year                $1,306,381    $1,178,242      $873,802
                                      ==========    ==========      ========
</TABLE>


     The following is a summary of nonperforming assets at
     December 31, 1999 and 1998 (in thousands):
<TABLE>
<CAPTION>
                                                        1999              1998
                                                      -------           -------
<S>                                                    <C>               <C>
Loans 90 days past due and still accruing interest     $  934            $1,765
Nonaccrual loans                                          267                --
Other real estate owned                                   245             2,439
                                                       ------            ------
      Total                                            $1,446            $4,204
                                                       ======            ======
</TABLE>
     At December 31, 1999 and 1998, the recorded investment in
     loans considered impaired in accordance with SFAS No. 114
     totaled $194,728 and $0, respectively, with corresponding
     valuation allowances of $22,609 and $0, respectively.  For
     the years ended December 31, 1999, 1998 and 1997, the
     average recorded investment in impaired loans was
     approximately $130,000, $580,000 and $654,000,
     respectively.  The amount of interest recognized on
     impaired loans during the portion of the year that they
     were impaired was immaterial.

     In the normal course of business, the Company enters into
     off-balance sheet commitments to extend credit.  The
     Company maintains the same credit policies in making
     off-balance sheet commitments as it does for its on-balance
     sheet instruments.  Commitments to extend credit are
     agreements to lend which generally have fixed expiration
     dates or other termination clauses and may require a fee.

     The following table summarizes the Company's outstanding
     off-balance sheet commitments to extend credit at December
     31, 1999 and 1998 (in thousands):

<TABLE>
<CAPTION>
                                                         1999             1998
                                                       --------          -------
<S>                                                    <C>               <C>
Undisbursed portion of home equity lines of credit
  collateralized primarily by junior liens on 1-4
  family properties                                    $ 7,593           $ 7,332
Other commitments and credit lines                      11,338             4,577
Fixed-rate mortgage loan commitments                     1,183             4,257
Adjustable-rate mortgage loan commitments                1,369             3,149
                                                       -------           -------
     Total                                             $21,483           $19,315
                                                       =======           =======
</TABLE>
                            27
<PAGE>
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     As commitments may expire unused, the total commitment
     amount does not necessarily represent future cash
     requirements.

     The Company, through its normal lending activity,
     originates and maintains loans which are substantially
     concentrated in Eastern North Carolina, where its
     offices are located.  The Company's policy calls for
     collateral or other forms of repayment assurance to be
     received from the borrower at the time of loan
     origination.  Such collateral or other form of repayment
     assurance is subject to changes in economic value due to
     various factors beyond the control of the
     Company and such changes could be significant.

     The Company originates both adjustable and fixed interest
     rate loans.  The adjustable-rate loans have interest rate
     adjustment limitations and are indexed to various
     nationally recognized indexes or financial instruments.
     Future market factors may affect the correlation of the
     interest rate adjustment with rates the Company pays on the
     short term deposits that have been primarily utilized to
     fund these loans.

     Mortgage loans serviced for others (previously sold without
     recourse) approximated $84,128,060, $58,674,064 and
     $65,061,001 at December 31, 1999, 1998 and 1997,
     respectively.

     Servicing loans for others generally consists of collecting
     mortgage payments, maintaining escrow accounts, disbursing
     payments to investors and foreclosure processing.  Loan
     servicing income is recorded on the cash basis and includes
     servicing fees from investors and certain charges collected
     from borrowers, such as late payment fees.

6.   PREMISES AND EQUIPMENT

     Premises and equipment at December 31, 1999 and 1998 are
     summarized as follows:
<TABLE>
<CAPTION>
                                                         1999               1998
                                                      -----------       -----------
<S>                                                   <C>               <C>
Land                                                  $ 1,677,245       $ 1,677,245
Buildngs                                                5,542,243         5,488,561
Leasehold improvements                                    307,994           307,994
Furniture and equipment                                 4,886,268         4,572,363
                                                      -----------       -----------
                                                       12,413,750        12,046,163
Less accumulated depreciation and amortization         (6,169,199)       (5,673,707)
                                                      -----------       -----------
     Premises and equipment, net                      $ 6,244,551       $ 6,372,456
                                                      ===========       ===========
</TABLE>

