SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                   FORM 10-KSB

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

For the Fiscal Year Ended December 31, 2000     Commission File Number 000-32493

                            REGIONAL BANKSHARES, INC.
                 (Name of Small Business Issuer in its Charter)

      South Carolina                                  57-1108717
(State or Other Jurisdiction of           (IRS Employer Identification Number)
 Incorporation or Organization)

            644 South Fourth Street, Hartsville, South Carolina 29550
                (Address of Principal Executive Office, Zip Code)

         Issuer's Telephone Number, Including Area Code: (843) 383-4333

        Securities Registered Pursuant to Section 12(b) of the Act: None

           Securities Registered Pursuant to Section 12(g) of the Act:

                          Common stock, $1.00 par value
                                (Title of Class)

         Check whether the issuer (1) filed all reports  required to be filed by
Section  13 or 15(d) of the  Exchange  Act  during  the past 12  months  (or for
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 [ ]

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B contained in this form,  and no disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

         The issuer's revenues for its most recent fiscal year were $1,397,712.

         There is no  established  trading  market for the  Registrant's  voting
common equity. The Registrant has no non-voting common equity  outstanding.  The
aggregate book value of the voting common equity held by non-affiliates on March
1, 2001, was approximately  $4,568,345.  As of March 1, 2001, there were 560,270
shares of the  Registrant's  common  stock,  $1.00 par value,  outstanding.  For
purposes of the foregoing calculation only, all directors and executive officers
of the Registrant have been deemed affiliates.

                       DOCUMENTS INCORPORATED BY REFERENCE

(1)  Portions of the Registrant's Proxy Statement for the 2001 Annual Meeting of
     Shareholders - Part III

     Transitional Small Business Disclosure Format (check one):

     Yes [ ]  No [X]


<PAGE>


                              Cross-Reference Sheet
<TABLE>
<CAPTION>

<S>                                                                                                     <C>
PART I...................................................................................................1
        Item 1.      Description of Business.............................................................1
        Item 2.      Description of Property.............................................................8
        Item 3.      Legal Proceedings...................................................................8
        Item 4.      Submission of Matters to Vote of Security Holders...................................9
PART II..................................................................................................9
        Item 5.      Market for Common Equity and Related Stockholder Matters............................9
        Item 6.      Management's Discussion and Analysis or Plan of Operation..........................10
        Item 7.      Financial Statements...............................................................25
        Item 8.      Changes in and Disagreements with Accountants
                         on Accounting and Financial Disclosure.........................................42
PART III................................................................................................42
        Item 9.      Directors, Executive Officers, Promoters and Control Persons;
                         Compliance with Section 16(a) of the Exchange Act..............................42
        Item 10.     Executive Compensation.............................................................42
        Item 11.     Security Ownership of Certain Beneficial Owners and Management.....................42
        Item 12.     Certain Relationships and Related Transactions.....................................42
PART IV.................................................................................................43
        Item 13.     Exhibits and Reports on Form 8-K...................................................43
</TABLE>


<PAGE>



                                     PART I

Forward-Looking Statements

         This  Report on Form  10-KSB  may  contain  forward-looking  statements
relating  to  such  matters  as  anticipated  financial  performance,   business
prospects,  technological  developments,  new products and similar matters.  The
Private  Securities  Litigation  Reform Act of 1995  provides a safe  harbor for
forward-looking  statements.  In order to comply with terms of the safe  harbor,
Regional Bankshares,  Inc. (the "Company") notes that a variety of factors could
cause the Company's actual results and experience to differ  materially from the
anticipated   results  or  other   expectations   expressed  in  the   Company's
forward-looking  statements.  The risks and  uncertainties  that may  affect the
operations,  performances,  development  and results of the  Company's  business
include,  but are not limited to, the following:  risks from changes in economic
and industry  conditions;  changes in interest  rates;  risks inherent in making
loans including  repayment  risks and value of collateral;  dependence on senior
management ; and recently-enacted or proposed legislation.  Statements contained
in this filing regarding the demand for Hartsville Community Bank's products and
services,  changing economic conditions,  interest rates,  consumer spending and
numerous  other  factors may be  forward-looking  statements  and are subject to
uncertainties and risks.

Item 1.  Description of Business.

                                     GENERAL

         Regional  Bankshares,  Inc. is the  successor  registrant to Hartsville
Community Bank, National  Association (the "Bank").  The Bank was organized as a
national bank and opened for business in June, 1999. The Bank's common stock was
registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, and
filings were made with the Office of the Comptroller of the Currency pursuant to
Section 12(i) of the Securities Exchange Act of 1934.

         Regional Bankshares,  Inc. is a South Carolina corporation incorporated
in 2000 to become the  holding  company  for the Bank.  On January 1, 2001,  the
Company completed its acquisition of the Bank and the Bank became a wholly-owned
subsidiary  of the  Company.  On January 10,  2001,  the Bank  converted  from a
national  bank to a South  Carolina  state bank.  The Company has no  operations
other than those carried on by the Bank as its wholly-owned subsidiary. Pursuant
to 17  C.F.R.  ss.  240.12g-3(g),  because  the  acquisition  of the Bank by the
Company  was  not  completed  until  after  December  31,  2000,  the  financial
statements and Management's  Discussion and Analysis provided in this report are
for the Bank only.

         The Bank  conducts  a general  banking  business  from its main  office
located in Hartsville, South Carolina. The Bank's business primarily consists of
accepting  deposits  and making  loans.  The Bank seeks  deposit  accounts  from
households  and  businesses in its primary market areas by offering a full range
of  savings  accounts,  retirement  accounts  (including  Individual  Retirement
Accounts),  checking accounts,  money market accounts,  and time certificates of
deposit. It also makes primarily commercial,  real estate and installment loans,
primarily  on a secured  basis,  to borrowers  in and around  Hartsville,  South
Carolina and makes other authorized investments.  Residential mortgage loans are
primarily  maintained  in-house with conventional  mortgage  financing  arranged
through a correspondent mortgage company.

                              BUSINESS OF THE BANK

Market Area

         The Bank's primary  market area is the community of  Hartsville,  South
Carolina and the surrounding  areas within a 15 mile radius of Hartsville.  This
market area comprises most of Darlington County, South Carolina,  as well as the
incorporated  areas of  Bishopville  in Lee  County  and  McBee in  Chesterfield
County. Most of the Bank's business is drawn from the city of Hartsville and the
greater Hartsville area, with significant  additional  business being drawn from
the area outside greater Hartsville but within the designated market area.


<PAGE>




         Hartsville  has a population  of  approximately  10,000 within the city
limits and 28,000 in the greater  Hartsville area.  Darlington County is located
in  the  northeastern  portion  of  South  Carolina  near  the  intersection  of
Interstates  I-95 and I-20. It is bordered on the north by  Chesterfield  County
and on the south by Florence County. Darlington County is served by an excellent
network of regional roads,  including major routes such as U.S.  Highways 15, 52
and 401. The primary link between the two major  communities  of Darlington  and
Hartsville is a four-lane  highway which tends to encourage  development  in the
area.

Competition

         South Carolina law permits statewide branching by banks and savings and
loan  associations.  Consequently,  many  financial  institutions  have branches
located in several  communities.  Currently,  in addition to the Bank,  25 other
financial  institutions  are located in the Bank's  market area.  The  principal
areas and  methods of  competition  in the  banking  industry  are the  services
offered,  pricing of those services,  the  convenience  and  availability of the
services,  and the degree of  expertise  and  personal  manner  with which those
services are offered.

         The Bank  encounters  strong  competition  from  most of the  financial
institutions in its extended market area. In the conduct of certain areas of its
business, the Bank also competes with credit unions, insurance companies,  money
market  mutual  funds and other  financial  institutions,  some of which are not
subject to the same degree of regulation and  restrictions  as the Bank. Most of
these  competitors have  substantially  greater  resources and lending abilities
than  the  Bank and  offer  certain  services,  such as  international  banking,
investment  banking,  and  trust  services,  that  the Bank  does not  presently
provide.

Deposits

         The Bank offers the full range of deposit services typically  available
in most banks and savings and loan  associations,  including  checking accounts,
NOW accounts, and savings and other time deposits of various types, ranging from
daily  money  market  accounts  to  longer-term  certificates  of  deposit.  The
transaction  accounts and time certificates are tailored to the principal market
area  at  rates  competitive  with  those  offered  in the  area.  In  addition,
retirement accounts such as IRA's (Individual  Retirement Accounts) are offered.
All deposit  accounts are insured by the FDIC up to the maximum amount permitted
by  law.  The  Bank  solicits  these  accounts  from  individuals,   businesses,
associations and organizations, and government authorities.

Lending Activities

         The Bank emphasizes a range of lending services, including real estate,
commercial and consumer loans.  Consumer loans include both installment and term
loans, and include loans for automobiles,  household goods, education, boats and
general personal expenses.

         To address the risks inherent in making loans,  management maintains an
allowance  for loan losses based on, among other  things,  an  evaluation of the
Bank's  loan  loss  experience,   management's  experience  at  other  financial
institutions in the market area, the amount of past due and nonperforming loans,
current and  anticipated  economic  changes  and the values of loan  collateral.
Based upon such  factors,  management  makes various  assumptions  and judgments
about  the  ultimate  collectibility  of the  loan  portfolio  and  provides  an
allowance for potential  loan losses based upon a percentage of the  outstanding
balances and specific loans.  However,  because there are some risks that cannot
be precisely  quantified,  management's judgment of the allowance is necessarily
approximate  and  imprecise.  The adequacy and  methodology of the allowance for
loan losses is subject to regulatory examination and compared to a peer group of
financial institutions identified by the regulators.



                                       2
<PAGE>

Real Estate Loans

         One of the primary  components  of the Bank's loan  portfolio  is loans
secured by first or second  mortgages on residential and commercial real estate.
These loans generally consist of commercial real estate loans,  construction and
development  loans and residential  real estate loans (including home equity and
second mortgage  loans).  Interest rates may be fixed or adjustable and the Bank
generally  charges an origination  fee. The Bank also originates  mortgage loans
for sale into the  secondary  market,  earning a fee,  but avoiding the interest
rate risk of holding long-term, fixed-rate loans.

         The principal  economic risk associated with all loans,  including real
estate loans, is the creditworthiness of the Bank's borrowers.  The ability of a
borrower to repay a real estate loan depends upon a number of economic  factors,
including employment levels and fluctuations in the value of real estate. In the
case of a real estate  construction  loan, there is generally no income from the
underlying property during the construction period, and the developer's personal
obligations  under  the  loan  are  typically  limited.  Each of  these  factors
increases the risk of  nonpayment by the borrower.  In the case of a real estate
purchase  loan,  the  borrower may be unable to repay the loan at the end of the
loan  term and may thus be  forced to  refinance  the loan at a higher  interest
rate,  or,  in  certain  cases,  the  borrower  may  default  as a result of its
inability to refinance the loan.  In either case,  the risk of nonpayment by the
borrower is increased.

         The Bank also  faces  additional  credit  risks to the  extent  that it
engages in making  adjustable  rate mortgage loans  ("ARMs").  In the case of an
ARM, as interest rates increase, the borrower's required payments increase, thus
increasing  the  potential  for default.  The  marketability  of all real estate
loans,  including  ARMs, is also generally  affected by the prevailing  level of
interest rates.

Commercial Loans

         The Bank  makes  loans for  commercial  purposes  in  various  lines of
business.  Commercial loans include both secured and unsecured loans for working
capital  (including  inventory and  receivables),  loans for business  expansion
(including  acquisition  of  real  estate  and  improvements),   Small  Business
Administration ("SBA") loans for new businesses (as well as other governmentally
guaranteed  business loans), and loans for purchases of equipment and machinery.
Commercial loans vary greatly  depending upon the  circumstances  and loan terms
are structured on a case-by-case basis to better serve customer needs.

         The risks  associated  with  commercial  loans vary with many  economic
factors,  including the economy in the  Hartsville  area.  The  well-established
banks in the Bank's  market area make  proportionately  more loans to medium- to
large-sized  businesses than the Bank. Many of the Bank's  commercial  loans are
made to small- to medium-sized  businesses,  which are typically  smaller,  have
shorter operating histories,  and less sophisticated record keeping systems than
larger  entities.  As a  result,  these  smaller  entities  may be less  able to
withstand  adverse  competitive,  economic and financial  conditions than larger
borrowers. In addition, because payments on loans secured by commercial property
generally  depend to a large degree on the results of operations  and management
of the properties,  repayment of such loans may be subject,  to a greater extent
than  other  loans,  to  adverse  conditions  in the real  estate  market or the
economy.

Consumer Loans

         The Bank  makes a variety  of loans to  individuals  for  personal  and
household purposes,  including secured and unsecured installment and term loans,
home equity loans and lines of credit and  unsecured  revolving  lines of credit
such as credit  cards.  The  secured  installment  and term  loans to  consumers
generally  consist  of  loans  to  purchase  automobiles,   boats,  recreational
vehicles,  mobile homes and household furnishings,  with the collateral for each
loan being the purchased  property.  The  underwriting  criteria for home equity
loans and lines of credit  are  generally  the same as  applied by the Bank when
making a first  mortgage  loan,  as  described  above,  and home equity lines of
credit  typically expire 15 years or less after  origination,  unless renewed or
extended.



                                       3
<PAGE>

         Consumer  loans  generally  involve  more credit risks than other loans
because of the type and nature of the  underlying  collateral  or because of the
absence  of any  collateral.  Consumer  loan  repayments  are  dependent  on the
borrower's  continuing  financial  stability  and  are  likely  to be  adversely
affected by job loss,  divorce and  illness.  Furthermore,  the  application  of
various  federal and state laws,  including  federal  and state  bankruptcy  and
insolvency  laws,  may limit the amount  which can be recovered on such loans in
the case of default. In most cases, any repossessed  collateral will not provide
an adequate  source of repayment of the outstanding  loan balance.  Although the
underwriting  process for consumer  loans  includes a comparison of the value of
the security,  if any, to the proposed loan amount,  the Bank cannot predict the
extent to which the  borrower's  ability to pay, and the value of the  security,
will be affected by prevailing economic and other conditions.


