<PAGE> 1




                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549


                                 FORM 10-QSB

(Mark One)

  X   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934
      For the quarterly period ended March 31, 2000
                                     --------------

      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
----- SECURITIES EXCHANGE ACT OF 1934
      For the transition period from                   to
                                     -----------------    -----------------

                        COMMISSION FILE NUMBER 1-5735


                       UNION FINANCIAL BANCSHARES, INC.
                       --------------------------------


Delaware                                                      57-1001177
--------------------------------------------------------------------------------
(Jurisdiction of Incorporation)             (I.R.S. Employer Identification No.)

203 West Main Street, Union, South Carolina                            29379
-------------------------------------------                       --------------
(Address of Principal Executive Offices)                            (Zip Code)

Registrant's telephone number, including area code (864)429-1864

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

State the number of shares outstanding of each of the issuer's classes of common
stock,  as of the  latest  practicable  date:  The  Corporation  had  issued and
outstanding  1,901,721  shares,  $0.01 par value,  common  stock as of April 26,
2000.








<PAGE> 2



                       UNION FINANCIAL BANCSHARES, INC.


                                    INDEX

PART I.           FINANCIAL INFORMATION                                 PAGE
                  ---------------------                                 ----

        Item 1.  Consolidated Financial Statements (unaudited)

        Consolidated Balance Sheets as of March 31, 2000
         and September 30, 1999                                           3

        Consolidated Statements of Income for the three and six months
         ended March 31, 2000 and 1999                                    4

        Consolidated Statements of Cash Flows for the six
         months ended March 31, 2000 and 1999                             5

        Consolidated Statements of Shareholders' Equity for the
         six months ended March 31, 2000 and 1999                         6

        Notes to Consolidated Financial Statements                      7-9

        Item 2.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations                10-13


PART II.    OTHER INFORMATION                                            14
            -----------------


            Signatures                                                   15




<PAGE> 3


ITEM 1.  FINANCIAL STATEMENTS
UNION FINANCIAL BANCSHARES, INC.
CONSOLIDATING BALANCE SHEET
MARCH 31, 2000 (UNAUDITED) AND SEPTEMBER 30, 1999


<TABLE>
<CAPTION>


ASSETS                                               MARCH 31,                 SEPTEMBER 30,
                                                      2000                         1999
                                                ---------------            -------------------
                                                          (DOLLARS IN THOUSANDS)

<S>                                              <C>                        <C>
Cash                                             $      1,536               $      3,149
Short term interest-bearing deposits                    4,983                      2,421
                                                 ------------               ------------
Total cash and cash equivalents                         6,519                      5,570
                                                 ------------               ------------
Investment and mortage-backed securities
  Held to maturity                                     12,472                      5,586
  Available for sale                                   29,477                     27,335
                                                 ------------               ------------
Total investment and mortgage-backed securities        41,949                     32,921
Loans, net
  Held for sale                                           970                        216
  Held for investment                                 191,257                    149,185
                                                 ------------               ------------
Total loans receivable, net                           192,227                    149,401
Office properties and equipment, net                    5,516                      4,524
Federal Home Loan Bank Stock, at cost                   2,095                      2,050
Accrued interest receivable                             2,070                      1,574
Mortgage servicing rights                               3,176                      3,842
Goodwill intangible                                     4,315                      1,818
Other assets                                            3,122                      3,594
                                                 ------------               ------------
TOTAL ASSETS                                     $    260,989               $    205,294
                                                 ============               ============

LIABILITIES

Deposit accounts                                 $    197,694               $    142,624
Advances from Federal Home Loan Bank and
 other borrowings                                      40,668                     46,503
Accrued interest on deposits                              355                        226
Advances from borrowers for taxes and insurance           342                        548
Other liabilities                                       1,533                        655
                                                 ------------               ------------
TOTAL LIABILITIES                                     240,592                    190,556
                                                 ------------               ------------

SHAREHOLDERS' EQUITY

Serial preferred stock, no par value,
 authorized - 500,000 shares, issued
 and outstanding - None                                     0                          0
Common stock - $0.01 par value,
  authorized - 2,500,000 shares,
  issued and outstanding - 1,901,721 shares
  at 3/31/00 and 1,357,214 at 9/30/99                      20                         14
Additional paid-in capital                             11,263                      5,484
Accumulated other comprehensive income                 (2,351)                    (1,779)
Retained earnings, substantially restricted            11,465                     11,019
                                                 ------------               ------------
TOTAL SHAREHOLDERS' EQUITY                             20,397                     14,738

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       $    260,989               $    205,294
                                                 ============               ============

</TABLE>

See notes to consolidated financial statements.