                            28
<PAGE>
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.   DEPOSITS

     Time deposits of $100,000 or more at December 31, 1999 and
     1998, are summarized by maturity as follows (in thousands):



<TABLE>
<CAPTION>
                                                         1999             1998
                                                      ---------         ---------
<S>                                                   <C>               <C>
3 months or less                                      $  12,819         $  10,486
Over 3 through 6 months                                  14,656            12,238
Over 6 through 12 months                                 13,741            16,994
Over 12 months                                            7,608             9,367
                                                      ---------         ---------
           Total                                      $  48,824         $  49,085
                                                      =========         =========
</TABLE>

     The average balance of, and weighted average rates ("WAR")
     paid on, deposits for the years ended December 31, 1999,
     1998 and 1997 (in thousands) are summarized as follows:
<TABLE>
<CAPTION>
                                 1999               1998
                          ------------------------------------
                          Average             Average
                          Balance     WAR     Balance    WAR
                          -------     ----    --------   ---
<S>                       <C>         <C>     <C>        <C>
NOW accounts              $ 15,394    0.59%   $ 14,117   0.85%
Money market                20,011    3.78%     11,978   3.60%
Savings                     26,088    1.47%     28,714   1.74%
Certificates of deposit    230,681    5.03%    236,042   5.44%
                          --------    ----    --------   ----
   Total                  $292,174    4.39%   $290,851   4.78%
                          ========    ====    ========   ====
</TABLE>

     Non-interest bearing deposits totaled $9,610,007 and
     $7,877,568 at December 31, 1999 and 1998, respectively.

8.   BORROWED FUNDS

     Borrowed funds and the corresponding weighted average rates
     ("WAR") at December 31, 1999 and 1998 are summarized as
     follows:
<TABLE>
<CAPTION>
                              1999     WAR     1998       WAR
                          -----------  ---   -----------  ---
<S>                       <C>          <C>     <C>         <C>
Advances from FHLB        $75,000,000  6.11% $50,000,000  6.33%
Affordable Housing
  Program advances from
  FHLB                        105,567  3.50%     109,439  3.50%
                          -----------  ----  -----------  ----
           Total          $75,105,567  6.11% $55,109,439  6.33%
                          ===========  ====  ===========  ====
</TABLE>
                            29
<PAGE>
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Pursuant to a collateral agreement with the FHLB, advances
     are collateralized by all the Company's FHLB stock and
     qualifying first mortgage loans.  This agreement provides
     for a $92 million line of credit with the FHLB.  The
     maximum month end balances were $75 million, $55 million,
     and $50 million during the years ended December 31, 1999,
     1998 and 1997.  Annual principal maturities of Federal Home
     Bank advances for each of the five years subsequent to
     December 31, 1999 are as follows:

     2000                                         $ 40,000,000
     2001                                           15,000,000
     2002                                           10,000,000
     2003                                            5,000,000
     2004                                            5,000,000
                                                   -----------
              Total                                $75,000,000
                                                   ===========

     The Affordable Housing Program advances are funds advanced
     by the FHLB for the Company to lend to borrowers who might
     not otherwise qualify for a home mortgage.  These advances
     have an interest rate of 3.5% and mature at various times
     between November 2015 and January 2016.

     Interest expense on borrowed funds is summarized as
     follows:
<TABLE>
<CAPTION>
                                         1999           1998         1997
                                      -----------    ----------    ----------
<S>                                   <C>            <C>           <C>
Advances from FHLB                    $ 3,583,825    $3,320,483    $2,575,273
ESOP loan                                      --           100         8,870
                                      -----------    ----------    ----------
      Total                           $ 3,583,825    $3,320,583    $2,584,143
                                      ===========    ==========    ==========
</TABLE>

9.   REGULATORY MATTERS AND CAPITAL REQUIREMENTS

     The Company is subject to various regulatory capital
     requirements administered by federal and state 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 Company's
     consolidated financial statements.  Quantitative measures
     established by regulation to ensure capital adequacy
     require the Company to maintain minimum amounts and ratios,
     as set forth in the table below.  Management believes, as
     of December 31, 1999, that the Company meets all capital
     adequacy requirements to which it is subject.  The
     Company's only significant asset is its investment in
     Cooperative Bank for Savings, Inc. SSB.  Consequently, the
     information concerning capital ratios is essentially the
     same for the Company and the Bank.