Other Services

         The  Bank  participates  in a  regional  network  of  automated  teller
machines  that may be used by Bank  customers  in major  cities  throughout  the
Southeast.  The Bank  offers  both  VISA and  MasterCard  brands  of bank  cards
together  with  related  lines of  credit.  The lines of credit  may be used for
overdraft protection as well as pre-authorized credit for personal purchases and
expenses. The Bank also provides travelers checks, direct deposit of payroll and
social security checks, and automatic drafts for various accounts,  but will not
provide international or trust banking services in the near future.

Employees

         The Bank has 16 full time employees. The Company has no employees.


                           SUPERVISION AND REGULATION

         Bank  holding  companies  and banks  are  extensively  regulated  under
federal and state law. To the extent that the  following  information  describes
statutory  and  regulatory  provisions,  it is  qualified  in  its  entirety  by
reference to such  statutes and  regulations.  Any change in  applicable  law or
regulation  may have a material  effect on the  business  of the Company and the
Bank.

General

         The Company is a bank  holding  company  under the federal Bank Holding
Company  Act  ("BHCA"),  and is  subject  to the  regulations  of the  Board  of
Governors of the Federal Reserve System (the "Federal Reserve"). Under the BHCA,
the Company's  activities and those of its  subsidiaries are limited to banking,
managing or controlling banks, furnishing services to or performing services for
its  subsidiaries  or engaging in any other activity  which the Federal  Reserve
determines to be so closely related to banking or managing or controlling  banks
as to be a proper incident thereto. The Company may engage in a broader range of
activities  if  it  becomes  a  "financial  holding  company"  pursuant  to  the
Gramm-Leach-Bliley  Act,  which is  described  below under the  caption  "Recent
Legislation."  The BHCA prohibits the Company from acquiring  direct or indirect
control of more than 5% of the outstanding  voting stock or substantially all of
the  assets of any bank or from  merging  or  consolidating  with  another  bank
holding company without prior approval of the Federal Reserve. Additionally, the
BHCA  prohibits  the Company  from  engaging in or from  acquiring  ownership or
control of more than 5% of the  outstanding  voting stock of any company engaged
in a  non-banking  business  unless such  business is  determined by the Federal
Reserve to be so closely related to banking as to be properly  incident thereto.
The BHCA generally does not place territorial  restrictions on the activities of
such non-banking related activities.

         The Company is also subject to regulation and  supervision by the South
Carolina  State Board of Financial  Institutions  (the "State  Board").  A South
Carolina bank holding company must provide the State Board with information with
respect to the financial  condition,  operations,  management and  inter-company
relationships of the holding company and its subsidiaries.  The State Board also
may require such other information as is necessary to keep itself informed about
whether the  provisions  of South  Carolina law and the  regulations  and orders
issued  thereunder  by the State Board have been  complied  with,  and the State
Board may examine any bank holding company and its subsidiaries.



                                       4
<PAGE>

Obligations of the Company to its Subsidiary Bank

         A number of obligations  and  restrictions  are imposed on bank holding
companies  and their  depository  institution  subsidiaries  by Federal  law and
regulatory  policy that are designed to reduce  potential  loss  exposure to the
depositors of such  depository  institutions  and to the FDIC insurance funds in
the event the depository  institution  is in danger of becoming  insolvent or is
insolvent.  For example, under the policy of the Federal Reserve, a bank holding
company is required to serve as a source of financial strength to its subsidiary
depository  institutions and to commit resources to support such institutions in
circumstances  where it might not do so absent such  policy.  In  addition,  the
"cross-guarantee"  provisions of the Federal  Deposit  Insurance Act, as amended
("FDIA"),  require  insured  depository  institutions  under  common  control to
reimburse the FDIC for any loss suffered or reasonably anticipated by either the
Savings  Association  Insurance Fund ("SAIF") or the Bank Insurance Fund ("BIF")
of the  FDIC  as a  result  of the  default  of a  commonly  controlled  insured
depository  institution or for any assistance provided by the FDIC to a commonly
controlled  insured  depository  institution in danger of default.  The FDIC may
decline to enforce the cross-guarantee provisions if it determines that a waiver
is in the best  interest  of the SAIF or the BIF or both.  The FDIC's  claim for
damages  is  superior  to  claims  of  shareholders  of the  insured  depository
institution  or its holding  company but is subordinate to claims of depositors,
secured  creditors and holders of subordinated  debt (other than  affiliates) of
the commonly controlled insured depository institutions.

         The FDIA also provides that amounts  received from the  liquidation  or
other resolution of any insured  depository  institution by any receiver must be
distributed (after payment of secured claims) to pay the deposit  liabilities of
the  institution  prior to payment  of any other  general  or  unsecured  senior
liability,   subordinated  liability,  general  creditor  or  shareholder.  This
provision  would give  depositors  a preference  over  general and  subordinated
creditors  and  shareholders  in the event a receiver is appointed to distribute
the assets of the Bank.

         Any capital  loans by a bank holding  company to any of its  subsidiary
banks are  subordinate  in right of payment  to  deposits  and to certain  other
indebtedness of such subsidiary  bank. In the event of a bank holding  company's
bankruptcy,  any  commitment  by the bank  holding  company  to a  federal  bank
regulatory  agency to maintain the capital of a subsidiary  bank will be assumed
by the bankruptcy trustee and entitled to a priority of payment.

Capital Adequacy Guidelines for Bank Holding Companies and State Banks

         The various federal bank regulators,  including the Federal Reserve and
the FDIC have adopted  risk-based and leverage capital  adequacy  guidelines for
assessing bank holding company and bank capital adequacy. These standards define
what qualifies as capital and establish minimum capital standards in relation to
assets and off-balance sheet exposures, as adjusted for credit risks.

         Failure  to meet  capital  requirements  could  subject  the  Bank to a
variety of enforcement remedies,  including the termination of deposit insurance
by the FDIC and a prohibition on the taking of brokered deposits.

         The risk-based  capital standards of both the Federal Reserve Board and
the FDIC explicitly identify  concentrations of credit risk and the risk arising
from non-traditional  activities,  as well as an institution's ability to manage
these risks,  as  important  factors to be taken into account by the agencies in
assessing an institution's overall capital adequacy. The capital guidelines also
provide that an institution's exposure to a decline in the economic value of its
capital due to changes in interest rates should be considered by the agencies as
a factor in evaluating a bank's capital  adequacy.  The Federal Reserve also has
recently issued  additional  capital  guidelines for bank holding companies that
engage in certain trading activities.

         The Bank exceeded all applicable capital  requirements by a wide margin
at December 31, 2000.

Payment of Dividends

         The  Company is a legal  entity  separate  and  distinct  from its bank
subsidiary.  Most of the  revenues of the  Company  are  expected to result from
dividends  paid to the Company by the Bank.  There are statutory and  regulatory
requirements  applicable to the payment of dividends by subsidiary banks as well
as by the Company to its  shareholders.  It is not anticipated  that the Company
will pay cash dividends in the near future.



                                       5
<PAGE>

Certain Transactions by the Company with its Affiliates

         Federal  law   regulates   transactions   among  the  Company  and  its
affiliates,  including  the  amount of bank loans to or  investments  in nonbank
affiliates  and the  amount  of  advances  to third  parties  collateralized  by
securities of an affiliate.  Further,  a bank holding company and its affiliates
are prohibited  from engaging in certain tie-in  arrangements in connection with
any extension of credit, lease or sale of property or furnishing of services.

FDIC Insurance Assessments

         Because the Bank's deposits are insured by the BIF, the Bank is subject
to insurance assessments imposed by the FDIC. Currently, the assessments imposed
on all FDIC deposits for deposit insurance have an effective rate ranging from 0
to 27 basis points per $100 of insured deposits,  depending on the institution's
capital position and other supervisory  factors.  However,  because  legislation
enacted in 1996  requires  that  insured  deposits pay a pro rata portion of the
interest due on the obligations  issued by the Financing  Corporation  ("FICO"),
the FDIC is currently  assessing  BIF-insured  deposits an additional 1.26 basis
points per $100 of deposits,  and SAIF-insured deposits an additional 6.30 basis
points per $100 of deposits,  to cover those  obligations.  The FICO  assessment
will  continue to be adjusted  quarterly  to reflect  changes in the  assessment
bases of the  respective  funds  based  on  quarterly  Call  Report  and  Thrift
Financial Report submissions.

Regulation of the Bank

         The Bank is subject to regulation by the State Board. In addition,  the
Bank is  subject  to  various  other  state and  federal  laws and  regulations,
including state usury laws,  laws relating to  fiduciaries,  consumer credit and
laws  relating  to branch  banking.  The Bank's loan  operations  are subject to
certain federal  consumer credit laws and  regulations  promulgated  thereunder,
including,  but not  limited  to: the federal  Truth-In-Lending  Act,  governing
disclosures of credit terms to consumer borrowers;  the Home Mortgage Disclosure
Act, requiring financial  institutions to provide certain information concerning
their mortgage  lending;  the Equal Credit  Opportunity Act and the Fair Housing
Act,  prohibiting  discrimination on the basis of certain  prohibited factors in
extending credit; the Fair Credit Reporting Act, governing the use and provision
of information to credit reporting agencies; the Bank Secrecy Act, dealing with,
among other things, the reporting of certain currency transactions; and the Fair
Debt  Collection  Act,  governing  the  manner  in which  consumer  debts may be
collected by collection agencies. The deposit operations of the Bank are subject
to the Truth in Savings Act,  requiring certain  disclosures about rates paid on
savings  accounts;  the  Expedited  Funds  Availability  Act,  which  deals with
disclosure of the availability of funds deposited in accounts and the collection
and return of checks by banks; the Right to Financial Privacy Act, which imposes
a duty to maintain certain  confidentiality of consumer  financial records,  and
the Electronic Funds Transfer Act and regulations promulgated thereunder,  which
govern  automatic   deposits  to  and  withdrawals  from  deposit  accounts  and
customers'  rights and  liabilities  arising  from the use of  automated  teller
machines and other electronic banking services.

         The  Bank  is  also  subject  to  the  requirements  of  the  Community
Reinvestment  Act (the  "CRA").  The CRA imposes on  financial  institutions  an
affirmative  and  ongoing  obligation  to meet the credit  needs of their  local
communities,  including low- and moderate-income neighborhoods,  consistent with
the safe and sound operation of those institutions. Each financial institution's
actual performance in meeting community credit needs is evaluated as part of the
examination process, and also is considered in evaluating mergers,  acquisitions
and applications to open a branch or facility.

Other Safety and Soundness Regulations

         Prompt  Corrective  Action.  The federal  banking  agencies  have broad
powers under  current  federal law to take prompt  corrective  action to resolve
problems of insured depository institutions.  The extent of these powers depends
upon whether the  institutions in question are "well  capitalized,"  "adequately
capitalized,"    "undercapitalized,"    "significantly    undercapitalized"   or
"critically undercapitalized."



                                       6
<PAGE>

         A bank that is "undercapitalized"  becomes subject to provisions of the
FDIA:   restricting  payment  of  capital  distributions  and  management  fees;
requiring the FDIC to monitor the condition of the bank; requiring submission by
the bank of a capital  restoration  plan;  restricting  the growth of the bank's
assets and requiring prior approval of certain expansion proposals.  A bank that
is  "significantly   undercapitalized"   is  also  subject  to  restrictions  on
compensation  paid  to  senior  management  of  the  bank,  and a bank  that  is
"critically   undercapitalized"  is  further  subject  to  restrictions  on  the
activities of the bank and restrictions on payments of subordinated  debt of the
bank.  The  purpose  of these  provisions  is to  require  banks  with less than
adequate  capital to act quickly to restore  their  capital and to have the FDIC
move  promptly  to take over  banks  that are  unwilling  or unable to take such
steps.

         Brokered Deposits.  Under current FDIC regulations,  "well capitalized"
banks may accept brokered deposits without restriction, "adequately capitalized"
banks may accept  brokered  deposits  with a waiver  from the FDIC  (subject  to
certain  restrictions on payment of rates), while  "undercapitalized"  banks may
not accept brokered deposits.

Interstate Banking

         Under the Riegle-Neal  Interstate Banking and Branching  Efficiency Act
of 1994 the Company and any other  adequately  capitalized  bank holding company
located in South  Carolina can acquire a bank located in any other state,  and a
bank  holding  company  located  outside  South  Carolina  can acquire any South
Carolina-based  bank, in either case subject to certain  deposit  percentage and
other restrictions.  Unless prohibited by state law, adequately  capitalized and
managed bank holding  companies are permitted to  consolidate  their  multistate
bank operations into a single bank subsidiary and to branch  interstate  through
acquisitions. De novo branching by an out-of-state bank is permitted only if the
laws of the host state expressly permit it. The authority of a bank to establish
and operate  branches within a state continue to be subject to applicable  state
branching  laws.  South  Carolina law was amended,  effective  July 1, 1996,  to
permit such  interstate  branching but not de novo branching by an  out-of-state
bank.

Recent Legislation

         On November 12, 1999, the President signed the Gramm-Leach-Bliley  Act,
which  makes it easier for  affiliations  between  banks,  securities  firms and
insurance companies to take place. The Act removes Depression-era  barriers that
had separated  banks and securities  firms,  and seeks to protect the privacy of
consumers' financial information.  Most of the provisions of the Act require the
applicable   regulators  to  adopt  regulations  in  order  to  implement  these
provisions, and a substantial number of regulations have already been adopted.