                                                   3


<PAGE> 4
UNION FINANCIAL BANCSHARES, INC.
CONSOLIDATED  STATEMENTS OF INCOME
THREE AND SIX MONTHS ENDED MARCH 31, 2000 (UNAUDITED) AND 1999 (UNAUDITED)
<TABLE>
<CAPTION>
                                               THREE MONTHS ENDED                  SIX MONTHS ENDED
                                            MARCH 31,        MARCH 31,         MARCH 31,       MARCH 31,
                                              2000             1999              2000            1999
                                         -------------    -------------       ------------    ------------
                                          (DOLLARS IN THOUSANDS)                (DOLLARS IN THOUSANDS)
<S>                                    <C>             <C>             <C>              <C>
INTEREST INCOME:
  Loans                                $       3,773   $       2,631   $        7,222   $        5,569
  Deposits and federal funds sold                 19              31               39               50
  Mortgage-backed securities                     266             391              538              747
  Interest and dividends on
   investment securities                         384             226              751              434
                                        ------------    ------------    -------------    -------------
TOTAL INTERST INCOME                           4,442           3,279            8,550            6,800
                                        ------------    ------------    -------------    -------------


INTEREST EXPENSE:
  Deposit accounts                             2,145           1,454            3,815            2,868
  Advances from the FHLB and other
   borrowings                                    587             407            1,292              968
                                        ------------    ------------    -------------    -------------
TOTAL INTEREST EXPENSE                         2,732           1,861            5,107            3,836
                                        ------------    ------------    -------------    -------------

NET INTEREST INCOME                            1,710           1,418            3,443            2,964
  Provision for loan losses                        0              30               50               45
                                        ------------    ------------    -------------    -------------
NET INTEREST INCOME AFTER
  PROVISION FOR LOAN LOSSES                    1,710           1,388            3,393            2,919
                                        ------------    ------------    -------------    -------------

NON INTEREST INCOME:
  Fees for financial services                    300             206              616              388
  Loan servicing fees (costs)                     23              (3)              38              (75)
  Net gains (losses) on sale of
   investments                                     0               7                0                7
                                        ------------    ------------    -------------    -------------

  Net gains (losses) on sale of loans             22             231              131              374
                                        ------------    ------------    -------------    -------------
TOTAL NON INTEREST INCOME                        345             441              785              694

NON INTEREST EXPENSE:
Compensation and employee benefits               792             600            1,486            1,182
  Occupancy and equipment                        367             252              698              535
  Deposit insurance premiums                       8              17               29               42
  Professional services                           94              62              179              137
  Real estate operations                          10              (3)              15                2
  Goodwill amortization                           96              53              185              115
  Other                                          218             211              406              388
                                        ------------    ------------    -------------     ------------
TOTAL NON INTERST EXPENSE                      1,585           1,192            2,998            2,401
                                        ------------    ------------    -------------     ------------
INCOME BEFORE INCOME TAXES                       470             637            1,180            1,212
Income tax expense                               164             232              417              439
                                        ------------    ------------    -------------     ------------
NET INCOME                             $         306   $         405   $          763    $         773
                                        ------------    ------------    -------------     ------------

BASIC NET INCOME PER COMMON SHARE      $        0.16   $        0.30   $         0.42    $        0.57
                                        ============    ============    =============     ============

DILUTED NET INCOME PER COMMON SHARE    $        0.16   $        0.28   $         0.42    $        0.55
                                        ============    ============    =============     ============

WEIGHTED AVERAGE NUMBER OF
 COMMON SHARES OUTSTANDING

BASIC                                      1,899,516       1,347,669        1,804,177        1,345,999

DILUTED                                    1,910,002       1,423,567        1,819,761        1,417,297

See notes to consolidated financial statements.
</TABLE>
                                                          4