     As of December 31, 1999, the most recent notification from
     the FDIC categorized the Company as well capitalized under
     the regulatory framework for prompt corrective action.  To
     be categorized as well capitalized the Company must
     maintain minimum amounts and ratios, as set forth in the
     table below.  There are no conditions or events since that
     notification that management believes have changed the
     Company's category.

                            30
<PAGE>
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The Company's actual capital amounts and ratios are also
     presented in the table below (dollars in thousands):
<TABLE>
<CAPTION>
                                                                    TO BE WELL
                                                                    CAPITALIZED
                                                                   UNDER PROMPT
                                                 FOR CAPITAL        CORRECTIVE
                                ACTUAL        ADEQUACY PURPOSES  ACTION PROVISIONS
                          ----------------    -----------------  -----------------
                          AMOUNT     RATIO    AMOUNT     RATIO    AMOUNT     RATIO
                          ------     -----    ------     -----    ------     -----
<S>                       <C>         <C>     <C>        <C>     <C>       <C>
As of December 31, 1999:
-----------------------
Total Capital (to Risk
  Weighted Assets)        $30,970     12.0%    $20,608   8.0%     $25,761   10.0%
Tier I Capital (to Risk
  Weighted Assets)         29,664     11.5%     10,304   4.0%      15,456    6.0%
Tier I Capital (to
  Average Assets)          29,664      7.4%     16,074   4.0%      20,092    5.0%
Total Tangible Capital
  (to Total Tangible
  Assets)                  29,343      7.2%     20,507   5.0%      20,507    5.0%

As of December 31, 1998:
-----------------------
Total Capital (to Risk
  Weighted Assets)        $32,637     14.3%    $18,290   8.0%     $22,863   10.0%
Tier I Capital (to Risk
  Weighted Assets)         31,459     13.8%      9,145   4.0%      13,718    6.0%
Tier I Capital (to
  Average Assets)          31,459      8.1%     15,528   4.0%      19,410    5.0%
Total Tangible Capital
  (to Total Tangible
  Assets)                  31,613      8.1%     19,489   5.0%      19,489    5.0%

</TABLE>

     A liquidation account was established at the time of
     conversion to a stock institution in an amount equal to the
     total net worth of the Bank as of March 31, 1991.  Each
     eligible deposit account holder is entitled to a
     proportionate share of this account in the event of a
     complete liquidation of the Bank, and only in such an
     event.  This share will be reduced if the account holder's
     eligible deposits fall below the amount on the date of
     record and will cease to exist if the account is closed.
     The liquidation account will never be increased
     despite any increase after the conversion in the related
     eligible deposit of an account holder.  The liquidation
     account was approximately $3,241,346 at December 31, 1999.

     The Company may not declare or pay a cash dividend, or
     repurchase any of its capital stock, if the effect would
     cause the regulatory net worth of the Company to fall below
     the amount required for the liquidation account established
     in connection with the conversion, or to an amount which is
     less than the minimum required by the FDIC and the North
     Carolina Savings Institutions Administrator ("N.C.
     Administrator").

10.  BENEFIT PLANS

     The Company participates in a qualified, noncontributory,
     defined-benefit, multi-employer retirement plan (the
     "Plan") covering substantially all of its employees.  The
     benefits are based on each employee's years of service and
     the employee's compensation during the last ten years of
     employment.

                            31
<PAGE>
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Under the multi-employer plan, the Company is required to
     contribute its share of the Plan's total pension liability
     as determined by the plan administrator.  There were no
     contributions required or made to the Plan during 1999,
     1998 and 1997.

     The Company maintains a combined ESOP and 401(k) plan (the
     "KSOP").  Employees are able to contribute up to 15% of
     their eligible annual compensation to the KSOP subject to
     Internal Revenue Service limitations.  The Company matches
     employee contributions up to a limit determined
     annually by the Board of Directors.  The match was
     established by the Board as 6% for 1999 and 1998.

     During the year ended December 31, 1998, the Company
     matched employee contributions by contributing $85,000 to
     the KSOP to repay the remaining portion of an ESOP note.
     This released the remaining 8,774 shares from
     serving as collateral for the loan.  These shares were
     allocated to the participants according to the plan
     specifications on December 31, 1998.