         Under provisions of the new legislation, which were effective March 11,
2000, banks,  securities firms and insurance companies are able to structure new
affiliations  through  a  holding  company  structure  or  through  a  financial
subsidiary.  The legislation creates a new type of bank holding company called a
"financial  holding  company" which has powers much more extensive than those of
standard holding companies. These expanded powers include authority to engage in
"financial  activities,"  which are activities that are (1) financial in nature;
(2) incidental to activities that are financial in nature;  or (3) complementary
to a  financial  activity  and that do not impose a safety and  soundness  risk.
Significantly,   the  permitted  financial   activities  for  financial  holding
companies  include  authority  to  engage  in  merchant  banking  and  insurance
activities,  including insurance portfolio investing. A bank holding company can
qualify as a financial holding company and expand the services it offers only if
all of its subsidiary depository institutions are well-managed, well-capitalized
and  have  received  a  rating  of   "satisfactory"   on  their  last  Community
Reinvestment Act examination.

         The  legislation  also  creates  another  new type of  entity  called a
"financial subsidiary." A financial subsidiary may be used by a national bank or
a group of national banks to engage in many of the same activities permitted for
a financial holding company, though several of these activities,  including real
estate development or investment,  insurance or annuity underwriting,  insurance
portfolio  investing and merchant  banking,  are reserved for financial  holding
companies.  A bank's  investment  in a financial  subsidiary  affects the way in


                                       7
<PAGE>

which the bank calculates its regulatory capital, and the assets and liabilities
of financial  subsidiaries  may not be consolidated  with those of the bank. The
bank must also be certain that its risk  management  procedures  are adequate to
protect it from  financial and  operational  risks created both by itself and by
any financial subsidiary.  Further, the bank must establish policies to maintain
the separate corporate  identities of the bank and its financial  subsidiary and
to prevent each from becoming liable for the obligations of the other.

         The Act also  establishes  the  concept  of  "functional  supervision,"
meaning that  similar  activities  should be  regulated  by the same  regulator.
Accordingly,  the Act spells out the regulatory authority of the bank regulatory
agencies,  the Securities and Exchange Commission and state insurance regulators
so that each type of activity is  supervised by a regulator  with  corresponding
expertise.  The Federal  Reserve Board is intended to be an umbrella  supervisor
with the  authority  to  require a bank  holding  company or  financial  holding
company  or any  subsidiary  of  either  to  file  reports  as to its  financial
condition,  risk management  systems,  transactions with depository  institution
subsidiaries  and  affiliates,  and compliance  with any federal law that it has
authority to enforce.

         Although the Act reaffirms that states are the regulators for insurance
activities  of  all  persons,  including   federally-chartered  banks,  the  Act
prohibits  states from preventing  depository  institutions and their affiliates
from conducting insurance activities.

         The Act also  establishes  a minimum  federal  standard  of  privacy to
protect the confidentiality of a consumer's  personal financial  information and
gives the consumer the power to choose how personal financial information may be
used by  financial  institutions.  The Act and the  regulations  adopted  by the
federal banking agencies under the Act require increased disclosure to consumers
about use of information about them and, in some  circumstances,  require notice
to, or consent from, consumers before the information may be provided to a third
party.

         The  Company  anticipates  that  the Act and  the  regulations  adopted
pursuant to the Act will be likely to create new opportunities to offer expanded
services to customers in the future,  though the Company has not yet  determined
what the nature of the expanded services might be or when the Company might find
it  feasible  to offer  them.  The  Company  further  expects  that the Act will
increase competition from larger financial  institutions that are currently more
capable  than the Company of taking  advantage of the  opportunity  to provide a
broader range of services.  However,  the Company  continues to believe that its
commitment to providing  high quality,  personalized  service to customers  will
permit it to remain competitive in its market area.

Legislative Proposals

         New proposed legislation, which could significantly affect the business
of banking,  has been  introduced  or may be introduced in Congress from time to
time.  Management  of the  Company  cannot  predict  the  future  course of such
legislative proposals or their impact on the Company and the Bank should they be
adopted.

Fiscal and Monetary Policy

         Banking  is  a  business   that  depends   largely  on  interest   rate
differentials. In general, the difference between the interest paid by a bank on
its deposits and its other  borrowings,  and the interest  received by a bank on
its loans and  securities  holdings,  constitutes  the major portion of a bank's
earnings.  Thus, the earnings and growth of the Company and the Bank are subject
to the influence of economic  conditions  generally,  both domestic and foreign,
and also to the  monetary  and  fiscal  policies  of the  United  States and its
agencies,  particularly the Federal Reserve.  The Federal Reserve  regulates the
supply of money through various means,  including open-market dealings in United
States government  securities,  the discount rate at which banks may borrow from
the Federal Reserve,  and the reserve  requirements on deposits.  The nature and
timing of any changes in such  policies  and their impact on the Company and the
Bank cannot be predicted.



                                       8
<PAGE>

Item 2.  Description of Property.

         The  Bank's  proposed  permanent  office  site is owned by the Bank and
consists of 37,500 square feet located at 206 South Fifth Street in  Hartsville.
This  site is a  corner  location  one  block  from  the  geographic  center  of
Hartsville.  This area of town is  undergoing  extensive  redevelopment,  and is
likely to be a center for retail,  professional  and service  business growth in
the  future.  The  permanent  office  building  is under  construction  and will
comprise  between 8,000 and 8,500 feet. The building is expected to be completed
in the second quarter of 2001, and is expected to cost approximately $1,000,000.
The  property on which the main office is to be located  was  purchased  from an
unaffiliated  third party for  approximately  $293,400.  Until completion of the
main office, the Bank is operating in temporary  facilities located at 644 South
Fourth Street in Hartsville. The building is leased on a monthly basis.

Item 3.  Legal Proceedings.

         The  Company  may  from  time  to  time be a  party  to  various  legal
proceedings  arising in the ordinary  course of business,  but management of the
Company  is not aware of any  pending or  threatened  litigation  or  unasserted
claims or assessments that are expected to result in losses,  if any, that would
be material to the Company's business and operations.

Item 4.  Submission of Matters to Vote of Security Holders.

         On November 15, 2000,  special  meetings of the shareholders of each of
the  Company  and the Bank were held to vote on  acquisition  of the Bank by the
Company and exchange of each share of  outstanding  common stock of the Bank for
one share of the  outstanding  common stock of the Company.  All ten of the then
outstanding  shares  of the  Company  were  voted in  favor of the  transaction.
Outstanding shares of the Bank were voted as follows:

                                                                      BROKER
             FOR            AGAINST             ABSTAIN             NON-VOTES
             ---            -------             -------             ---------

           407,745             0                   0                    0


                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters.

Absence of Market for Common Stock

         Although  the common  stock of the  Company  may be traded from time to
time on an individual  basis,  no  established  trading market has developed and
none is expected to develop in the foreseeable  future.  The common stock is not
listed on any exchange nor is it traded on the NASDAQ  National  Market  System,
nor are there any market makers known to  management.  In 2000,  management  was
aware of a few  transactions  in which the  Company's  common  stock  traded for
between $13.00 and $16.00 per share.  However,  management  has not  ascertained
that these transactions are the result of arm's length negotiations  between the
parties, and because of the limited number of shares involved,  these prices may
not be indicative of the market value of the common stock.

         As of March 1, 2001, there were  approximately 886 holders of record of
the  Company's  common  stock,  excluding  individual  participants  in security
position listings.



                                       9
<PAGE>

Dividends

         The Company  has never paid any cash  dividends,  and to  maintain  its
capital,  does not expect to pay cash dividends in the near future. The dividend
policy of the Company is subject to the discretion of the Board of Directors and
depends upon a number of factors, including earnings, financial conditions, cash
needs  and  general  business  conditions,  as  well  as  applicable  regulatory
considerations.  Because the Company has no  operations  other than those of the
Bank and presently has no income of its own, the Company would rely on dividends
from the Bank as its principal  source of cash to pay dividends.  South Carolina
banking  regulations  restrict the amount of cash  dividends that can be paid to
shareholders,  and all of the Bank's cash dividends to shareholders  are subject
to the prior approval of the South Carolina Commissioner of Banking.

         The  payment  of  dividends  by the  Company  and the  Bank may also be
affected  or limited by other  factors,  such as the  requirements  to  maintain
adequate capital above regulatory guidelines. In addition, if, in the opinion of
the applicable regulatory authority, a bank under its jurisdiction is engaged in
or is about to engage in an unsafe or unsound practice (which,  depending on the
financial  condition of the Bank, could include the payment of dividends),  such
authority may require, after notice and hearing, that such bank cease and desist
from  such  practice.  The  Federal  Reserve  and the FDIC  have  issued  policy
statements  which  provide that bank holding  companies and insured banks should
generally only pay dividends out of current operating earnings.

Issuance of Unregistered Securities

         In connection  with the Bank's  initial  public  offering,  each of its
organizers  received a warrant to  purchase  5,000  shares of the Bank's  common
stock. Upon acquisition of the Bank by the Company,  the warrants were converted
into warrants to purchase  common stock of the Company.  The exercise  price for
the warrants is $10 per share and they may be exercised over a ten-year  period.
The right to exercise  the  warrants  vested with  respect to  one-third  of the
warrants  on June 15,  2000,  and will vest with  respect  to  one-third  of the
remaining  warrants  on each of June 15, 2001 and June 15,  2002,  so long as an
organizer has served  continuously as a director from the Bank's formation until
the vesting  date.  Assuming all of the warrants  issued to the  organizers  are
exercised and that the Company  issues no further  common stock,  the organizers
would own an aggregate of 244,150 shares,  or 40%, of the Company's  outstanding
common stock.

         On January 1, 2001,  pursuant  to a  transaction  in which the  Company
became a one-bank  holding  company  for  Hartsville  Community  Bank,  National
Association, the Company exchanged 560,270 shares of its common stock for all of
the 560,270  outstanding  shares of common stock of Hartsville  Community  Bank,
National  Association.  The Company did not  register  issuance of its shares in
this  transaction  in reliance on the exemption  from  registration  provided by
Section 3(a)(12) of the Securities Act of 1933.

Item 6.  Management's Discussion and Analysis or Plan of Operation.

The following discussion should be read in conjunction with the Bank's Financial
Statements and the Notes thereto and the other financial data included elsewhere
in this report.  The financial  information  provided  below has been rounded in
order to simplify its presentation. However, the ratios and percentages provided
below are calculated using the detailed financial  information  contained in the
Financial  Statements,  the Notes thereto and the other  financial data included
elsewhere in this report.  Pursuant to 17 C.F.R. ss.  240.12g-3(g),  because the
acquisition  of the Bank by the Company was not completed  until after  December
31, 2000,  the financial  statements  and  Management's  Discussion and Analysis
provided in this report are for the Bank only.

                                     General

At  December  31,  2000,  Hartsville  Community  Bank,  N.A.  (the  Bank)  was a
nationally-chartered  bank  headquartered  in  Hartsville,  South  Carolina.  On
January  1,  2001,  the  Bank  became  a  wholly-owned  subsidiary  of  Regional
Bankshares,  Inc. (the Company).  The Company  acquired 100% of the  outstanding
common stock of the Bank.  The Company was formed to serve as a holding  company
for  the   Bank.   On   January   10,   2001,   the   Bank   converted   from  a
nationally-chartered  bank to a state-chartered  bank.  Management believes that
the  conversion  will  more  accurately  reflect  the  operating  philosophy  of
management and the Board of Directors.



                                       10
<PAGE>

The Bank opened for business on June 15, 1999. The principal  business  activity
of the Bank is to provide banking services to domestic  markets,  principally in
Darlington County,  South Carolina.  The deposits of the Bank are insured by the
Federal  Deposit  Insurance  Corporation.  In addition to providing  traditional
banking  services,  the Bank has a mortgage  loan  division.  The mortgage  loan
division  originates  loans to purchase  existing or construct  new homes and to
refinance existing mortgages.

Organizing  activities for the Bank began in September 1998. Upon the completion
of the  application  process with the Office of the  Comptroller of the Currency
for national bank status and with the Federal Deposit Insurance  Corporation for
deposit insurance, the Bank was ready to issue stock. The Bank received approval
for the  authorization  to issue 2,000,000 shares of its common stock. The stock
sale resulted in the issuance of 560,270  shares at a price of $10.00 per share.
The offering resulted in capital totaling $5,533,541, net of selling expenses of
$69,159. The Bank began operations on June 15, 1999 at its temporary facility on
South Fourth Street in Hartsville, South Carolina.

                              Results of Operations

A comparison  between 2000 and 1999 is not relevant since the Bank was only open
for business 6.5 months in 1999.

For the year ended December 31, 2000

Net interest  income for the year ended  December 31, 2000 was  $778,578.  Total
interest income for the year ended December 31, 2000 was $1,319,404. The primary
components of interest income were from loans, including fees, of $1,021,267 and
from federal funds sold of $267,120.

The Bank's net  interest  spread and net  interest  margin were 3.55% and 5.23%,
respectively,  in 2000. The largest  component of earning assets was loans which
had a yield of 10.16% in 2000. The overall yield on earning assets was 8.86% and
the overall yield on interest-bearing liabilities was 5.31% in 2000.

The provision for loan losses was $118,884 in 2000. The charges to the provision
were  primarily to maintain the allowance for loan losses at a level  sufficient
to cover known and inherent losses in the loan portfolio.

Noninterest  income for the year ended  December 31, 2000 totaled  $78,308.  The
largest component of noninterest  income was service charges on deposit accounts
which  totaled  $46,848 for the year.  Other  components of  noninterest  income
included  credit  life  insurance  commissions  of $14,270  and other  income of
$17,190.

Noninterest expense for the year ended December 31, 2000 totaled $1,302,523. The
primary component of noninterest expense included salaries and employee benefits
which totaled  $660,924 for the year.  Furniture and equipment  expense  totaled
$89,845 for the year ended December 31, 2000.  Other operating  expenses totaled
$491,690 for the year.

The Bank's net loss for the year ended  December 31, 2000 was $355,367.  The net
loss for the year is after the  recognition of an income tax benefit of $209,154
for the year.  The  income  tax  benefit  is based on an  effective  tax rate of
37.05%.