<PAGE> 5
UNION FINANCIAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MARCH 31, 2000 (UNAUDITED) AND 1999 (UNAUDITED)
<TABLE>
<CAPTION>
                                                                   SIX MONTHS ENDED
                                                              MARCH 31,        MARCH 31,
                                                                 2000            1999
                                                            -------------   --------------
                                                                    (IN THOUSANDS)
<S>                                                              <C>             <C>
OPERATING ACTIVITIES:
Net income                                                       $763            $773
Adjustments to reconcile net income to
  net cash provided by operating activities:
  Provision for loan losses                                        50              45
  Amortization of intangibles                                     185             115
  Depreciation expense                                            216             163
  Recognition of deferred income, net of costs                    (27)            (55)
  Deferral of fee income, net of costs                            224              18
  Loans originated for sale                                    17,977         (81,611)
  Sale of loans                                               (17,977)         86,529
  Gain on sale of loans                                          (131)           (381)
  Changes in operating assets and liabilities:
   (Increase) decrease in accrued interest receivable            (496)           (135)
   (Increase) decrease in other assets                            472             164
   Increase (decrease) in other liabilities                       672          (1,297)
   Increase (decrease) in accrued interest payable                129             (80)
                                                            ---------       ---------
Net cash provided by (used by) operating activities             2,057           4,248

INVESTING ACTIVITIES:

Purchase of investment and mortgage-backed securities:
   Held to maturity                                            (4,886)              0
   Available for sale                                          (2,901)        (18,930)
Investments acquired in merger                                 (2,602)              0
Proceeds from sale of investment and mortgage-
    backed securities                                               0           2,090
Proceeds from maturity of investment and mortgage-
    backed securities:
   Available for sale                                               0           4,657
Principal repayments on mortgage-backed securities:
   Held to maturity                                               386             165
   Available for sale                                             975           2,565
Loans acquired in merger                                      (41,144)              0
Net (increase) decrease in loans                               (2,371)          5,244
Net (increase) decrease in mortgage servicing rights              666            (833)
Purchase of FHLB stock                                            (45)              0
Redemption of FHLB stock                                            0             290
Purchase of office properties and equipment                    (1,206)           (423)
                                                            ---------       ---------

Net cash provided by (used by) investing activities          ($53,128)        ($5,175)
                                                            ---------       ---------
FINANCING ACTIVITIES:

Proceeds from the dividend reinvestment plan                      123              97
Dividends paid in cash ($0.10 per share - 2000
and $0.093 per share - 1999)                                     (317)           (242)
Proceeds from the exercise of stock options                        13               0
Increase in goodwill intangible                                (2,682)         (1,073)
Proceeds from term borrowings                                  (5,835)        (16,872)
Capital acquired in merger                                      5,648               0
Deposits acquired in acquisition                               35,688          12,622
Increase (Decrease) in deposit accounts                        19,382           8,494
                                                            ---------       ---------
Net cash (used by) provided by financing activities            52,020           3,026
                                                            ---------       ---------

NET DECREASE\INCREASE IN CASH
  AND CASH EQUIVALENTS                                            949           2,099

CASH AND CASH EQUIVALENTS
  AT BEGINNING OF PERIOD                                        5,570           3,593
                                                            ---------       ---------

CASH AND CASH EQUIVALENTS
   AT END OF PERIOD                                            $6,519          $5,692
                                                           ==========       =========

SUPPLEMENTAL DISCLOSURES:

Cash paid for:
  Income taxes                                                     $0            $803
  Interest                                                      4,977           3,916

Non-cash transactions:
  Loans foreclosed                                                200               0

See notes to consolidated financial statements.
</TABLE>
                                              5


<PAGE> 6



                      UNION FINANCIAL BANCSHARES, INC.
               CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
            SIX MONTHS ENDED MARCH 31, 2000 AND 1999 (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                        Retained        Accumulated
                                                                         Additional     Earnings          Other           Total
                                                        Common Stock      Paid-in      Substantially   Comprehensive   Shareholders'
                                                      Shares    Amount    Capital       Restricted        Income          Equity
                                                      ------    ------    -------       ----------        ------          ------
                                                                            (In Thousands, Except Share Data)