     The compensation expense incurred by the Company for these
     benefit plans, including the effect of the change in the
     defined benefit plan noted earlier, was $176,038, $366,939
     and $232,164 for the years ended December 31, 1999,
     1998 and 1997, respectively.

11.   EARNINGS PER SHARE

     The following table provides a reconciliation of income
     available to common stockholders and the average number of
     shares outstanding (less unearned ESOP shares) for the
     years ended December 31, 1999, 1998  and 1997:

<TABLE>
<CAPTION>
                                         1999           1998           1997
                                      ----------     -----------   -----------
<S>                                   <C>            <C>           <C>
Net income(numerator)                 $2,680,430     $ 2,385,235   $ 2,233,738
                                      ==========     ===========   ===========
Shares for basic EPS (denominator)     2,819,846       3,019,413     2,972,686
Dilutive effect of stock options         154,197         186,979       211,611
                                      ----------     -----------   -----------
Adjusted shares for diluted EPS        2,974,043       3,206,392     3,184,297
                                      ==========     ===========   ===========
</TABLE>

     For the year ended December 31, 1999, there were 83,204
     options outstanding that were antidilutive since the
     exercise price exceeds the average market price for the
     year.  These common stock equivalents have been omitted
     from the 1999 calculation of diluted earnings per share.

12.  INCOME TAXES

     Income tax expense consists of the following components for
     the years ended December 31, 1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                         1999            1998        1997
                                      ----------     -----------   --------
<S>                                   <C>            <C>           <C>
Current tax provision                 $1,760,022     $1,805,174    $1,680,031
Deferred tax provision (benefit)        (280,431)      (416,469)     (286,101)
                                      ----------     ----------    ----------
     Total                            $1,479,591     $1,388,705    $1,393,930
                                      ==========     ==========    ==========
</TABLE>
                            32
<PAGE>
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The components of the net deferred tax liability at
     December 31, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>

                                                       1999         1998
                                                   ----------   ----------
<S>                                                 <C>          <C>
Deferred tax assets:
  Unrealized loss on securities
    available for sale                             $  204,902   $       --
  Allowance for loan losses                           223,127       36,744
  Accrued pension cost                                 46,483           --
                                                   ----------   ----------
      Total                                           474,512       36,744
                                                   ----------   ----------
Deferred tax liabilities:
  Deferred loan fees                                  262,575      360,378
  FHLB stock                                          190,813      209,692
  Excess of book over tax basis of equipment          170,564      106,805
  Unrealized gain on securities available
    for sale                                               --       98,492
  Other                                                 5,358           --
                                                   ----------   ----------
       Total                                          629,310      775,367
                                                   ----------   ----------
       Net deferred tax liability                  $  154,798   $  738,623
                                                   ==========   ==========
</TABLE>
     Reconciliations of income taxes computed at the statutory
     federal income tax rate (34%) to the provisions for income
     tax for the years ended December 31, 1999, 1998 and 1997
     are as follows:
<TABLE>
<CAPTION>
                                         1999           1998           1997
                                      ----------     -----------   -----------
<S>                                   <C>            <C>          <C>
Income taxes at federal tax rate      $1,414,407    $ 1,283,140   $1,233,407
Increase (decrease) resulting from:
   State income taxes, net of
     federal income tax benefit          108,200         84,619      152,196
   Other                                 (43,016)        20,946        8,327
                                      ----------    -----------   ----------
       Total                          $1,479,591    $ 1,388,705   $1,393,930
                                      ==========    ===========   ==========
</TABLE>

     As of December 31, 1999, the Bank's bad debt reserve for
     federal tax purposes was approximately $5,169,000 which
     represents the base year amount.  A deferred tax liability
     has not been recognized for the base year amount.  If the
     Bank uses the base year reserve for any reason other than
     to absorb loan losses, a tax liability could be incurred.
     It is not anticipated that the reserve will be used for any
     other purpose.

13.  STOCK OPTION PLAN

     The Company has a Stock Option Plan (the "Option Plan") for
     selected employees of the Company and for nonemployee
     directors.  The purpose of the Option Plan is to attract
     and retain the best available personnel for positions of
     substantial responsibility and to provide additional
     incentive to key employees and directors by facilitating
     their purchase of a stock interest in the Company.