For the period June 15, 1999 to December 31, 1999

Net interest  income for the period June 15, to December 31, 1999 was  $226,935.
Total  interest  income for the period was $327,352 and was partially  offset by
interest  expense of $100,417.  The primary  components of interest  income were
from loans, including fees, of $166,701 and from federal funds sold of $153,984.



                                       11
<PAGE>

The Bank's net  interest  spread and net  interest  margin were 3.08% and 5.37%,
respectively,  in 1999.  The largest  component  of average  earning  assets was
federal   funds  sold  and   interest  on  funds  held  in  escrow   during  the
organizational  process.  Excess funds from the stock  offering were invested in
federal funds until loans were generated.

The provision for loan losses was $61,637 in 1999.  The charges to the provision
were  primarily to maintain the allowance for loan losses at a level  sufficient
to cover known and inherent losses in the loan portfolio.

Noninterest  income for the period June 15, 1999 to  December  31, 1999  totaled
$30,711.  The largest  component of  noninterest  income was service  charges on
deposit  accounts  which  totaled  $15,420 for the period.  Other  components of
noninterest  income  included  credit life insurance  commissions of $10,595 and
other income of $4,696.

Noninterest  expense for the period June 15, 1999 to December  31, 1999  totaled
$1,116,854.  Noninterest  expenses  included  $330,434 in pre-opening  expenses.
Salaries  and  employee  benefits  totaled  $531,874  for the  period.  Salaries
included the cost of key personnel employed during the  organizational  process.
Other  operating  expenses  totaled  $484,869  for the  period.  These  expenses
included a number of one-time expenses associated with opening the Bank.

The  Bank's net loss for the  period  June 15,  1999 to  December  31,  1999 was
$607,845.  The net loss for the period is after the recognition of an income tax
benefit of $313,000 for the period.  As stated  earlier,  the net loss  includes
pre-opening expenses of $330,434.

                               Net Interest Income

General.  The  largest  component  of the Bank's net income is its net  interest
income, which is the difference between the income earned on assets and interest
paid on deposits and borrowings used to support such assets. Net interest income
is determined by the yields earned on the Bank's interest-earning assets and the
rates  paid  on  its  interest-bearing  liabilities,  the  relative  amounts  of
interest-earning  assets  and  interest-bearing  liabilities,  and the degree of
mismatch and the maturity and repricing  characteristics of its interest-earning
assets and interest-bearing  liabilities. Net interest income divided by average
interest-earning assets represents the Bank's net interest margin.

Average Balances, Income and Expenses and Rates. The following table sets forth,
for the periods  indicated,  certain  information  related to the Bank's average
balance sheet and its average yields on assets and average costs of liabilities.
Such yields are derived by dividing  income or expense by the average balance of
the corresponding assets or liabilities. Average balances have been derived from
the daily balances  throughout the year 2000, and balances have been  annualized
for the period June 15, 1999 to December 31, 1999.



                                       12
<PAGE>



                         Net Interest Income (continued)

Average Balances, Income and Expenses and Rates

<TABLE>
<CAPTION>
                                                                       2000                                    1999
                                                                       ----                                    ----
                                                       Average       Income/         Yield/       Average     Income/       Yield/
(Dollars in thousands)                                 Balance       Expense         Rate         Balance     Expense        Rate
                                                       -------       -------         ----         -------     -------        ----
Assets:
 Earning Assets:
   <S>                                                <C>           <C>              <C>        <C>            <C>            <C>
   Loans (1) ...................................      $ 10,052      $   1,021        10.16%     $  1,604       $  167         10.41%
   Securities, taxable (2) .....................           344             22         6.40            18            1          5.55
   Nonmarketable securities ....................           192              9         4.69            91            5          5.49
   Federal funds sold ..........................         4,294            267         6.22         2,492          154          6.18
                                                      --------       --------                   --------       ------
     Total earning assets ......................        14,882          1,319         8.86         4,205          327          7.78
                                                      --------       --------                   --------       ------
 Cash and due from banks .......................           675                                       715
 Premises and equipment ........................           686                                       227
 Other assets ..................................           486                                       138
 Allowance for loan losses .....................           (98)                                      (14)
                                                      --------                                  --------
     Total assets ..............................      $ 16,631                                  $  5,271
                                                      ========                                  ========
Liabilities:
 Interest-Bearing Liabilities:
   Interest-bearing transaction accounts........      $  1,376             32         2.33%     $    263            4          1.52%
   Savings deposits ............................         2,728            124         4.55           895           38          4.36
   Time deposits ...............................         6,080            385         6.33           727           38          5.23
   Other short-term borrowings .................             -              -            -           242           20          8.26
                                                      --------       --------                   --------       ------
     Total interest-bearing liabilities.........        10,184            541         5.31         2,127          100          4.70
                                                      --------       --------                   --------       ------

 Demand deposits ...............................         1,552                                       318
 Accrued interest and other liabilities ........           163                                        21
 Shareholders' equity ..........................         4,732                                     2,805
                                                      --------                                  --------
     Total liabilities and shareholders' equity.      $ 16,631                                  $  5,271
                                                      ========                                  ========
 Net interest spread ...........................                                      3.55%                                    3.08%
 Net interest income ...........................                     $    778                                 $   227
                                                                     ========                                  ======
Net interest margin ............................                                      5.23%                                    5.37%
</TABLE>
(1)  The effect of loans in nonaccrual  status and the effect of fees  collected
     on loans is not significant to the computations. All loans and deposits are
     domestic.
(2)  Average investment securities exclude the valuation allowance on securities
     available-for-sale.




                                       13
<PAGE>


                              Rate/Volume Analysis

Analysis of Changes in Net  Interest  Income.  Net  interest  income can also be
analyzed  in terms of the impact of  changing  rates and  changing  volume.  The
following  table  describes  the extent to which  changes in interest  rates and
changes in the volume of earning assets and interest-  bearing  liabilities have
affected the Company's  interest income and interest  expense during the periods
indicated.  Information on changes in each category  attributable to (i) changes
due to volume (change in volume  multiplied by prior period rate),  (ii) changes
due to rates  (changes in rates  multiplied  by prior  period  volume) and (iii)
changes in  rate/volume  (change in rate  multiplied by the change in volume) is
provided as follows:

<TABLE>
<CAPTION>
                                                                                         2000 compared to 1999
                                                                                     Due to increase (decrease) in
 (Dollars in thousands)                                               Volume            Rate             Volume/Rate          Total
                                                                      ------            ----             -----------          -----
Interest income:
<S>                                                                   <C>               <C>                <C>                <C>
  Loans ..................................................            $  880            $   (4)            $  (21)            $  855
  Securities, taxable ....................................                18                 -                  3                 21
  Nonmarketable securities ...............................                 5                (1)                (1)                 3
  Federal funds sold and other ...........................               111                 1                  1                113
                                                                      ------            ------             ------             ------
    Total interest income ................................             1,014                (4)               (18)               992
                                                                      ------            ------             ------             ------
Interest expense:
  Interest-bearing deposits ..............................               383                12                 45                440
                                                                      ------            ------             ------             ------
    Total interest expense ...............................               383                12                 45                440
                                                                      ------            ------             ------             ------
      Net interest income ................................            $  631            $  (16)            $  (63)            $  552
                                                                      ======            ======             ======             ======
</TABLE>


                               Net Interest Income

Interest Sensitivity.  The Bank monitors and manages the pricing and maturity of
its assets and  liabilities  in order to diminish the potential  adverse  impact
that  changes in  interest  rates  could have on its net  interest  income.  The
principal  monitoring  technique  employed by the Bank is the measurement of the
Bank's  interest  sensitivity  "gap," which is the  positive or negative  dollar
difference  between  assets and  liabilities  that are subject to interest  rate
repricing  within a given  period  of time.  Interest  rate  sensitivity  can be
managed   by   repricing    assets   or    liabilities,    selling    securities
available-for-sale,  replacing an asset or  liability at maturity,  or adjusting
the interest rate during the life of an asset or liability.  Managing the amount
of assets and  liabilities  repricing in this same time interval  helps to hedge
the risk and  minimize  the impact on net  interest  income of rising or falling
interest rates.




                                       14
<PAGE>



                         Net Interest Income (continued)

The following table sets forth the Bank's interest rate  sensitivity at December
31, 2000.

Interest Sensitivity Analysis

<TABLE>
<CAPTION>
                                                                          After One   After Three               Greater
                                                                           Through      Through                 Than One
December 31, 2000                                            Within One     Three        Twelve    Within One  Year or Non-
(Dollars in thousands)                                          Month       Months      Months        Year      Sensitive     Total
                                                                -----       ------      ------        ----      ---------     -----
Assets
Earning Assets
<S>                                                           <C>          <C>         <C>         <C>          <C>         <C>
  Loans ...................................................   $    126     $    412    $  1,883    $  2,421     $ 12,736    $ 15,157
  Securities, taxable .....................................          -            -           -           -          347         347
  Nonmarktable securities .................................        239            -           -         239            -         239
  Federal funds sold ......................................      4,610            -           -       4,610            -       4,610
                                                              --------     --------    --------    --------     --------    --------
    Total earning assets ..................................      4,975          412       1,883       7,270       13,083      20,353
                                                              --------     --------    --------    --------     --------    --------

Liabilities
Interest-bearing liabilities:
  Interest-bearing deposits:
    Demand deposits .......................................      2,726            -           -       2,726            -       2,726
    Savings deposits ......................................      3,411            -           -       3,411            -       3,411
    Time deposits .........................................        797        1,878       7,240       9,915          107      10,022
                                                              --------     --------    --------    --------     --------    --------
      Total interest-bearing deposits .....................      6,934        1,878       7,240      16,052          107      16,159
                                                              --------     --------    --------    --------     --------    --------
      Total interest-bearing liabilities ..................      6,934        1,878       7,240      16,052          107      16,159
                                                              --------     --------    --------    --------     --------    --------
Period gap ................................................   $ (1,959)    $ (1,466)   $ (5,357)   $ (8,782)    $ 12,976
                                                              ========     ========    ========     =======     ========
Cumulative gap ............................................   $ (1,959)    $ (3,425)   $ (8,782)   $ (8,782)    $  4,194
                                                              ========     ========    ========     =======     ========
Ratio of cumulative gap to total earning assets ...........      (9.63)%     (16.83)%    (43.15)%    (43.15)%     20.61%
</TABLE>


The  above  table   reflects  the  balances  of   interest-earning   assets  and
interest-bearing  liabilities  at the  earlier of their  repricing  or  maturity
dates.  Overnight  federal funds are reflected at the earliest  pricing interval
due to the immediately available nature of the instruments.  Debt securities are
reflected at each instrument's ultimate maturity date. Scheduled payment amounts
of fixed rate  amortizing  loans are reflected at each  scheduled  payment date.
Scheduled  payment  amounts of variable rate  amortizing  loans are reflected at
each scheduled  payment date until the loan may be repriced  contractually;  the
unamortized  balance is  reflected at that point.  Interest-bearing  liabilities
with no  contractual  maturity,  such as savings  deposits and  interest-bearing
transaction  accounts,  are  reflected in the earliest  repricing  period due to
contractual  arrangements  which give the Bank the opportunity to vary the rates
paid on those deposits  within a thirty-day or shorter  period.  Fixed rate time
deposits,   principally   certificates  of  deposit,   are  reflected  at  their
contractual maturity date.




                                       15
<PAGE>


Net Interest Income (continued)

The Bank generally would benefit from  increasing  market rates of interest when
it  has an  asset-sensitive  gap  position  and  generally  would  benefit  from
decreasing market rates of interest when it is liability-sensitive.  The Bank is
cumulatively  liability-sensitive over the one month to twelve month time frame.
However,  the Bank's gap  analysis is not a precise  indicator  of its  interest
sensitivity position.  The analysis presents only a static view of the timing of
maturities and repricing  opportunities,  without taking into consideration that
changes in interest rates do not affect all assets and liabilities  equally. For
example,  rates  paid on a  substantial  portion  of core  deposits  may  change
contractually  within a relatively  short time frame, but those rates are viewed
by management as significantly less  interest-sensitive  than market-based rates
such as those  paid on  noncore  deposits.  Accordingly,  management  believes a
liability-sensitive  gap  position  is not as  indicative  of  the  Bank's  true
interest  sensitivity  as it would be for an  organization  which  depends  to a
greater extent on purchased funds to support earning assets. Net interest income
may  be  impacted  by  other  significant  factors  in  a  given  interest  rate
environment,  including  changes in the  volume  and mix of  earning  assets and
interest-bearing liabilities.

                     Provision and Allowance for Loan Losses

General.  The Bank has developed  policies and  procedures  for  evaluating  the
overall  quality  of its  credit  portfolio  and the  timely  identification  of
potential  problem credits.  On a quarterly basis, the Bank's Board of Directors
reviews and approves the  appropriate  level for the Bank's  allowance  for loan
losses  based upon  management's  recommendations,  the results of the  internal
monitoring and reporting system,  and an analysis of economic  conditions in its
market.  The experience of management with other financial  institutions and the
experience  of  other  financial  institutions  in the area has been to fund the
allowance for loan losses at approximately 1% of total loans outstanding until a
history is established for the Bank.

Additions to the allowance for loan losses,  which are expensed as the provision
for loan losses on the Bank's  statement  of income,  are made  periodically  to
maintain the allowance at an appropriate level based on management's analysis of
the potential risk in the loan portfolio. Loan losses and recoveries are charged
or credited directly to the allowance. The amount of the provision is a function
of the level of loans outstanding,  the level of nonperforming loans, historical
loan loss  experience,  the amount of loan losses  actually  charged against the
reserve during a given period, and current and anticipated economic conditions.