<S>                                                 <C>          <C>       <C>            <C>              <C>             <C>
BALANCE AT SEPTEMBER 30, 1998                       1,278,250    $13       $4,475         $10,664          $148            $15,300

Net income                                                                                    773                              773

  Other comprehensive income
    Unrealized losses on securities:
      Unrealized holding losses arising during
      period                                                                                               (559)              (559)
                                                                                                           -----              -----
  Comprehensive income                                                                                                         214

Dividend reinvestment plan contributions               6,813       0           97                                               97

Five percent stock dividend                           64,090

Cash dividend ($.093 per share)                                                              (242)                            (242)

                                                 ----------------------------------------------------------------------------------
BALANCE AT MARCH 31, 1999                          1,349,153      13        4,572          11,195          (411)            15,369
                                                 ==================================================================================

BALANCE AT SEPTEMBER 30, 1999                      1,357,214      14        5,484          11,019        (1,779)            14,738

Net income                                                                                    763                              763

  Other comprehensive income
    Unrealized losses on securities:
      Unrealized holding losses arising during
      period                                                                                               (572)              (572)
                                                                                                           -----              -----
  Comprehensive loss                                                                                                           191

Options exercised                                      2,200                   13                                               13

Dividend reinvestment plan contributions              16,124       1          123                                              124

Acquisition of SC Community Bancshares               526,183       5        5,643                                            5,648

Cash dividend ($.20 per share)                                                               (317)                            (317)

                                                 ----------------------------------------------------------------------------------
BALANCE AT MARCH 31, 2000                          1,901,721     $20      $11,263         $11,465       ($2,351)           $20,397
                                                 ==================================================================================
</TABLE>



                                                                    6


<PAGE> 7


                          UNION FINANCIAL BANCSHARES, INC.

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.    Presentation of Consolidated Financial Statements
      -------------------------------------------------

      The  accompanying  unaudited  consolidated  financial  statements of Union
      Financial Bancshares, Inc. (the "Corporation") were prepared in accordance
      with  instructions  for Form  10-QSB  and,  therefore,  do not include all
      disclosures   necessary  for  a  complete   presentation  of  consolidated
      financial condition,  results of operations,  and cash flows in conformity
      with generally accepted accounting  principles.  However,  all adjustments
      which  are,  in  the  opinion  of  management,   necessary  for  the  fair
      presentation of the interim  consolidated  financial  statements have been
      included.  All such adjustments are of a normal and recurring nature.  The
      consolidated  financial  statements include the Corporation's wholly owned
      subsidiary,   Provident  Community  Bank  (the  "Bank").  The  results  of
      operations  for the six months  ended March 31,  2000 are not  necessarily
      indicative  of the  results  which may be expected  for the entire  fiscal
      year.  The consolidated  balance sheet as  of September  30, 1999 has been
      derived from the Company's audited financial  statements  presented in the
      annual  report  to  shareholders.  Certain  amounts  in the  prior  year's
      financial statements have been reclassified  to conform  with current year
      classifications.

      SFAS  No.  133,   Accounting  for  Derivative   Instruments   and  Hedging
                        --------------------------------------------------------
      Activities-This  statement establishes  accounting and reporting standards
      ----------
      for derivative instruments and for hedging activities. It requires that an
      entity  recognize all  derivatives  as either assets or liabilities in the
      balance sheet and measure those  instruments at fair value. The accounting
      for changes in the fair value of a derivative  depends on the intended use
      of the derivative.  The statement is effective for the Corporation for the
      fiscal   year   beginning   October   1,  1999  and  may  not  be  applied
      retroactively.

      SFAS No. 134, Accounting for Mortgage-Backed Securities Retained after the
                    ------------------------------------------------------------
      Securitization  of  Mortgage  Loans  Held for Sale by a  Mortgage  Banking
      --------------------------------------------------------------------------
      Enterprise.   The  new  statement  establishes  accounting  and  reporting
      ----------
      standards  for certain  activities  of mortgage  banking  activities.  The
      statement is effective for the first quarter beginning  December 15, 1998.
      This  statement  had  no  effect  on  the  financial   statements  of  the
      Corporation.