                            33
<PAGE>
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The Option Plan provides for a term of ten years, after
     which no awards may be made, unless earlier terminated by
     the Board of Directors pursuant to the Option Plan.  The
     option exercise price is the market price of the common
     stock on the date the option is granted.  Options are fully
     vested upon being granted.

     Stock options, after giving retroactive effect to stock
     dividends and splits, are summarized as follows:


<TABLE>
<CAPTION>
                                                    ALL DIRECTORS
                                                     WHO ARE NOT
                                                      EXECUTIVE
                                     ALL OFFICERS     OFFICERS                RESERVED
                                      AS A GROUP     AS A GROUP              FOR FUTURE
                                     (6 PERSONS)    (8 PERSONS)    TOTAL      ISSUANCE
                                     -----------    -----------    ------    -----------
<S>                                  <C>             <C>           <C>        <C>
Balance, December 31, 1999           238,554         42,564        281,118     211,000
                                     =======         ======        =======     =======
Balance, December 31, 1998           187,438         38,104        225,542          --
                                     =======         ======        =======     =======
Balance, December 31, 1997           230,726         56,704        287,430          --
                                     =======         ======        =======     =======
</TABLE>

     A summary of the status of the Option Plan as of December
     31, 1999, 1998 and 1997, and changes during the years then
     ended is presented below:

<TABLE>
<CAPTION>
                                                     1999                   1998                 1997
                                             ---------------------   --------------------  -------------------
                                                        WEIGHTED               WEIGHTED              WEIGHTED
                                                         AVERAGE                AVERAGE               AVERAGE
                                                         OPTION                 OPTION                OPTION
                                              NUMBER      PRICE       NUMBER     PRICE      NUMBER     PRICE
                                             --------   ----------   --------  ----------  --------  ---------
<S>                                          <C>        <C>          <C>       <C>          <C>      <C>
Options outstanding beginning of year         225,542    $ 2.96      287,430    $3.28       276,802   $ 3.28
Granted                                        79,000     11.05           --       --        11,628    13.75
Exercised                                     (23,424)     2.21      (61,888)    4.43        (1,000)    1.78
Forfeited                                          --        --           --       --            --       --
                                              -------    ------      -------    -----       -------   ------
Options outstanding, end of year              281,118    $ 5.03      225,542    $2.96       287,430   $ 3.28
                                              =======    ======      =======    =====       =======   ======
</TABLE>

                            34
<PAGE>
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     On January 1, 1996 the Company adopted SFAS No. 123,
     "Accounting for Stock Based Compensation".  As permitted by
     SFAS No. 123, the Company has chosen to continue to apply
     APB Opinion No. 25, "Accounting for Stock Issued to
     Employees" and related interpretations.  Accordingly, no
     compensation cost has been recognized for options granted
     under the Option Plan.  Had compensation cost for the
     Company's Option Plan been determined based on the fair
     value at the grant dates for awards under the Option Plan
     consistent with the method of SFAS No. 123, the Company's
     net income and net income per share would have been reduced
     to the pro forma amounts indicated below.  The Company did
     not grant any options during the year ended December 31,
     1998, therefore, there are no pro forma amounts for that
     period.
<TABLE>
<CAPTION>
                                                 1999
                                         ---------------------
                                             AS
                                          REPORTED   PRO FORMA
                                         ---------   ---------
<S>                                      <C>         <C>
Net income                               $2,680,430  $2,513,362
Earnings per common share                $     0.95  $     0.89
Earnings per common share - assuming
  dilution                               $     0.90  $     0.85

<CAPTION>
                                                 1997
                                         ---------------------
                                             AS
                                          REPORTED   PRO FORMA
                                         ---------   ---------
<S>                                      <C>         <C>
Net income                               $2,233,738  $2,213,554
Earnings per common share                $     0.75  $     0.74
Earnings per common share - assuming
  dilution                               $     0.70  $     0.70
</TABLE>
     The fair value of each option grant is estimated on the
     date of grant using the Black-Scholes option-pricing model
     with the following weighted-average assumptions used for
     grants in 1999 and 1997:  dividend yield of 0%, as there
     has been no regular dividend payment history; expected
     volatility of 17.8% in 1999 and 7.7% in 1997; risk-free
     interest rates of 6.25% in 1999 and 5.50% in 1997; and
     expected lives of 5 years.  The weighted average fair
     values of options granted in 1999 and 1997 were $3.42 and
     $3.87, respectively.