The Bank's  allowance for loan losses is based upon judgments and assumptions of
risk elements in the portfolio,  future economic  conditions,  and other factors
affecting  borrowers.  The process includes  identification and analysis of loss
potential in various portfolio  segments utilizing a credit risk grading process
and  specific  reviews  and  evaluations  of  significant  problem  credits.  In
addition,  management  monitors the overall portfolio quality through observable
trends in delinquency,  chargeoffs,  and general and economic  conditions in the
service   area.   The  adequacy  of  the  allowance  for  loan  losses  and  the
effectiveness  of the Bank's  monitoring  and analysis  system are also reviewed
periodically by the banking regulators and the Bank's independent auditors.

Based on present information and an ongoing evaluation, management considers the
allowance  for loan losses to be adequate to meet  presently  known and inherent
risks in the loan  portfolio.  Management's  judgment  about the adequacy of the
allowance is based upon a number of  assumptions  about  future  events which it
believes to be reasonable but which may or may not be accurate.  Thus, there can
be no assurance that  chargeoffs in future periods will not exceed the allowance
for loan losses or that  additional  increases in the  allowance for loan losses
will not be required.  The Bank does not allocate the  allowance for loan losses
to  specific  categories  of loans but  evaluates  the  adequacy  on an  overall
portfolio basis utilizing a risk grading system.




                                       16
<PAGE>



               Provision and Allowance for Loan Losses (continued)

The following  table sets forth certain  information  with respect to the Bank's
allowance for loan losses and the  composition  of chargeoffs and recoveries for
the year ended  December  31,  2000 and for the period June 15, 1999 to December
31, 1999.

Allowance for Loan Losses

<TABLE>
<CAPTION>
(Dollars in thousands)                                                                                  2000                  1999
                                                                                                        ----                  ----
<S>                                                                                                   <C>                   <C>
Total loans outstanding at end of period ...............................................              $15,157               $ 5,536
                                                                                                      =======               =======
Average loans outstanding ..............................................................              $10,052               $ 1,604
                                                                                                      =======               =======
Balance of allowance for loan losses at beginning of period ............................              $    55               $     -
Loan losses:
  Real estate - construction ...........................................................                    -                     -
  Real estate - mortgage ...............................................................                    -                     -
  Commercial and industrial ............................................................                    -                     -
  Consumer and other ...................................................................                   21                     7
                                                                                                      -------               -------
     Total loan losses .................................................................                   21                     7
                                                                                                      -------               -------
Recoveries of previous loan losses:
  Real estate - construction ...........................................................                    -                     -
  Real estate - mortgage ...............................................................                    -                     -
  Commercial and industrial ............................................................                    -                     -
  Consumer and other ...................................................................                    6                     -
                                                                                                      -------               -------
     Total recoveries ..................................................................                    6                     -
                                                                                                      -------               -------
Net loan losses ........................................................................                   15                     7
Provision for loan losses ..............................................................                  119                    62
                                                                                                      -------               -------
Balance of allowance for loan losses at end of period ..................................              $   159               $    55
                                                                                                      =======               =======

Allowance for loan losses to period end loans ..........................................                 1.05%                 0.99%
Net chargeoffs to average loans ........................................................                 0.15                  0.44
</TABLE>

                              Nonperforming Assets

Nonperforming  Assets.  There was one loan totaling $10,789 in nonaccrual status
at December 31, 2000. There were no loans past due ninety days or more and still
accruing interest at December 31, 2000.

Accrual of interest is discontinued on a loan when  management  believes,  after
considering  economic and business conditions and collection  efforts,  that the
borrower's  financial  condition  is such that the  collection  of  interest  is
doubtful.  A delinquent  loan is generally  placed in nonaccrual  status when it
becomes 90 days or more past due.  When a loan is placed in  nonaccrual  status,
all interest  which has been accrued on the loan but remains  unpaid is reversed
and deducted from current  earnings as a reduction of reported  interest income.
No additional  interest is accrued on the loan balance  until the  collection of
both principal and interest becomes reasonably  certain.  When a problem loan is
finally  resolved,  there may ultimately be an actual write-down or chargeoff of
the principal balance of the loan which would necessitate  additional charges to
earnings. For all periods presented, the additional interest income, which would
have been  recognized  into  earnings  if the Bank's  nonaccrual  loans had been
current in accordance with their original terms, is immaterial.




                                       17
<PAGE>



                        Nonperforming Assets (continued)

Potential  Problem Loans. At December 31, 2000, the Bank had identified  $39,597
in criticized  loans and $12,766 in classified loans through its internal review
mechanisms.  The  results of this  internal  review  process are  considered  in
determining  management's  assessment  of the adequacy of the allowance for loan
losses.  Until a history is established,  the overall  objective of the Bank has
been to maintain  the  allowance  for loan losses at  approximately  1% of total
loans to provide for potential problem loans.

                         Noninterest Income and Expense

Noninterest  Income.  The largest  component of noninterest  income for the year
ended December 31, 2000, was service  charges on deposit  accounts which totaled
$46,848. This amount included NSF and overdraft fees of $28,846.

The  largest  component  of  noninterest  income for the period June 15, 1999 to
December  31,  1999,  was  service  charges on deposit  accounts  which  totaled
$15,420. This amount included NSF and overdraft fees of $12,025.

The following  table sets forth the principal  components of noninterest  income
for the year  ended  December  31,  2000  and for the  period  June 15,  1999 to
December 31, 1999.

(Dollars in thousands)                                          2000        1999
                                                                ----        ----
Service charges on deposit accounts ..................          $47          $15
Credit life insurance commissions ....................           14           11
Other income .........................................           18            5
                                                                ---          ---
    Total noninterest income .........................          $79          $31
                                                                ===          ===

Noninterest  Expense.  Salaries and employee benefits,  the largest component of
noninterest  expense,  were  $660,924  for the year  ended  December  31,  2000.
Furniture and equipment  expense and net occupancy  expense  totaled $89,845 and
$60,064,  respectively,  for the year ended December 31, 2000.  Other  operating
expenses  totaled  $491,690 for the year.  The largest  item in other  operating
expenses was the service bureau data processing charges which totaled $83,728.

Salaries and employee  benefits,  the largest component of noninterest  expense,
totaled  $531,874  for the period June 15, 1999 to December  31,  1999.  Of this
total,  $160,576  related to  salaries  prior to the Bank's  opening on June 15,
1999.  Other operating  expense totaled $484,869 for the period June 15, 1999 to
December  31,  1999.  Pre-opening  expenses  associated  with  forming  the Bank
comprise a significant portion of these expenses.

The following table sets forth the primary components of noninterest expense for
the year ended  December  31,  2000 and for the period June 15, 1999 to December
31, 1999.

(Dollars in thousands)                                      2000           1999
                                                            ----           ----
Salaries and employee benefits .....................       $  661        $  532
Net occupancy and equipment expense ................          150           100
Advertising and public relations ...................           65            70
Office supplies, stationery, and printing ..........           35            55
Service bureau and related expense .................           84            41
Professional fees and services .....................           51           112
Telephone expenses .................................           19            20
Other ..............................................          237           187
                                                           ------        ------
     Total noninterest expense .....................       $1,302        $1,117
                                                           ======        ======
Efficiency ratio ...................................       152.01%       432.95%



                                       18
<PAGE>


                                 Earning Assets

Loans.  Loans are the largest  category of earning assets and typically  provide
higher yields than the other types of earning assets. Associated with the higher
loan  yields  are the  inherent  credit and  liquidity  risks  which  management
attempts to control and counterbalance.  Loans averaged  $10,052,000 in 2000. At
December 31, 2000, total loans were $15,157,361.

The following table sets forth the composition of the loan portfolio by category
at the dates  indicated and highlights the Bank's general  emphasis on all types
of lending.

Composition of Loan Portfolio

<TABLE>
<CAPTION>
December 31,                                                              2000                                   1999
                                                                          ----                                   ----
(Dollars in thousands)                                           Amount     Percent of Total             Amount     Percent of Total
                                                                 ------     ----------------             ------     ----------------
<S>                                                            <C>                <C>                  <C>                <C>
Commercial and industrial ..........................           $  3,329            21.96%              $  1,192            21.54%
Real estate
  Construction .....................................              1,439             9.49                    121             2.19
  Mortgage-residential .............................              4,422            29.17                  1,397            25.23
  Mortgage-nonresidential ..........................              1,936            12.77                    814            14.70
Consumer ...........................................              3,956            26.11                  1,858            33.56
Other ..............................................                 75             0.50                    154             2.78
                                                               --------           ------               --------           ------
     Total loans ...................................             15,157           100.00%                 5,536           100.00%
Allowance for loan losses ..........................               (159)                                    (55)
                                                               --------                                --------
     Net loans .....................................           $ 14,998                                $  5,481
                                                               ========                                ========
</TABLE>


The largest  component  of the Bank's  loan  portfolio  is real estate  mortgage
loans. At December 31, 2000,  real estate mortgage loans totaled  $6,357,811 and
represented 41.94% of the total loan portfolio.

In the context of this  discussion,  a "real estate mortgage loan" is defined as
any loan,  other than loans for construction  purposes,  secured by real estate,
regardless  of the  purpose of the loan.  It is common  practice  for  financial
institutions  in the Bank's  market  area to obtain a security  interest in real
estate whenever possible,  in addition to any other available  collateral.  This
collateral is taken to reinforce the likelihood of the ultimate repayment of the
loan and tends to increase  the  magnitude  of the real  estate  loan  portfolio
component.

Residential mortgage loans totaled $4,421,265 at December 31, 2000.  Residential
real  estate  loans  consist  of  first  and  second   mortgages  on  single  or
multi-family residential dwellings. Nonresidential mortgage loans, which include
commercial  loans  and  other  loans  secured  by  multi-family  properties  and
farmland,  totaled  $1,936,546 at December 31, 2000. The demand for  residential
and commercial real estate loans in the Hartsville  market has remained  stable.
The Bank has been able to compete favorably for residential  mortgage loans with
other  financial  institutions  by offering fixed rate products having three and
five year call provisions.

The Bank's  loan  portfolio  is also  comprised  heavily of consumer  loans.  At
December 31, 2000 consumer and other loans totaled  $4,031,263  and  represented
26.61% of the total loan portfolio.

Commercial  and  industrial  loans  totaled  $3,329,040 at December 31, 2000 and
comprised 21.96% of the total portfolio.




                                       19
<PAGE>



                           Earning Assets (continued)

The Bank's loan portfolio  reflects the diversity of its market. The Bank's home
office is located in  Hartsville  in  Darlington  County,  South  Carolina.  The
economy of  Hartsville  contains  elements  of medium  and light  manufacturing,
higher education, regional health care, and distribution facilities.  Management
expects the area to remain stable with continued growth in the near future.  The
diversity of the economy  creates  opportunities  for all types of lending.  The
Bank does not engage in foreign lending.

The repayment of loans in the loan  portfolio as they mature is also a source of
liquidity for the Bank. The following table sets forth the Bank's loans maturing
within specified intervals at December 31, 2000.

Loan Maturity Schedule and Sensitivity to Changes in Interest Rates

<TABLE>
<CAPTION>
                                                                                     Over One Year
December 31, 2000                                                     One Year or        Through         Over Five
 (Dollars in thousands)                                                   Less         Five Years           Years             Total
                                                                          ----         ----------           -----             -----
<S>                                                                    <C>               <C>               <C>               <C>
Commercial and industrial ..................................           $   230           $ 1,422           $ 1,677           $ 3,329
Real estate ................................................             1,390             2,896             3,511             7,797
Consumer and other .........................................               801             3,204                26             4,031
                                                                       -------           -------           -------           -------
                                                                       $ 2,421           $ 7,522           $ 5,214           $15,157
                                                                       -------           -------           -------           -------

Loans maturing after one year with:
  Fixed interest rates .....................................                                                                 $ 8,982
  Floating interest rates ..................................                                                                   3,754
                                                                                                                             -------
                                                                                                                             $12,736
                                                                                                                             =======
</TABLE>


The  information  presented  in the  above  table is  based  on the  contractual
maturities  of the  individual  loans,  including  loans which may be subject to
renewal  at their  contractual  maturity.  Renewal  of such  loans is subject to
review and credit approval as well as modification of terms upon their maturity.
Consequently,  management  believes this treatment  presents fairly the maturity
and repricing structure of the loan portfolio shown in the above table.

Investment  Securities.  The investment securities portfolio is also a component
of the Bank's total earning assets. Total securities available-for-sale averaged
$344,000 in 2000. At December 31, 2000, total securities available-for-sale were
$346,709. All securities were designated as available-for-sale and were recorded
at their  estimated  fair value.  Investment  securities  also  include  certain
nonmarketable  equity securities  including Federal Reserve Bank stock,  Federal
Home Loan  Bank  stock and  Community  Financial  Services,  Inc.  stock.  These
securities are recorded at their original cost and totaled  $238,603 at December
31, 2000.

The   following   table   sets   forth   the  fair   value  of  the   securities
available-for-sale held by the Bank at December 31, 2000 and 1999.

Fair Value of Securities

 December 31,                                                   2000       1999
                                                                ----       ----
 (Dollars in thousands)
U.S. government agencies and corporations ..............        $347        $342
                                                                ----        ----

Total securities available-for-sale ....................        $347        $342
                                                                ====        ====



                                       20
<PAGE>



                           Earning Assets (continued)

The following  table sets forth the scheduled  maturities  and average yields of
securities available-for-sale held at December 31, 2000.

Investment Securities Maturity Distribution and Yields

December 31, 2000                             Within Five Years     Total
                                              -----------------     -----
(Dollars in thousands)                        Amount    Yield   Amount    Yield
                                              ------    -----   ------    -----
U.S. government agencies and corporations ..   $347      6.40%   $347      6.40%
                                               ----              ----
 Total securities available for sale .......   $347      6.40%   $347      6.40%
                                               ====              ====

Other attributes of the securities  portfolio,  including yields and maturities,
are  discussed  above  in  "---Net  Interest  Income---   Interest   Sensitivity
Analysis."

Short-Term  Investments.  Short-term  investments,  which  consist  primarily of
federal  funds  sold,  averaged  $4,294,000  in  2000.  At  December  31,  2000,
short-term  investments totaled $4,610,000.  These funds are an important source
of the Bank's  liquidity.  Federal  funds are  generally  invested in an earning
capacity on an overnight basis.