2.    Income Per Share
      ----------------

      Effective January 31, 1999, the Corporation  declared a 5% stock dividend.
      The weighted  average  number of shares and all other share data have been
      restated for all periods presented to reflect this dividend.

      Income per share amounts for the three and six months ended March 31, 2000
      and 1999 were

                                        7

<PAGE> 8

      computed based on the weighted average number of common shares outstanding
      adjusted  for the dilutive  effect of  outstanding  common  stock  options
      during the periods.

3.    Assets Pledged
      --------------

      Approximately  $13,966,000 and $12,963,000 of debt securities at March 31,
      2000 and  September  30, 1999,  respectively,  were pledged by the Bank as
      collateral  to secure  deposits  of the State of South  Carolina,  Laurens
      County and certain other  liabilities.  The Bank pledges as collateral for
      Federal Home Loan Bank  advances  the Bank's  Federal Home Loan Bank stock
      and has entered into a blanket collateral  agreement with the Federal Home
      Loan  Bank  whereby  the  Bank  maintains,  free  of  other  encumbrances,
      qualifying mortgages (as defined) with unpaid principal balances equal to,
      when  discounted at 75% of the unpaid  principal  balances,  100% of total
      advances.

4.    Contingencies and Loan Commitments
      ----------------------------------

      The Bank is a party to financial instruments with  off-balance-sheet  risk
      in the  normal  course  of  business  to meet the  financing  needs of its
      customers.  These instruments  expose the Bank to credit risk in excess of
      the amount recognized on the balance sheet.

      The Bank's exposure to credit loss in the event of  nonperformance  by the
      other party to the financial  instrument for  commitments to extend credit
      is represented by the contractual  amount of those  instruments.  The Bank
      uses the same  credit  policies  in  making  commitments  and  conditional
      obligations  as it does for  on-balance-sheet  instruments.  Total  credit
      exposure at March 31, 2000 related to these items is summarized below:

<TABLE>
<CAPTION>

Loan Commitments:                                         Contract Amount
----------------                                          ---------------
       <S>                                                  <C>
       Unadvanced portions of loans                         $ 7,880,000
       Total loan commitments                               $ 7,880,000
                                                            -----------
</TABLE>

      Loan  commitments to extend credit are agreements to lend to a customer as
      long  as  there  is no  violation  of  any  condition  established  in the
      contract.  Loan commitments generally have fixed expiration dates or other
      termination  clauses and may require  payment of a fee. The Bank evaluates
      each customer's  creditworthiness  on a case-by-case  basis. The amount of
      collateral  obtained  upon  extension  of credit is based on  management's
      credit evaluation of  the   counter party.  Collateral  held  is primarily
      residential property. Interest rates on loan commitments are a combination
      of fixed and variable.

      Commitments  outstanding at March 31, 2000 consist of fixed and adjustable
      rate loans of  approximately  $7,880,000  at rates  ranging from 7% to 9%.
      Commitments to originate loans generally expire within 30 to 60 days.

      Commitments  to  fund  credit  lines  (principally variable rate, consumer
      lines secured by real



                                      8

<PAGE> 9



      estate and overdraft  protection)  totaled  approximately  $19,656,000  at
      March 31, 2000. Of these lines,  the  outstanding  loan  balances  totaled
      approximately $11,776,000. The Bank also has commitments to fund warehouse
      lines of credit for various mortgage banking companies  totaling $750,000,
      which had an outstanding  balance at March 31, 2000 of  approximately $ 0.
      At March 31, 2000,  the Bank had loan  commitments  to sell  $3,971,000 in
      fixed rate residential  loans which had not been closed to Freddie Mac for
      the months of April-June, 2000.

5.    Acquisition of South Carolina Community Bancshares, Inc.
      -------------------------------------------------------

      On November 12, 1999, the  Corporation  completed the acquisition of South
      Carolina  Community  Bancshares,  Inc.  and its wholly  owned  subsidiary,
      Community Federal Savings Bank. The Corporation  issued a total of 526,290
      shares  and  paid a total  of  $3,582,081  to the  shareholders  of  South
      Carolina  Community  Bancshares,  Inc. The  transaction  was accounted for
      under the  purchase  method of  accounting.  The two offices of  Community
      Federal  Savings  Bank became  offices of  Provident  Community  Bank.  At
      September 30, 1999, South Carolina  Community  Bancshares,  Inc. had total
      assets of $46.6  million,  loans of $40.2  million  and  deposits of $35.9
      million.  Approximately  $1.7  million in goodwill  was  created  with the
      transaction and will be amortized straight-line over 15 years.

