     The following table summarizes additional information about
     the Option Plan at December 31, 1999:
<TABLE>
<CAPTION>
                                                             REMAINING
                                                NUMBER      CONTRACTUAL       NUMBER
EXERCISE PRICE                                OUTSTANDING       LIFE        EXERCISABLE
--------------                                -----------    ----------     -----------
<S>                                            <C>           <C>            <C>
$1.78                                           181,066      1.75 years      181,066
$2.67                                             1,424      2.25 years        1,424
$7.50                                            10,000      4.25 years       10,000
$10.50                                            5,424      7.25 years        5,424
$10.94                                            9,000      9.75 years        9,000
$11.06                                           70,000      9.50 years       70,000
$19.50                                            4,204      8.00 years        4,204
                                               --------      ----------      -------
                                                281,118      4.23 years      281,118
                                               ========      ==========      =======
</TABLE>

                            35
<PAGE>
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14.  PARENT COMPANY FINANCIAL INFORMATION

     Condensed financial information of Cooperative Bankshares,
     Inc., the parent company, at December 31, 1999 and 1998 and
     for the years ended December 31, 1999, 1998 and 1997 is
     presented below:


CONDENSED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
                                          1999       1998
                                      ----------  -----------
<S>                                   <C>         <C>
Assets:
     Cash                             $       951  $     1,624
     Equity investment in
       subsidiary                      29,342,349   31,602,685
     Deferred organization costs               --        8,841
                                      -----------  -----------
                                      $29,343,300  $31,613,150
                                      ===========  ===========
Liabilities and stockholders' equity:
     Stockholders' equity             $29,343,300  $31,613,150
                                      ===========  ===========
</TABLE>
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                     1999         1998        1997
                                                  ----------  -----------  -----------
<S>                                               <C>          <C>         <C>
Dividends from subsidiary                         $   13,906  $    11,938  $    13,709
Equity in income of subsidiary                     2,689,944    2,403,474    2,248,259
Miscellaneous expenses                                23,420       30,177       28,230
                                                  ----------  -----------  -----------
   Net income                                     $2,680,430  $ 2,385,235  $ 2,233,738
                                                  ==========  ===========  ===========
<CAPTION>
CONDENSED STATEMENTS OF CASH FLOWS
                                                     1999         1998        1997
                                                  ----------  -----------  -----------
<S>                                              <C>            <C>          <C>
Operating Activities:
  Net income                                     $ 2,680,430    $ 2,385,235  $ 2,233,738
  Equity in undistributed earnings of
    subsidiary                                    (2,689,944)    (2,403,474)  (2,248,259)
  Amortization of deferred organization costs          8,841         15,156       15,156
                                                 -----------    -----------  -----------
      Cash flows provided by (used in) operating
        activities                                      (673)        (3,083)         635

Cash and cash equivalents, beginning of year           1,624          4,707        4,072
                                                 -----------    -----------  -----------
Cash and cash equivalents, end of year           $       951    $     1,624  $     4,707
                                                 ===========    ===========  ===========
</TABLE>

                            36
<PAGE>
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15.  CASH FLOW SUPPLEMENTAL DISCLOSURES

     The following information is supplemental information
     regarding the cash flows for the years ended December 31,
     1999, 1998 and 1997:
<TABLE>
<CAPTION>
                                                     1999          1998          1997
                                                 ------------   ----------   ------------
<S>                                              <C>            <C>          <C>
Cash paid for:
  Interest on deposits and borrowed funds       $ 16,450,109   $ 17,258,719  $ 15,957,580
  Income taxes                                     1,724,000      1,544,000     1,247,000

Summary of noncash investing and financing
  activities:
  Transfer from loans to foreclosed real
    estate                                           330,014         34,000       843,477
  Loans to facilitate the sale of foreclosed
    real estate                                    2,335,000      2,438,023       235,648
</TABLE>

16.  FAIR VALUE OF FINANCIAL INSTRUMENTS

     The following disclosure of the estimated fair value of
     financial instruments is made in accordance with the
     requirements of SFAS No. 107, "Disclosures About Fair Value
     of Financial Instruments".  The estimated fair value
     amounts have been determined by the Company using the
     methods and assumptions described below.  However,
     considerable judgment is required to interpret market data
     to develop the estimates of fair value.  Accordingly, the
     estimates presented herein are not necessarily indicative
     of the amounts the Company could realize in a current
     market exchange.  The use of different market assumptions
     and/or estimation methodologies may have a material effect
     on the estimated fair value amounts.