                                    Deposits

Average  interest-bearing  liabilities totaled $10,184,000 in 2000. In 2000, all
interest-bearing liabilities were deposits.

Deposits.  Average total deposits totaled  $11,736,000  during 2000. At December
31, 2000, total deposits were $18,464,219.

The following  table sets forth the deposits of the Bank by category at December
31, 2000 and 1999.

Deposits

<TABLE>
<CAPTION>
December 31,                                                                 2000                                1999
                                                                             ----                                ----
                                                                                     Percent of                           Percent of
(Dollars in thousands)                                             Amount             Deposits           Amount            Deposits
                                                                   ------             --------           ------            --------
<S>                                                               <C>                 <C>               <C>                  <C>
Demand deposit accounts ....................................      $ 2,305              12.48%           $   992               15.64%
NOW accounts ...............................................        2,726              14.76                773               12.19
Money market accounts ......................................        3,247              17.59              1,763               27.79
Savings accounts ...........................................          165               0.89                105                1.66
Time deposits less than $100,000 ...........................        6,119              33.14              1,907               30.06
Time deposits of $100,000 or over ..........................        3,902              21.14                803               12.66
                                                                  -------             ------            -------              ------
  Total deposits ...........................................      $18,464             100.00%           $ 6,343              100.00%
                                                                  =======                               =======
</TABLE>

Core  deposits,  which  exclude  time  deposits of  $100,000 or more,  provide a
relatively stable funding source for the Bank's loan portfolio and other earning
assets. The Bank's core deposits were $14,561,835 at December 31, 2000.




                                       21
<PAGE>



                              Deposits (continued)

Deposits, and particularly core deposits, have been the Bank's primary source of
funding and have enabled the Bank to meet  successfully  both its short-term and
long-term  liquidity  needs.  Management  anticipates  that such  deposits  will
continue to be the Bank's  primary  source of funding in the future.  The Bank's
loan-to-deposit ratio was 85.65% at December 31, 2000. The maturity distribution
of the Bank's time  deposits over $100,000 at December 31, 2000, is set forth in
the following table:

Maturities of Time Deposits of $100,000 or More

<TABLE>
<CAPTION>
                                                                                                   After Six
                                                                                    After Three     Through
                                                                      Within Three  Through Six      Twelve     After Twelve
(Dollars in thousands)                                                   Months       Months         Months      Months       Total
                                                                         ------       ------         ------      ------       -----
<S>                                                                      <C>           <C>           <C>         <C>          <C>
Certificates of deposit of $100,000 or more .....................        $1,133        $  942        $1,827      $   -        $3,902
</TABLE>


Approximately  29.04% of the Bank's time  deposits  over  $100,000 had scheduled
maturities  within three months,  and 53.18% had  maturities  within six months.
Large  certificate  of  deposit  customers  tend to be  extremely  sensitive  to
interest rate levels, making these deposits less reliable sources of funding for
liquidity planning purposes than core deposits.

                                     Capital

The Bank is subject to various regulatory capital  requirements  administered by
the federal banking agencies.  Failure to meet minimum capital  requirements can
initiate  certain  mandatory and possibly  additional  discretionary  actions by
regulators  that,  if  undertaken,  could have a  material  effect on the Bank's
financial  statements.  Under capital  adequacy  guidelines  and the  regulatory
framework for prompt  corrective  action,  the Bank must meet  specific  capital
guidelines that involve quantitative measures of the Bank's assets, liabilities,
and certain  off-balance-sheet  items as calculated under regulatory  accounting
practices.  The Bank's capital amounts and  classifications  are also subject to
qualitative judgments by the regulators about components,  risk weightings,  and
other factors.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Bank to  maintain  minimum  ratios of Tier 1 and total  capital as a
percentage of assets and off-balance-sheet exposures,  adjusted for risk weights
ranging  from  0% to  100%.  Tier 1  capital  of the  Bank  consists  of  common
shareholders'  equity,  excluding  the  unrealized  gain or  loss on  securities
available-for-sale,  minus certain  intangible assets. The Bank's Tier 2 capital
consists of the allowance for loan losses subject to certain limitations.  Total
capital for purposes of computing the capital ratios consists of the sum of Tier
1 and Tier 2 capital.  The regulatory minimum requirements are 4% for Tier 1 and
8% for total risk-based capital.

The Bank is also required to maintain  capital at a minimum level based on total
assets,  which is known as the  leverage  ratio.  Only the  strongest  banks are
allowed to  maintain  capital at the minimum  requirement  of 3%. All others are
subject to maintaining ratios 1% to 2% above the minimum.




                                       22
<PAGE>



                               Capital (continued)

The Bank is required to maintain  certain  risk-based and leverage  ratios.  The
Bank exceeded these  regulatory  capital ratios at December 31, 2000 and 1999 as
set forth in the following table.

Analysis of Capital and Capital Ratios

<TABLE>
<CAPTION>
December 31,                                                                                             2000                 1999
                                                                                                         ----                 ----
(Dollars in thousands)
<S>                                                                                                     <C>                 <C>
Tier 1 capital .............................................................................            $ 4,570             $ 4,925
Tier 2 capital .............................................................................                159                  55
                                                                                                        -------             -------
 Total qualifying capital ..................................................................            $ 4,729             $ 4,980
                                                                                                        =======             =======

Risk-adjusted total assets (including off-balance-sheet exposures) .........................            $17,033             $ 6,635
                                                                                                        =======             =======

Tier 1 risk-based capital ratio ............................................................              26.83%              74.24%
Total risk-based capital ratio .............................................................              27.77%              75.06%
Tier 1 leverage ratio ......................................................................              21.70%              47.02%
</TABLE>


                              Liquidity Management

Liquidity management involves monitoring the Bank's sources and uses of funds in
order to meet its day-to-day cash flow  requirements  while maximizing  profits.
Liquidity  represents  the ability of a bank to convert assets into cash or cash
equivalents without significant loss and to raise additional funds by increasing
liabilities.  Without proper liquidity management, the Bank would not be able to
perform the primary function of a financial  intermediary and would,  therefore,
not be able to meet the needs of the communities it serves.

Liquidity  management  is made more  complex  because  different  balance  sheet
components are subject to varying  degrees of management  control.  For example,
the timing of maturities of the  investment  portfolio is very  predictable  and
subject to a high degree of control at the time  investment  decisions are made.
However,  net deposit inflows and outflows are far less  predictable and are not
subject to nearly the same degree of control. Nevertheless,  management believes
that cash and cash  equivalents  in  combination  with deposit  inflows and loan
repayments  are  adequate  to meet  reasonably  foreseeable  demands for deposit
withdrawals and the funding of new loans.

                               Impact of Inflation

Unlike  most  industrial  companies,  the assets and  liabilities  of  financial
institutions  such as the Bank are  primarily  monetary  in  nature.  Therefore,
interest rates have a more significant  effect on the Bank's performance than do
the effects of changes in the general rate of inflation and change in prices. In
addition, interest rates do not necessarily move in the same direction or in the
same  magnitude as the prices of goods and  services.  As discussed  previously,
management seeks to manage the relationships  between interest  sensitive assets
and  liabilities  in order to protect  against wide interest rate  fluctuations,
including those resulting from inflation.



                                       23
<PAGE>


                    Accounting and Financial Reporting Issues

In June 1998, the Financial  Accounting  Standards Board (FASB) issued Statement
(SFAS) No. 133,  Accounting for Derivative  Instruments and Hedging  Activities,
effective  for fiscal  years  beginning  after  June 15,  2000.  This  Statement
establishes  accounting and reporting  standards for derivative  instruments and
hedging activities,  including certain derivative  instruments embedded in other
contracts,  and requires that an entity  recognize all  derivatives as assets or
liabilities in the balance sheet and measure them at fair value.  The accounting
for changes in the fair value of a derivative  depends on how the  derivative is
used and how the derivative is designated. The Bank adopted SFAS No. 133 on July
1, 2000.  The  adoption  of SFAS No.  133 did not have a material  impact on the
financial statements.


                              Industry Developments

On November 4, 1999, the U.S.  Senate and House of  Representatives  each passed
the   Gramm-Leach-Bliley   Act,  previously  known  as  the  Financial  Services
Modernization  Act of 1999. The Act was signed into law by President  Clinton in
November 1999.  Among other things,  the Act repeals the  restrictions  on banks
affiliating  with  securities  firms  contained  in  sections  20  and 32 of the
Glass-Steagall Act. The Act also creates a new "financial holding company" under
the Bank Holding Company Act, which will permit holding companies to engage in a
statutorily  provided  list of financial  activities,  including  insurance  and
securities  underwriting and agency activities,  merchant banking, and insurance
company portfolio investment activities. The Act also authorizes activities that
are  "complementary"  to financial  activities.  The Act is intended to grant to
community  banks  certain  powers as a matter of right that larger  institutions
have accumulated on an ad hoc basis.  Nevertheless,  the Act may have the result
of  increasing  the  amount  of  competition  that the Bank  faces  from  larger
institutions  and other  types of  companies.  In fact,  it is not  possible  to
predict the full effect that the Act will have on the Bank.

From time to time,  various bills are  introduced in the United States  Congress
with  respect to the  regulation  of  financial  institutions.  Certain of these
proposals,  if adopted,  could significantly  change the regulation of banks and
the financial  services  industry.  The Bank cannot predict whether any of these
proposals will be adopted or, if adopted,  how these  proposals would affect the
Bank.

Item 7.  Financial Statements.

Independent Auditors' Report
Balance Sheets
Statements of Income
Statements of Changes in Shareholders' Equity and Comprehensive Income
Statements of Cash Flows
Notes to Financial Statements



                                       24
<PAGE>


                       TOURVILLE, SIMPSON & CASKEY, L.L.P.
                          CERTIFIED PUBLIC ACCOUNTANTS
                              POST OFFICE BOX 1769
                         COLUMBIA, SOUTH CAROLINA 29202

                            TELEPHONE (803) 252-3000
                               FAX (803) 252-2226
WILLIAM E. TOURVILLE, CPA                                   MEMBER AICPA SEC AND
HARRIET S. SIMPSON, CPA, CISA, CDP                             PRIVATE COMPANIES
R. JASON CASKEY, CPA                                           PRACTICE SECTIONS

JOHN T. DRAWDY, JR., CPA
TIMOTHY R. ALFORD, CPA
DAVID J. WATKINS II, CPA







                          INDEPENDENT AUDITORS' REPORT







The Board of Directors
Hartsville Community Bank, N.A.
Hartsville, South Carolina


We have audited the  accompanying  balance sheets of Hartsville  Community Bank,
N.A.,  as of December  31, 2000 and 1999 and the related  statements  of income,
changes in shareholders' equity and comprehensive income, and cash flows for the
year ended  December  31, 2000 and for the period June 15, 1999 to December  31,
1999.  These  financial   statements  are  the   responsibility  of  the  Bank's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards 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.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Hartsville  Community  Bank,
N.A., as of December 31, 2000 and 1999 and the results of their  operations  and
cash flows for the year ended December 31, 2000 and for the period June 15, 1999
to  December  31,  1999  in  conformity  with  generally   accepted   accounting
principles.



s/Tourville, Simpson and Caskey, L.L.P.

Tourville, Simpson and Caskey, L.L.P.
Columbia, South Carolina
January 31, 2001




                                       25
<PAGE>


                         HARTSVILLE COMMUNITY BANK, N.A.

                                 Balance Sheets
                           December 31, 2000 and 1999

<TABLE>
<CAPTION>
                                                                                                   2000                    1999
                                                                                                   ----                    ----
Assets:
 Cash and cash equivalents:
<S>                                                                                            <C>                     <C>
  Cash and due from banks ..........................................................           $  1,408,628            $    894,020
  Federal funds sold ...............................................................              4,610,000               3,470,000
                                                                                               ------------            ------------
    Total cash and cash equivalents ................................................              6,018,628               4,364,020
                                                                                               ------------            ------------

 Investment securities:
  Securities available-for-sale ....................................................                346,709                 342,131
  Nonmarketable equity securities ..................................................                238,603                 168,150
                                                                                               ------------            ------------
    Total investment securities ....................................................                585,312                 510,281
                                                                                               ------------            ------------

 Loans receivable: .................................................................             15,157,361               5,536,489
  Less allowance for loan losses ...................................................               (159,000)                (54,629)
                                                                                               ------------            ------------
    Loans, net .....................................................................             14,998,361               5,481,860

 Premises, furniture and equipment, net ............................................              1,051,941                 607,219
 Accrued interest receivable .......................................................                 89,540                  28,573
 Other assets ......................................................................                560,275                 334,313
                                                                                               ------------            ------------
    Total assets ...................................................................           $ 23,304,057            $ 11,326,266
                                                                                               ============            ============

Liabilities:
 Deposits:
  Noninterest-bearing transaction accounts .........................................           $  2,304,641            $    991,569
  Interest-bearing transaction accounts ............................................              2,726,322                 773,323
  Savings ..........................................................................              3,411,490               1,867,787
  Time deposits $100,000 and over ..................................................              3,902,384                 803,481
  Other time deposits ..............................................................              6,119,382               1,907,206
                                                                                               ------------            ------------
    Total deposits .................................................................             18,464,219               6,343,366

 Accrued interest payable ..........................................................                245,113                  32,200
 Other liabilities .................................................................                 24,005                  25,607
                                                                                               ------------            ------------
    Total liabilities ..............................................................             18,733,337               6,401,173
                                                                                               ------------            ------------

Commitments and Contingencies (Notes 11 and 16)

Shareholders' Equity:
 Common stock, $5.00 par value, 2,000,000 shares authorized;
   560,270 shares issued and outstanding ...........................................              2,801,350               2,801,350
 Capital surplus ...................................................................              2,732,191               2,732,191
 Retained earnings (deficit) .......................................................               (963,212)               (607,845)
 Accumulated other comprehensive income (loss) .....................................                    391                    (603)
                                                                                               ------------            ------------
    Total shareholders' equity .....................................................              4,570,720               4,925,093
                                                                                               ------------            ------------