                                      9

<PAGE> 10




ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

      Financial Condition
      -------------------

      At March 31, 2000, total assets of the Corporation  increased  $55,695,000
      or  27.13%  to  $260,989,000  from  $205,294,000  at  September  30,  1999
      primarily  as a result  of the  acquisition  of South  Carolina  Community
      Bancshares,  which was  completed on November 12,  1999.  Investments  and
      mortgage-backed  securities increased  approximately  $9,028,000 or 27.42%
      during the six months ended March 31, 2000. Loans increased $42,826,000 or
      28.67% to  $192,227,000  for the six  months  ended  March 31,  2000.  The
      increase  in  loans   included   approximately   $41.1  million  from  the
      acquisition  of South  Carolina  Community  Bancshares of which 91.4% were
      residential  mortgage loans. At March 31, 2000,  mortgage servicing rights
      decreased  $666,000 or 17.33% to $3,176,000  from  $3,842,000 at September
      30, 1999. The reduction in mortgage  servicing rights was due to a sale of
      servicing  of  approximately  $30 million  that was  completed in October,
      1999.  In  conjunction  with this  reduction,  loans  serviced  for others
      decreased from $257,906,000 at September 30, 1999 to $233,771,000 at March
      31, 2000. Deposits increased $55,070,000 or 38.61% to $197,694,000 for the
      six months ended March 31, 2000. Approximately $35,900,000 or 84.3% of the
      deposit increase was a result of the South Carolina  Community  Bancshares
      acquisition.  The  remaining  growth  was  a  result  of  various  deposit
      promotion programs with continued emphasis on core deposits.
      Liquidity
      ---------

      Liquidity  is the ability to meet demand for loan  disbursements,  deposit
      withdrawals,  repayment of debt, payment of interest on deposits and other
      operating expenses. The primary sources of liquidity are savings deposits,
      loan repayments, borrowings and interest payments.

      The OTS  imposes  a  minimum  level  of  liquidity  on the  Bank  which is
      currently 4% of with drawable  deposits plus  short-term  borrowings.  The
      liquidity level of the Bank as measured for regulatory purposes was 14.00%
      as of March 31, 2000.  As in the past,  management  expects  that the Bank
      can  meet its  obligations  to fund  outstanding  loan  commitments  while
      maintaining liquidity in excess of regulatory requirements.

      Capital Resources
      -----------------

      The capital  requirement  of the Bank  consists of three  components:  (1)
      tangible  capital,  (2) core capital and (3) risk based capital.  Tangible
      capital must equal or exceed 1.5% of adjusted  total assets.  Core capital
      must be a minimum of 4% of adjusted  total  assets and risk based  capital
      must be a minimum of 8% of risk weighted assets.


                                      10

<PAGE> 11



      As of March 31, 2000, the Bank's  capital  position,  as calculated  under
      regulatory  guidelines,  exceeds  these  minimum  requirements  as follows
      (dollars in thousands):
<TABLE>
<CAPTION>

                                                      REQUIREMENT       ACTUAL            EXESS
-----------------------------------------------------------------------------------------------
      <S>                                              <C>             <C>              <C>
      Tangible capital                                  $3,888         $18,496          $14,608
      Tangible capital to adjusted total assets          1.50%           7.14%            5.64%

      Core capital                                     $10,369         $18,496           $8,127
      Core capital to adjusted total assets              4.00%           7.14%            3.14%

      Risk based capital                               $12,782         $19,767           $6,985
      Risk based capital to risk weighted assets         8.00%          12.37%            4.37%

      The reported capital requirements are based on information reported in the
      OTS March 31, 2000 quarterly thrift financial report.

</TABLE>

      RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 2000 AND 1999
      ----------------------------------------------------------------------

      General
      -------

      Net income decreased $10,000 or 1.29% to $763,000 for the six months ended
      March 31, 2000 as compared to the same period in 1999. Non interest income
      increased  $91,000 or 13.11% and net interest  income after  provision for
      loan losses increased  $474,000 or  16.24%.  All  current year comparative
      references reflect the acquisition of South Carolina Community  Bancshares
      from the acquisition date, November 12, 1999.