     The following methods and assumptions were used to estimate
     the fair value of each class of financial instruments for
     which it is practicable to estimate that value.

          Cash and Cash Equivalents
          -------------------------

          The carrying amount is a reasonable estimate of fair
          value.

          Securities, Mortgage-Backed and Related Securities,
          ---------------------------------------------------
          and Other Investments
          ---------------------

          For investments in debt securities, fair values are
          based on quoted market prices or dealer quotes.  For
          other securities, fair value equals quoted market
          price, if available.  If a quoted market price is not
          available, fair value is estimated using quoted market
          prices for similar securities.

          Loans Receivable
          ----------------

          The fair value of loans receivable is estimated by
          discounting the future cash flows using the current
          rates at which similar loans would be made to
          borrowers with similar credit ratings and for the same
          remaining maturities.

<PAGE>
          Deposits
          --------

          The fair value of NOW, savings, and money market
          deposit accounts is the amount payable on demand at
          the reporting date.  The fair value of fixed-maturity
          certificates of deposit is estimated using the rates
          currently offered for deposits of similar remaining
          maturities.

                            37
<PAGE>
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

          Borrowed Funds
          --------------

          Borrowed funds consist of FHLB borrowings with varying
          maturities.  The fair values of these liabilities are
          estimated using the discounted values of the
          contractual cash flows.  The discount rate is
          estimated using the rates currently in effect for
          similar borrowings.

          Off-Balance Sheet Financial Instruments
          ---------------------------------------

          The fair value of off-balance sheet financial
          instruments has not been considered in determining
          on-balance sheet fair value.  As discussed in
          Note 5, these off-balance sheet financial instruments
          are commitments to extend credit and are either short
          term in nature or subject to immediate repricing.

          The carrying amounts and estimated fair values of the
          Company's financial instruments at December 31, 1999
          and 1998 are as follows (in thousands):
<TABLE>
<CAPTION>
                                                     1999                   1998
                                             ---------------------   --------------------
                                             CARRYING   ESTIMATED    CARRYING  ESTIMATED
                                              AMOUNT    FAIR VALUE    AMOUNT   FAIR VALUE
                                             --------   ----------   --------  ----------
<S>                                          <C>        <C>          <C>       <C>
Financial assets:
  Cash and cash equivalents                  $ 15,592   $ 15,592     $  8,856  $  8,856
  Securities:
    Available for sale                         20,672     20,672       21,163    21,163
    Held to maturity                           18,025     17,114       13,034    12,780
  Mortgage-backed and related securities
    available for sale                          6,564      6,564       10,551    10,551
  Loans receivable:
    Gross loans                               336,050    332,266      322,502   322,896
    Allowance for loan losses                  (1,306)    (1,306)      (1,178)   (1,178)
                                             --------   --------     --------  --------
    Loans receivable, net                     334,744    330,960      321,324   321,718

  Other investments                             3,755      3,755        2,828     2,828
                                             --------   --------     --------  --------
          Total                              $399,352   $394,657     $377,756  $377,896
                                             ========   ========     ========  ========
Financial liabilities:
  Deposits                                   $304,834   $297,168     $301,656  $299,383
  Borrowed funds                               75,106     74,645       55,109    56,674
                                             --------   --------     --------  --------
          Total                              $379,940   $371,813     $356,765  $356,057
                                             ========   ========     ========  ========
</TABLE>

     The Company's remaining assets and liabilities are not
     considered financial instruments.

17.  STOCK REPURCHASE PLAN

     The Company's Board of Directors has approved a Stock
     Repurchase Program authorizing the Company to repurchase up
     to 440,000 shares of the currently outstanding shares of
     common stock.  During 1999, a total of 381,789 shares
     were repurchased.  An additional 58,211 shares have been
     authorized for repurchase under the program.