    Total liabilities and shareholders' equity .....................................           $ 23,304,057            $ 11,326,266
                                                                                               ============            ============
</TABLE>


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



                                       26
<PAGE>


                              Statements of Income
                    for the year ended December 31, 2000 and
                for the period June 15, 1999 to December 31, 1999

<TABLE>
<CAPTION>
                                                                                                  2000                       1999
                                                                                                  ----                       ----
Interest income:
<S>                                                                                           <C>                       <C>
 Loans, including fees .........................................................              $ 1,021,267               $   166,701
 Investment securities:
   Taxable .....................................................................                   22,110                     1,202
   Nonmarketable equity securities .............................................                    8,907                     5,465
 Federal funds sold ............................................................                  267,120                   153,984
                                                                                              -----------               -----------
   Total .......................................................................                1,319,404                   327,352
                                                                                              -----------               -----------

Interest expense:
 Time deposits $100,000 and over ...............................................                  134,967                    13,499
 Other deposits ................................................................                  405,859                    66,677
 Short-term borrowings .........................................................                        -                    20,241
                                                                                              -----------               -----------
   Total .......................................................................                  540,826                   100,417
                                                                                              -----------               -----------

Net interest income ............................................................                  778,578                   226,935

Provision for loan losses ......................................................                  118,884                    61,637
                                                                                              -----------               -----------

Net interest income after provision for loan losses ............................                  659,694                   165,298
                                                                                              -----------               -----------

Other income:
 Service charges on deposit accounts ...........................................                   46,848                    15,420
 Credit life insurance commissions .............................................                   14,270                    10,595
 Other income ..................................................................                   17,190                     4,696
                                                                                              -----------               -----------
   Total .......................................................................                   78,308                    30,711
                                                                                              -----------               -----------

Other expenses:
 Salaries and employee benefits ................................................                  660,924                   531,874
 Net occupancy expense .........................................................                   60,064                    46,865
 Furniture and equipment expense ...............................................                   89,845                    53,246
 Other operating expenses ......................................................                  491,690                   484,869
                                                                                              -----------               -----------
   Total .......................................................................                1,302,523                 1,116,854
                                                                                              -----------               -----------

Income (loss) before income taxes ..............................................                 (564,521)                 (920,845)

Income tax provision (benefit) .................................................                 (209,154)                 (313,000)
                                                                                              -----------               -----------

Net income (loss) ..............................................................              $  (355,367)              $  (607,845)
                                                                                              ===========               ===========

Earnings per share
Basic earnings (losses) per share ..............................................              $     (0.63)              $     (1.08)
Diluted earnings (losses) per share ............................................              $     (0.63)              $     (1.08)
</TABLE>


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


                                       27
<PAGE>





     Statements of Changes in Shareholders' Equity and Comprehensive Income
                    for the year ended December 31, 2000 and
                for the period June 15, 1999 to December 31, 1999

<TABLE>
<CAPTION>
                                                                                                         Accumulated
                                                   Common Stock                              Retained       Other
                                                   ------------               Capital        Earnings   Comprehensive
                                               Shares         Amount          Surplus        (Deficit)       Income         Total
                                               ------         ------          -------        ---------       ------         -----

<S>                                           <C>          <C>              <C>              <C>             <C>        <C>
Common stock issued ....................      560,270      $ 2,801,350      $ 2,801,350              -           -      $ 5,602,700

Cost of common stock issuance ..........                                        (69,159)                                    (69,159)

Net income (loss)
 for the period . ......................                                                      (607,845)                    (607,845)

Other comprehensive
 income (loss), net of tax
 benefit of $310........................                                                                      (603)            (603)
                                                                                                                        -----------

Comprehensive income ...................                                                                                   (608,448)
                                              -------      -----------      -----------      ---------       -----      -----------

Balance, ...............................      560,270        2,801,350        2,732,191       (607,845)       (603)       4,925,093
 December 31, 1999

Net income (loss) ......................                                                      (355,367)                    (355,367)

Other comprehensive
 income (loss), net of tax
 expense of $539 .......................                                                                       994              994
                                                                                                                        -----------

Comprehensive income ...................                                                                                   (354,373)
                                              -------      -----------      -----------      ---------       -----      -----------

Balance,
December 31, 2000 ......................      560,270      $ 2,801,350      $ 2,732,191      $(963,212)      $ 391      $ 4,570,720
                                              =======      ===========      ===========      =========       =====      ===========
</TABLE>




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


                                       28
<PAGE>


                            Statements of Cash Flows
                    for the year ended December 31, 2000 and
                for the period June 15, 1999 to December 31, 1999

<TABLE>
<CAPTION>
                                                                                                     2000                 1999
                                                                                                     ----                 ----
Cash flows from operating activities:
<S>                                                                                              <C>                   <C>
 Net income (loss) .....................................................................         $   (355,367)         $   (607,845)
 Adjustments to reconcile net income to net cash (used) provided by
 operating activities:
  Provision for possible loan losses ...................................................              118,884                61,637
  Depreciation and amortization expense ................................................               75,789                44,789
  Accretion and premium amortization ...................................................               (3,045)                 (161)
  Deferred income tax provision (benefit) ..............................................             (209,693)             (313,000)
  Increase in accrued interest receivable ..............................................              (60,967)              (28,573)
  Increase in accrued interest payable .................................................              212,913                32,200
  Increase in other assets .............................................................              (16,808)              (21,003)
  (Decrease) increase in other liabilities .............................................               (1,602)               25,607
                                                                                                 ------------          ------------
    Net cash used by operating activities ..............................................             (239,896)             (806,349)
                                                                                                 ------------          ------------

Cash flows from investing activities:
 Purchases of securities available-for-sale ............................................                    -              (342,883)
 Purchase of nonmarketable equity securities ...........................................              (70,453)             (168,150)
 Net increase in loans to customers ....................................................           (9,635,385)           (5,543,497)
 Purchase of premises and equipment ....................................................             (520,511)             (652,008)
                                                                                                 ------------          ------------
    Net cash used by investing activities ..............................................          (10,226,349)           (6,706,538)
                                                                                                 ------------          ------------

Cash flows from financing activities:
 Net increase in demand deposits, interest-bearing transaction accounts
 and savings accounts ..................................................................            4,809,774             3,632,679
 Net increase in certificates of deposit and other time deposits .......................            7,311,079             2,710,687
 Issuance of common stock, net of direct costs .........................................                    -             5,533,541
                                                                                                 ------------          ------------
    Net cash provided by financing activities ..........................................           12,120,853            11,876,907
                                                                                                 ------------          ------------

Net increase in cash and cash equivalents ..............................................            1,654,608             4,364,020

Cash and cash equivalents, beginning of period .........................................            4,364,020                     -
                                                                                                 ------------          ------------

Cash and cash equivalents, end of period ...............................................         $  6,018,628          $  4,364,020
                                                                                                 ============          ============
</TABLE>



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


                                       29
<PAGE>


                         HARTSVILLE COMMUNITY BANK, N.A.
                          Notes to Financial Statements


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization - Hartsville  Community Bank,  N.A., (the Bank) was incorporated on
March 24, 1999 and commenced  business on June 15, 1999. The principal  business
activity  of the  Bank is to  provide  banking  services  to  domestic  markets,
principally  in  Darlington  County,  South  Carolina.  The  Bank is a  national
chartered  bank, and its deposits are insured by the Federal  Deposit  Insurance
Corporation. As discussed in Note 19, the shareholders approved the formation of
a holding  company known as Regional  Bankshares,  Inc. The  effective  date was
January 1, 2001 and the holding company  acquired all of the outstanding  common
stock of the Bank.

Management's  Estimates - 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 at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

Material  estimates that are  particularly  susceptible  to  significant  change
relate to the  determination  of the  allowance  for losses on loans,  including
valuation  allowances  for  impaired  loans,  and the  valuation  of real estate
acquired  in  connection  with  foreclosures  or in  satisfaction  of loans.  In
connection  with the  determination  of the  allowances  for losses on loans and
foreclosed  real  estate,   management   obtains   independent   appraisals  for
significant  properties.  Management must also make estimates in determining the
estimated useful lives and methods for depreciating premises and equipment.

While  management  uses available  information to recognize  losses on loans and
foreclosed  real estate,  future  additions to the  allowances  may be necessary
based on changes in local economic conditions. In addition, regulatory agencies,
as an integral part of their examination process, periodically review the Bank's
allowances  for losses on loans and  foreclosed  real estate.  Such agencies may
require  the  Bank to  recognize  additions  to the  allowances  based  on their
judgments about information  available to them at the time of their examination.
Because of these  factors,  it is reasonably  possible that the  allowances  for
losses on loans and  foreclosed  real estate may change  materially  in the near
term.

Significant Group  Concentrations of Credit Risk - Most of the Bank's activities
are with customers located within Darlington County in South Carolina. The types
of  securities  in which the Bank invests are  discussed in Note 3. The types of
lending that the Bank engages in are discussed in Note 4. The Bank does not have
any significant concentrations to any one industry or customer.

Securities  Available-for-Sale  - Securities  available-for-sale  are carried at
amortized  cost and  adjusted  to  estimated  market  value by  recognizing  the
aggregate  unrealized gains or losses in a valuation  account.  Aggregate market
valuation  adjustments  are  recorded  in  shareholders'  equity net of deferred
income taxes.  Reductions  in market value  considered by management to be other
than temporary are reported as a realized loss and a reduction in the cost basis
of the security.  The adjusted cost basis of investments  available-for-sale  is
determined by specific  identification and is used in computing the gain or loss
upon sale.

Nonmarketable  Equity Securities - Nonmarketable  equity securities  include the
cost of the Bank's investment in the stock of the Federal Reserve Bank,  Federal
Home Loan Bank, and Community Financial Services, Inc. The stocks have no quoted
market  value and no ready market  exists.  Investment  in Federal  Reserve Bank
stock is required by law of every national bank.  Investment in the Federal Home
Loan Bank is a condition of borrowing  from the Federal Home Loan Bank,  and the
stock is pledged to collateralize  such borrowings.  There were no borrowings at
December  31,  2000.  At December 31, 2000 and 1999,  the Bank's  investment  in
Federal Reserve Bank stock was $168,150. At December 31, 2000, investment in the
Federal  Home  Loan Bank was  $20,400  and  investment  in  Community  Financial
Services, Inc. was $50,053. Dividends received on these stocks are included as a
separate component in interest income.




                                       30
<PAGE>


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
---------------------------------------------------

Loans - Loans are stated at their unpaid principal  balance.  Interest income is
computed using the simple interest method and is recorded in the period earned.

When  serious  doubt  exists as to the  collectibility  of a loan or when a loan
becomes  90 days  past due as to  principal  or  interest,  interest  income  is
generally  discontinued  unless the estimated net realizable value of collateral
exceeds the principal balance and accrued  interest.  When interest accruals are
discontinued, income earned but not collected is reversed.

Allowance  for Loan Losses - An allowance for possible loan losses is maintained
at a level deemed  appropriate by management to provide adequately for known and
inherent risks in the loan  portfolio.  The allowance is based upon a continuing
review of past loan loss  experience,  current  and future  economic  conditions
which may affect the borrowers'  ability to pay, and the  underlying  collateral
value of the loans.  Loans which are deemed to be uncollectible  are charged off
and deducted  from the  allowance.  The  provision  for possible loan losses and
recoveries of loans previously charged off are added to the allowance.

The Bank  identifies  impaired  loans  through its normal  internal  loan review
process.  Loans on the Bank's problem loan watch list are considered potentially
impaired loans. These loans are evaluated in determining whether all outstanding
principal  and interest are expected to be collected.  Loans are not  considered
impaired  if a minimal  delay  occurs and all  amounts  due,  including  accrued
interest at the contractual  interest rate for the period of delay, are expected
to be  collected.  At December  31,  2000,  management  has  determined  that no
impairment  of loans  existed  that would  have a material  effect on the Bank's
financial statements.

Premises  and  Equipment  - Premises  and  equipment  are  stated at cost,  less
accumulated  depreciation.  The  provision for  depreciation  is computed by the
straight-line  method,  based on the  estimated  useful lives for  furniture and
equipment of 5 to 7 years.  Leasehold  improvements are amortized over 20 years.
The cost of assets sold or otherwise  disposed of and the related  allowance for
depreciation  are eliminated from the accounts and the resulting gains or losses
are reflected in the income statement when incurred. Maintenance and repairs are
charged to current  expense.  The costs of major renewals and  improvements  are
capitalized.

Income Taxes - Income taxes are the sum of amounts  currently  payable to taxing
authorities  and the net changes in income taxes payable or refundable in future
years.  Income  taxes  deferred  to future  years  are  determined  utilizing  a
liability   approach.   This  method  gives  consideration  to  the  future  tax
consequences  associated with differences  between financial  accounting and tax
bases of certain assets and liabilities  which are principally the allowance for
loan losses and depreciable premises and equipment.

Retirement Plan - The Bank has a SIMPLE  retirement plan covering  substantially
all employees.  Under the plan, participants are permitted to make discretionary
contributions  up to  $6,000.  The  Bank can  match  employee  contributions  by
contributing up to 3% of each employee's annual  compensation up to a maximum of
$3,000. The Bank matched  contributions in 2000 and 1999 and charges to earnings
were $15,411 and $8,145, respectively.

Earnings Per Share - Basic  earnings per share  represents  income  available to
shareholders divided by the weighted-average number of common shares outstanding
during the period.  Diluted earnings per share reflects additional common shares
that would have been  outstanding if dilutive  potential  common shares had been
issued,  as well as any  adjustment to income that would result from the assumed
issuance.  Potential  common shares that may be issued by the Bank relate solely
to outstanding warrants, and are determined using the treasury stock method.

