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NORTH CAROLINA                                       LEASE AGREEMENT

LINCOLN COUNTY

         This  lease  agreement,  made  and  entered  into  as of the 1st day of
September,  1997,  by and  between  D. Mark  Boyd,  III and wife,  Diane H. Boyd
(hereafter  called  "Lessor"),  and Lincoln Bank of North Carolina  (hereinafter
called "Lessee"),

                                   WITNESSETH:

         In  consideration  of the  rents  hereinafter  agreed to be paid and in
consideration of the mutual covenants and agreements hereinafter recited, Lessor
does hereby  lease and demise unto Lessee and Lessee does hereby  lease and take
as tenant  from  Lessor  all of that real  property  described  in  Exhibit  "A"
attached hereto and incorporated by this reference.

         To have  and to hold  the  said  Premises  unto  the  Lessee  upon  the
following terms and conditions:

1.        Term.  The  initial  term of this Lease  shall begin on the 1st day of
          September  1997. It shall expire at 12:00 midnight August 31, 2002. It
          is agreed that,  at the  expiration of the initial term of this Lease,
          Lessee  shall have the right and option to renew the Lease for one (1)
          additional  five (5) year term. The renewal terms shall commence as of
          the end of the base term of this  Lease and shall be subject to and in
          accordance  with all terms and conditions set forth in this Lease.  If
          Lessee shall desire to exercise  this right and option,  it shall give
          Lessor  notice in writing  not less than ninety (90) days prior to the
          expiration  of the then  current  term of this Lease.  If Lessee shall
          fail to provide  such  notice to Lessor  within such time  period,  it
          shall be conclusively  deemed that Lessee has elected not to renew and
          extend the term of this Lease as aforesaid, time being of the essence.

2.       Rent.  Lessee  shall pay to the Lessor the  following  sums  payable in
         advance  on the first day of each  month in  installments  as  follows.
         Payments for the optional  lease term will be  negotiated in good faith
         based on comparable market rates, but under no circumstances  shall the
         amount be less than $3,658.67 monthly.
<TABLE>
<CAPTION>
                  Year                     Annual Rent                         Monthly Payment
                  <S>                        <C>                                   <C>    

                  1                          34,944                                 2,912.00
                  2                          37,184                                 3,098.67
                  3                          39,424                                 3,285.33
                  4                          41,664                                 3,472.00
                  5                          43,904                                 3,658.67
</TABLE>

3.        Default. The occurrence of one or more of the following events (herein
          called "Events of Default") shall constitute default by the Lessee:

          A. Failure to pay rent or any other payments hereunder when due if the
          failure to pay is not cured  within  fifteen  (15) days  after  notice
          thereof has been given to Lessee.

          B. Failure to perform any other provision of this Lease if the failure
          to perform is not cured within  fifteen (15) days after notice thereof
          has been given to Lessee.

4.       Lessor's  remedies  upon  default  by  Lessee.  Lessor  shall  have the
         following remedies if Lessee commits a default.  These remedies are not
         exclusive; they are cumulative in addition to any remedies now or later
         allowed by law.

          A. Lessor  shall have the right to  continue  this Lease in full force
          and effect.

          B.  Lessor  shall  have the right to  terminate  this Lease upon first
          giving to the Lessee  thirty (30) days  notice to vacate.  Said thirty
          (30) days notice to vacate  shall be in  addition to the fifteen  (15)
          days given to cure default.

5.        End of Term. Upon the expiration of this Lease,  Lessee shall quit and
          surrender  to Lessor  the  Premises,  broom  clean,  in good order and
          condition,  ordinary  wear and tear  expected  and Lessee shall remove
          from the premises all of its property.

6.        Use of  Premises.  Lessee  shall not use the  Premises  or any portion
          thereof  for any  illegal or  unlawful  purpose  and will not cause or
          permit nuisance to be created or maintained therein.

7.        Taxes.  During the term of the Lease,  and any extensions,  the Lessor
          shall pay all ad valorem  taxes on the  premises  and the Lessee shall
          pay all taxes on the contents.
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8.        Insurance.  During the term of this  Lease,  and any  extensions,  the
          Lessor shall keep the leased premises insured to its replacement value
          against fire and other normally insured  casualties as well as against
          public  liability.  The Lessee shall keep the contents insured as well
          as provide a reasonable  amount of public liability  coverage.  Lessee
          shall indemnify  Lessor against any loss or damage for personal injury
          arising out of Lessee's use of the premises.

9.        Utilities.  During the term of the lease and any extensions the Lessee
          shall pay for all utilities used by it.

10.       Fire or other casualty. In the event that before or during the term of
          the Lease the leased  premises or any part thereof shall be damaged by
          fire or other casualty  which renders the leased  premises or any part
          untenable  for the purpose  for which they are used by Lessee,  Lessor
          shall have the option to repair the building or  terminate  the Lease.
          However,  if the Lessor can not or does not restore the  premises to a
          state that is as good as the condition  thereof  immediately  prior to
          the damage, within sixty (60) days, Lessee has the right and option to
          terminate  this  Lease.  During the period of repair the Rent shall be
          reduced  to an amount  which  bears the same  ratio to the Rent as the
          portion  of the  leased  premises  then  available  for the use to the
          Lessee bears to the entire leased premises. Upon successful completion
          of such  repairs,  the rent shall  thereafter be paid as if no fire or
          other casualty had occurred.  Notwithstanding  the  foregoing,  Lessor
          shall have no  obligation  to replace  or repair any  property  on the
          leased premises  belonging to Lessee or to any one claiming through or
          under  Lessee,  nor shall Lessor be required to make  repairs  costing
          more than the amount of insurance  proceeds paid as a result of Lessee
          complying  with the  provisions  of paragraph 8. Any repairs made over
          and  above  the  amount  of  insurance   paid  shall  be  at  Lessee's
          responsibility.