      Interest Income
      ---------------

      Interest  income  increased  $1,750,000 or 25.74% for the six months ended
      March 31, 2000 as compared to the same period in 1999.  Interest income on
      loans  increased  29.68% or $1,653,000  to  $7,222,000  for the six months
      ended  March 31,  2000 from  $5,569,000  for the six  months  ended  March
      31,1999 due primarily to growth of the portfolio  and the  acquisition  of
      South Carolina Community Bancshares.  Interest and dividends on investment
      and  mortgage-backed  securities  increased  $97,000  or 7.88% for the six
      months ended March 31, 1999 to $1,328,000 from $1,231,000  during the same
      period in 1999. The increase was due primarily to an increase in the level
      of purchases in investment and mortgage-backed  securities made during the
      first two quarters of the fiscal year along with the investments  acquired
      from South Carolina Community Bancshares.

      Interest Expense
      ----------------

      Interest expense  increased  $1,271,000 or 33.13% for the six months ended
      March 31,  2000 as  compared  to the six months  ended  March 31, 1999 due
      primarily to the growth in deposits

                                          11

<PAGE> 12



      primarily  due to the  deposits  that were  acquired  from South  Carolina
      Community  Bancshares.  Interest  expense  on deposit  accounts  increased
      $947,000 or 33.02% to  $3,815,000  for the six months ended March 31, 2000
      from  $2,868,000  during  the same  period in 1999.  Interest  expense  on
      borrowings increased $324,000 or 33.47% for the six months ended March 31,
      2000 as compared to the six months ended March 31, 1999.  The increase was
      due primarily to rising rates during the period.

      Provision for Loan Loss
      -----------------------

      During the six months  ended March 31,  2000,  provisions  for loan losses
      were  $50,000 as compared  to $45,000 for the same period in the  previous
      year.  The increase in loan loss  provisions  are due to the growth in the
      loan portfolio as a result of the acquisition of South Carolina  Community
      Bancshares.  Management  believes  the  Bank's  loan loss  allowances  are
      adequate  to absorb  estimated  future loan  losses.  The Bank's loan loss
      allowances  at  March  31,  2000  were  approximately  .66% of the  Bank's
      outstanding  loan  portfolio,  net of loans held for sale compared to .74%
      for the same period in the previous year.

      The  following  table sets forth  information  with  respect to the Bank's
      non-performing assets at the dates indicated (dollars in thousands):

<TABLE>
<CAPTION>
                                          MARCH 31, 2000     SEPTEMBER 30, 1999
                                          --------------     ------------------

      <S>                                     <C>                <C>
      Non-accruing loans which are
      contractually past due 90 days
       or more:

      Real Estate:
       Residential                            $1,267             $  42
       Commercial                                 --                --
       Construction                               --                --
      Non-mortgage                               276               141
                                                 ---               ---
      Total                                   $1,544             $ 183
                                              ======              =====

      Percentage of loans receivable, net       0.80%             0.12%
                                                ====              ====

      Allowance for loan losses               $1,271              $836
                                              ======              ====

      Real estate acquired through
       foreclosure and repossessed
       assets, net of allowances                $441              $241
                                                ====              ====
</TABLE>

      All non-accruing loans and allowance for loan losses for the period ending
      March 31, 2000 reflect loans and balances  assumed with the acquisition of
      South Carolina Community



                                      12

<PAGE> 13



      Bancshares.

      Non Interest Income and Expense
      -------------------------------

      Total non interest income increased  $91,000 or 13.11% to $785,000 for the
      six months  ended March 31, 2000 from  $694,000 for the same period in the
      previous year. The increase in non-interest  income from the previous year
      was due to increased  fees from financial  services  which  increased from
      $388,000 at March 31, 1999 to $616,000 at March 31, 2000.  Loan  servicing
      fee income for the six months ended March 31, 2000 was $38,000 compared to
      loan  service fee income of  ($75,000)  for the six months ended March 31,
      1999.  The increase in the loan  servicing  income is due to lower premium
      amortization  expense as a result of lower loan prepayments.  Gain on sale
      of loans decreased $243,000 or 64.97% to $131,000 for the six months ended
      March 31, 2000 from $374,000 for the same period in the previous year. The
      reduction was due to lower volumes of loans sold.