                            38
<PAGE>
<PAGE>
              DIRECTORS, OFFICERS AND OFFICE LOCATIONS
<TABLE>
<CAPTION>
                         BOARD OF DIRECTORS

<S>                                        <C>
                  Frederick Willetts, III, Chairman
                  President, Chief Executive Officer
                  Cooperative Bankshares, Inc. and
               Cooperative Bank For Savings, Inc. SSB

Paul G. Burton                            H. T. King, III
President, Burton Steel Company           President, Hanover Iron Works, Inc.

F. Peter Fensel, Jr.                      R. Allen Rippy
President, F. P. Fensel Supply Company    Vice President, Rippy Cadillac Oldsmobile, Inc.


James D. Hundley, M.D.                    O. Richard Wright, Jr.
President, Wilmington Orthopaedic         Attorney, McGougan Wright Worley & Harper
  Group P.A.

<CAPTION>
         OFFICERS OF COOPERATIVE BANK
<S>                                    <C>
Frederick Willetts, III              Chairman, President & Chief Executive Officer
O.C. Burrell, Jr                     Executive Vice President - Chief Operating Officer
Daniel W. Eller                      Senior Vice President - Corporate Secretary
Eric R. Gray                         Senior Vice President - Mortgage Lending
Edward E. Maready                    Senior Vice President - Treasurer
Sandra B. Carr                       Vice President - Retail Banking Operations
Linda B. Garland                     Vice President - Marketing
Raymond A. Martin                    Vice President - Information Services
Carl N. Mathis, Jr.                  Vice President - Appraising
Donna H. Mitchell                    Vice President - Mortgage Operations
Dare C.  Rhodes                      Vice President - Human Resources
Todd L. Sammons                      Vice President - Auditing
Phillip T. Whittington               Vice President - Commercial Lending

</TABLE>


                          OFFICE LOCATIONS

           Beaufort                    Morehead City
           Belhaven                    Tabor City
           Corolla                     Wallace
           Elizabethtown               Washington (2)
           Jacksonville (2)            Wilmington (4)
           Kill Devil Hills

                            39
<PAGE>
<PAGE>
                     CORPORATE INFORMATION

                     CORPORATE HEADQUARTERS
                  Cooperative Bankshares, Inc.
                       201 Market Street
                          P.O. Box 600
               Wilmington, North Carolina  28402
                         (910) 343-0181
TRANSFER AGENT
First Citizens Bank
Corporate Trust Department
P.O. Box 29522
Raleigh, North Carolina  27626-0522

SPECIAL COUNSEL
Housley Kantarian & Bronstein, P.C.
Suite 700
1220 19th Street, NW
Washington, DC  20036

                       ANNUAL MEETING
The Annual Meeting of Stockholders of Cooperative Bankshares,
Inc. will be held at the Four Points Hotel by Sheraton, 5032
Market Street, Wilmington, North Carolina, on April 28, 2000 at
11:00 a.m.  All stockholders are cordially invited to attend.

                         FORM 10K
Copies of Cooperative Bankshares, Inc. Form 10K may be obtained
by stockholders without charge by writing to Linda B. Garland at
the Cooperative Headquarters address.

                     ADDITIONAL INFORMATION
           For additional information, please contact
          Frederick Willetts, III, Daniel W. Eller or
               Linda B. Garland at (910) 343-0181
                       www.coop-bank.com

                        CAPITAL STOCK
Cooperative's common stock is traded on the NASDAQ National
Market under the symbol "COOP".  As of December 31, 1999 there
were 2,687,919 shares outstanding which were held by 587
stockholders of record.  No cash dividends have been paid on the
common stock since its issuance.  Stock performance for 1999 and
1998 is given in the following table.  All prices have been
adjusted for the stock dividends as described in the notes to
the consolidated financial statements.

                  QUARTERLY COMMON STOCK DATA
<TABLE>
<CAPTION>
                                   1999            1998
                              -----------------------------
QUARTERS ENDED                HIGH      LOW     HIGH    LOW
------------------------------------------------------------
<S>                           <C>      <C>     <C>     <C>
December                      $11.625  $ 9.500 $16.000 $10.000
September                      12.750   10.500  18.000  12.500
June                           13.000    9.875  20.000  17.000
March                          14.000    9.000  24.380  18.000
</TABLE>

                             40

<PAGE>
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