11.       Maintenance  and  Repairs.  Lessee  shall take good care of the leased
          premises including the grounds,  driveways and parking,  and shall, at
          Lessee's  sole  cost  and  expense,  make  all  repairs  in and to the
          interior  of  the  leased   premises,   ordinary  and   extraordinary,
          structural  and otherwise,  including,  but not limited to, repairs to
          the doors, windows,  glass, plumbing,  wiring and heating systems that
          will sustain the premises in a normal working condition.  Lessor shall
          at Lessor's  sole cost and  expense,  make all repairs to the roof and
          outer structural walls.

12.       Notices.  Any  notice  or  demand  which  by any  provisions  of  this
          agreement  is required  or allowed to be given by either  party to the
          other shall be deemed to have been sufficiently given for all purposes
          when made in writing and sent in the United  States mail as  certified
          or registered  mail, and returned receipt  requested,  postage prepaid
          and addressed: (a) if to Lessee, to 402 East Main Street,  Lincolnton,
          North Carolina, 28092 and (b) if to Lessor, to D. Mark Boyd, III, Post
          Office Box 399,  Lincolnton,  North Carolina,  28093, or to such other
          place as Lessor may from time to time designate in notice to Lessee.

13.       Successors  and Assigns.  The  provisions of this Lease shall bind and
          inure to the  benefit  of Lessor  and  Lessee,  and  their  respective
          successors, heirs, legal representatives and assigns.

14.       Integration  and  binding  effect.  The entire  agreement,  intent and
          understanding between Lessor and Lessee is contained in the provisions
          of this  Lease  and any  stipulations,  representations,  promises  or
          agreements,  written or oral, made prior to or contemporaneously  with
          this Lease  shall  have no legal or  equitable  effect or  consequence
          unless reduced to writing herein.  This Lease shall be governed by and
          construed pursuant to the laws of the State of North Carolina.

15.       Compliance by Lessee with governmental regulations. In the performance
          of any acts  required of or permitted  Lessee under the  provisions of
          this Lease, Lessee shall obey and comply with all lawful requirements,
          rules,   regulations,   and  ordinances  of  all  legally  constituted
          authorities,  existing  at any time  during  the  continuance  of such
          performance  in any  way  affecting  the  Premises  or the  use of the
          Premises by lessee. Such compliance shall include compliance by Lessee
          with  requirements of the Occupational  Safety and Health Act, and all
          amendments  thereto,  as the same  applies to the  Lessee's use of the
          Premises.

16.       Subordination. If required by Lessor's lender, Lessee will subordinate
          this Lease to a first deed of trust.

17.       Assignment of Subletting.  Lessee may assign this Lease in whole or in
          part,  or  sublet  all of any part of the  leased  premises,  with the
          written approval of the Lessor in each instance; provided that consent
          of the  Lessor is given,  Lessee  shall  remain  fully  liable on this
          Lease.  It is understood and agreed that Lessor's  consent will not be
          unreasonably  withheld;  provided a  comparable  market rate is agreed
          upon for the  Assignee  or the  Sublessee  to pay the  Lessor  for the
          remainder of the initial term of the Lease.

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                                   EXHIBIT "A"

         Beginning  at an iron  stake at the point of  intersection  of the west
line of South Poplar Street with the south line of East Main Street,  said point
of  beginning  being  1.26  feet  westerly  from the west  edge of the  concrete
sidewalk on South Poplar  Street,  and 6.7 feet southerly from the south edge of
the concrete  sidewalk of East Main Street;  and runs thence with the said south
line of East Main  Street,  South 67 deg.  00 min.  West  90.00  feet to an iron
stake,  said point being 1.83 feet  westerly  from the east end of the  concrete
wing wall of the overhead  bridge on East Main  Street;  thence South 23 deg. 21
min. East, and parallel to South Poplar Street,  116.00 feet to an iron stake on
the line of property,  now or formally of W.H. Childs; thence with the said line
of W.H. Childs  property,  North 67 deg. 00 min. East, and parallel to East Main
Street 90.00 feet to an iron stake on the west edge of the concrete  sidewalk on
said street; thence with said west edge of South Poplar Street, North 23 deg. 21
min.  West 116.00 feet to the point of  Beginning,  all being  substantially  as
shown on the plat of said piece of parcel of land  prepared  by Wilbur W. Smith,
Civil Engineer, of Charlotte, NC, and bearing dated November 4, 1930.

         In witness  whereof,  the parties  hereto have duly executed this lease
         agreement  and have her unto set their  seals as of the day of the year
         first above written:




                                             Lessor:
                                             
                                             /s/ D. Mark Boyd, III
                                             ----------------------
                                                 D. Mark Boyd, III

                                             /s/ Diane H. Boyd
                                             ----------------------

                              
                                             Lessee:

Attest:                                      Lincoln Bank of North Carolina
/s/ Sue S. Stamey                            by:
------------------                                
Sue S. Stamey                                /s/ James E.Burt, III
Assistant Secretary                          -----------------------
                                                 James E. Burt, III