      For the six  months  ended  March 31,  2000,  total non  interest  expense
      increased  $597,000 or 24.86% to $2,998,000  from  $2,401,000 for the same
      period in 1999.  All expenses  were affected by the  acquisition  of South
      Carolina   Community   Bancshares.   Compensation  and  employee  benefits
      increased  $304,000 or 25.72% to $1,486,000 for the six month period ended
      March 31, 2000 from $1,182,000 for the same period in 1999.  Occupancy and
      equipment  expense  increased  $163,000 or 30.47% to $698,000  for the six
      months  ended  March 31, 2000 from  $535,000  for the same period in 1999.
      Professional services expenses increased $42,000 or 30.66% to $179,000 for
      the six month  period  ended  March 31,  2000 from  $137,000  for the same
      period in 1999. The increase in compensation and employee benefits was due
      primarily to the additional  staff assumed in the merger.  The increase in
      occupancy and equipment  expenses was due to higher data processing  costs
      along with higher depreciation expense.  Goodwill  amortization  increased
      from  $115,000  at March  31,  1999 to  $185,000  at March 31,  2000.  The
      increase was due to the additional  amortization  expense required for the
      merger.  Other  operating  expense for the six months ended March 31, 2000
      increased  $18,000 to $406,000  from $388,000 for the same period in 1999.
      The increase in other operating expenses was due to increases in forms and
      printing costs.

      Year 2000
      ---------

      The  Corporation's  formal Year 2000 plan  provided  the  framework  for a
      successful year end changeover.  All systems and procedures were tested on
      January 1 to ensure  compliance  with the  established  plan. To date, all
      equipment has worked  properly and no service  providers or customers have
      notified  the  Corporation  of any  problems  that  would  have a material
      adverse effect on the Corporation.







                                      13

<PAGE> 14



PART II  - OTHER INFORMATION

ITEM 1.     Legal Proceedings
            -----------------

                  The  Corporation  is  involved  in  various  claims  and legal
                  actions  arising in the normal course of business.  Management
                  believes that these  proceedings will not result in a material
                  loss to the Corporation.

ITEM 2.     Changes in Securities
            ---------------------

                  Not applicable.

ITEM 3.     Defaults upon Senior Securities
            -------------------------------

                  Not applicable.

ITEM 4.     Submission of Matters to a Vote of Security Holders
            ---------------------------------------------------

            The Annual Meeting of the  Stockholders  of the Corporation was held
            on  January  19,  2000.  The  results  of the  vote  on the  matters
            presented at the meeting is as follows:

            1.    The following individuals were elected as directors,  each for
                  a three-year term:
<TABLE>
<CAPTION>

                                        Vote For            Vote Withheld
                                        --------            -------------

                  <S>                  <C>                     <C>
                  Louis M. Jordan      1,162,016               91,093
                  Dwight V. Neese      1,180,210               72,899
                  Philip C. Wilkins    1,187,763               65,346
</TABLE>


            2.    The appointment of Elliott,  Davis & Company, LLP, as auditors
                  for the Corporation  for the fiscal year ending  September 30,
                  2000 was ratified by the shareholders by the following vote:

                  For 1,171,079     Against 60,611     Abstain 21,419
                      ---------             ------             ------

ITEM 5.     Other Information
            -----------------

                  None




                                      14

<PAGE> 15



ITEM 6.     Exhibits and Reports on Form 8-K
            --------------------------------

                  None

                  Exhibits
                  --------

                  27    Financial Data Schedule





































                                      15

<PAGE> 16



                                  SIGNATURES

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


                       UNION FINANCIAL BANCSHARES, INC.
                       --------------------------------
                                 (REGISTRANT)



Date:  5-4-00                    By: /s/ Dwight V. Neese
                                     ------------------------------------
                                     Dwight V. Neese, CEO


Date:  5/4/00                    By: /s/ Richard H. Flake
                                     ------------------------------------
                                     Richard H. Flake, CFO



























                                      16