Comprehensive  Income - Accounting  principles generally require that recognized
revenue, expenses, gains, and losses be included in net income. Although certain
changes  in assets  and  liabilities,  such as  unrealized  gains and  losses on
available-for-sale  securities,  are  reported  as a separate  component  of the
equity  section of the balance  sheet,  such items,  along with net income,  are
components of comprehensive income.



                                       31
<PAGE>



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
---------------------------------------------------

The  components  of other  comprehensive  income and related tax effects for the
year ended  December  31, 2000 and for the period June 15, 1999 to December  31,
1999 are as follows:

<TABLE>
<CAPTION>
                                                                                                           2000               1999
                                                                                                           ----               ----
<S>                                                                                                      <C>                <C>
Unrealized gains (losses) on available-for-sale securities: ..................................           $ 1,533            $  (913)
Reclassification adjustment for gains (losses) realized in net income ........................                 -                  -
                                                                                                         -------            -------

Net unrealized gains (losses) on securities ..................................................             1,533               (913)

Tax effect ...................................................................................              (539)               310
                                                                                                         -------            -------

Net-of-tax amount ............................................................................           $   994            $  (603)
                                                                                                         =======            =======
</TABLE>


Statement of Cash Flows - For purposes of reporting  cash flows in the financial
statements,  the Bank considers certain highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents. Cash equivalents
include amounts due from banks and federal funds sold. Generally,  federal funds
are sold for one-day periods.

Interest paid on deposits and other borrowings  totaled $327,913 and $68,217 for
the year ended  December  31,  2000 and for the period June 15, 1999 to December
31, 1999.

There were no income tax payments during the year ended December 31, 2000 or for
the period June 15, 1999 to December 31, 1999.

Changes in the valuation account of securities available-for-sale, including the
deferred tax effects,  are considered  noncash  transactions for purposes of the
statement  of cash  flows  and are  presented  in  detail  in the  notes  to the
financial statements.

Off-Balance-Sheet  Financial  Instruments - In the ordinary  course of business,
the Company enters into  off-balance-sheet  financial instruments  consisting of
commitments to extend credit and letters of credit. These financial  instruments
are  recorded  in the  financial  statements  when they  become  payable  by the
customer.

Recent  Accounting  Pronouncements  - In June  1998,  the  Financial  Accounting
Standards  Board  (FASB)  issued  Statement  (SFAS)  No.  133,   Accounting  for
Derivative  Instruments  and  Hedging  Activities,  effective  for fiscal  years
beginning  after  June 15,  2000.  This  Statement  establishes  accounting  and
reporting standards for derivative instruments and hedging activities, including
certain derivative instruments embedded in other contracts, and requires that an
entity  recognize all  derivatives as assets or liabilities in the balance sheet
and measure them at fair value.  The accounting for changes in the fair value of
a derivative  depends on how the  derivative  is used and how the  derivative is
designated.  The Bank adopted SFAS No. 133 on July 1, 2000. The adoption of SFAS
No. 133 did not have a material impact on the financial statements.

Reclassifications   -  Certain  captions  and  amounts  in  the  1999  financial
statements were reclassified to conform with the 2000 presentation.


NOTE 2 - CASH AND DUE FROM BANKS

The Bank is required to maintain  cash  balances  with the Bankers Bank to cover
all cash letter  transactions.  At December 31, 2000, the requirement was met by
the cash balance in the account and by the line available for federal funds.



                                       32
<PAGE>



NOTE 3 - INVESTMENT SECURITIES

The amortized cost and estimated fair values of securities available-for-sale at
December 31, 2000 and 1999 were:

<TABLE>
<CAPTION>
                                                                                            Gross Unrealized          Estimated Fair
                                                                      Amortized             ----------------          Estimated Fair
                                                                         Cost            Gains           Losses            Value
                                                                         ----            -----           ------            -----
December 31, 2000
<S>                                                                   <C>                <C>             <C>             <C>
U.S. government agencies and corporations .................           $346,089           $ 623           $      3        $346,709
                                                                      ========           =====           ========        ========

December 31, 1999
U.S. government agencies and corporations .................           $343,044           $   -           $    913        $342,131
                                                                      ========           =====           ========        ========
</TABLE>


There were no sales of securities in 2000 or 1999.

The following is a summary of maturities of securities  available-for-sale as of
December 31, 2000. The amortized cost and estimated fair values are based on the
contractual  maturity  dates.  Actual  maturities  may differ  from  contractual
maturities  because  borrowers may have the right to call or prepay  obligations
with or without penalty.

                                                            Securities
                                                         Available-For-Sale
                                                         ------------------
                                                      Amortized   Estimated Fair
                                                        Cost          Value
                                                        ----          -----
Due after one year but within five years .........    $346,089       $346,709
                                                      --------       --------

     Total .......................................    $346,089       $346,709
                                                      ========       ========


At  December  31,  2000,  securities  with an  amortized  cost of  $148,687  and
estimated fair value of $148,684 were pledged to secure public  deposits.  There
were no securities  pledged as collateral to secure public  deposits at December
31, 1999.


NOTE 4 - LOANS

Major  classifications  of loans  receivable  at December  31, 2000 and 1999 are
summarized as follows:

                                                      2000               1999
                                                      ----               ----
Real estate - construction ...............        $ 1,439,247        $   120,757
Real estate - mortgage ...................          6,357,811          2,210,718
Commercial and industrial ................          3,329,040          1,191,545
Consumer and other .......................          4,031,263          2,013,469
                                                  -----------        -----------

    Total gross loans ....................        $15,157,361        $ 5,536,489
                                                  ===========        ===========




                                       33
<PAGE>



NOTE 4 - LOANS (continued)

Transactions  in the allowance  for loan losses for the year ended  December 31,
2000 and for the period June 15, 1999 to December 31, 1999 are summarized below:

                                                          2000           1999
                                                          ----           ----
Balance, beginning of year .......................     $  54,629      $       -
Provision charged to operations ..................       118,884         61,637
Recoveries on loans previously charged-off .......         6,506              -
Loans charged-off ................................       (21,019)        (7,008)
                                                       ---------      ---------

    Balance, end of year .........................     $ 159,000      $  54,629
                                                       =========      =========


At  December  31,  2000,  the Bank had one loan in  nonaccrual  status  totaling
$10,789 and no loans past due ninety days or more and still  accruing  interest.
At December 31, 1999, the Bank had no loans in nonaccrual  status and there were
no loans past due ninety days or more.


NOTE 5 - PREMISES AND EQUIPMENT

Premises and equipment consisted of the following at December 31, 2000 and 1999:

                                                        2000             1999
                                                        ----             ----
Land and leasehold improvements ..............       $  353,669       $  343,844
Furniture and equipment ......................          354,237          293,353
Construction in progress .....................          464,613           14,811
                                                     ----------       ----------
     Total ...................................        1,172,519          652,008
Less, accumulated depreciation ...............          120,578           44,789
                                                     ----------       ----------

     Premises and equipment, net .............       $1,051,941       $  607,219
                                                     ==========       ==========


The Bank has committed to spend approximately $1,000,000 for the construction of
the new corporate headquarters. Construction in progress at December 31, 2000 of
$464,613 is for the headquarters.


NOTE 6 - DEPOSITS

At December 31, 2000, the scheduled  maturities of  certificates of deposit were
as follows:

 Maturing In                                                            Amount
 -----------                                                            ------
 2001                                                                $ 9,914,851
 2002                                                                    102,915
 2003                                                                      4,000
                                                                     -----------

     Total                                                           $10,021,766
                                                                     ===========




                                       34
<PAGE>



NOTE 7 - SHAREHOLDERS' EQUITY

Certain  restrictions  exist regarding the ability of the Bank to pay dividends.
The approval of the Office of the Comptroller of the Currency is required to pay
dividends  in excess of the Bank's net profits (as defined) for the current year
plus  retained net profits (as defined) for the  preceding  two years,  less any
required  transfers to surplus.  As of December 31, 2000 and 1999,  the Bank had
negative retained earnings and therefore, could not pay dividends.


NOTE 8 - OTHER OPERATING EXPENSES

Other operating expenses for the year ended December 31, 2000 and for the period
June 15, 1999 to December 31, 1999 are summarized below:

                                                             2000          1999
                                                             ----          ----
Professional fees ..................................      $ 51,074      $111,181
Telephone expenses .................................        19,405        20,013
Office supplies, stationery, and printing ..........        35,682        54,706
Service bureau and related expense .................        83,728        41,018
Advertising and public relations ...................        64,746        70,525
Automobile and mileage .............................        13,307        22,922
Other ..............................................       223,748       164,504
                                                          --------      --------

     Total .........................................      $491,690      $484,869
                                                          ========      ========


NOTE 9 - INCOME TAXES

Income tax expense  (benefit)  for the year ended  December 31, 2000 and for the
period June 15, 1999 to December 31, 1999 is summarized as follows:

                                                          2000          1999
                                                          ----          ----
Currently payable:
  Federal ........................................      $      -       $      -
  State ..........................................             -              -
                                                       ---------      ---------
     Total current ...............................             -              -
                                                       ---------      ---------
Change in deferred income taxes:
  Federal ........................................      (184,232)      (276,726)
  State ..........................................       (24,383)       (36,584)
                                                       ---------      ---------
     Total deferred ..............................      (208,615)      (313,310)
                                                       ---------      ---------

Income tax expense ...............................     $(208,615)     $(313,310)
                                                       =========      =========

Income tax expense is allocated as follows:
  To continuing operations .......................     $(209,154)     $(313,000)
  To shareholders' equity ........................           539           (310)
                                                       ---------      ---------

    Income tax expense ...........................     $(208,615)     $(313,310)
                                                       =========      =========




                                       35
<PAGE>


NOTE 9 - INCOME TAXES (continued)
---------------------

The gross  amounts of deferred  tax assets and deferred  tax  liabilities  as of
December 31, 2000 and 1999 are as follows:

                                                              2000        1999
                                                              ----        ----
Deferred tax assets:
 Unrealized loss on securities available-for-sale ....     $     -    $     310
 Allowance for loan losses ...........................      58,652       20,586
 Contributions carryforward ..........................       1,267          464
 Net operating loss carryforward .....................     435,660      223,532
 Organization costs ..................................      89,053      114,496
                                                         ---------    ---------
    Total gross deferred tax assets ..................     584,632      359,388
 Less, valuation allowance ...........................     (42,744)     (38,018)
                                                         ---------    ---------
    Total net deferred tax assets ....................     541,888      321,370
                                                         ---------    ---------

Deferred tax liabilities:
 Unrealized gain on securities available-for-sale ....         229            -
 Accumulated depreciation ............................      19,195        8,060
                                                         ---------    ---------
    Total deferred tax liabilities ...................      19,424        8,060
                                                         ---------    ---------

    Net deferred tax asset ...........................   $ 522,464    $ 313,310
                                                         =========    =========


Deferred tax assets  represent the future tax benefit of deductible  differences
and,  if it is more  likely  than not that a tax asset will not be  realized,  a
valuation  allowance is required to reduce the  recorded  deferred tax assets to
net realizable value. As of December 31, 2000, management has determined that it
is more likely than not that  $541,888 of the total  deferred  tax asset will be
realized, and accordingly, has established a valuation allowance of $42,744.

The Bank has a net  operating  loss for income tax purposes of  $1,131,584 as of
December 31, 2000. This net operating loss expires in the year 2020.

Reconciliation  between  the  income tax  expense  and the  amount  computed  by
applying the federal statutory rate of 34% to income before income taxes for the
year ended  December  31, 2000 and for the period June 15, 1999 to December  31,
1999 follows:

                                                             2000         1999
                                                             ----         ----
Tax expense at statutory rate ........................   $(191,937)   $(313,087)
State income tax, net of federal income tax benefit ..     (25,062)     (41,028)
Change in the deferred tax asset valuation allowance .       4,726       38,018
Other, net ...........................................       3,119        3,097
                                                         ---------    ---------
     Total ...........................................   $(209,154)   $(313,000)
                                                         =========    =========




                                       36
<PAGE>



NOTE 10 - LEASES

The Bank leases its main office  building under an operating  lease from a third
party.  Rental  expense for the year ended December 31, 2000 was $11,280 and for
the period June 15, 1999 to December 31, 1999 was $9,950. The initial lease term
expired  on  October  31,  1999.  However,  the Bank  exercised  both of its two
successive  options to renew the lease for a period of one year each at a rental
rate of $940 per month.  There is no option to purchase  the building at the end
of the lease.

The Bank also leases the operations  center from Industrial  Properties,  Inc. A
director of the Bank is a shareholder in this company. The use of the operations
center is  considered  to be temporary;  and,  therefore,  the building is being
rented on a monthly basis. The monthly rental rate is $1,600. Rental expense for
the year ended December 31, 2000 was $19,200 and for the period June 15, 1999 to
December 31, 1999 was $1,600.

The estimated future minimum rental  commitments  under these cancelable  leases
for the year 2001 as of  December  31, 2000 is $30,480.  These  commitments  are
based on a full year of leasing the facilities.  The Bank expects to cease using
both buildings once the new headquarters is completed.


NOTE 11 - RELATED PARTY TRANSACTIONS

Certain parties  (principally  certain  directors and executive  officers of the
Bank,  their immediate  families and business  interests) were loan customers of
and had other  transactions  in the  normal  course of  business  with the Bank.
Related party loans are made on substantially the same terms, including interest
rates  and  collateral,   as  those   prevailing  at  the  time  for  comparable
transactions with unrelated persons and do not involve more than the normal risk
of collectibility.  As of December 31, 2000 and 1999, the Bank had related party
loans totaling $1,864,222 and $1,504,047, respectively. During 2000, advances on
related party loans totaled $1,762,588 and repayments were $1,402,413.

As discussed in Note 10, the Bank leases its operations  center from a director.
The total  amount  paid to the  director  for rental  expense for the year ended
December  31, 2000 was $19,200 and for the period June 15, 1999 to December  31,
1999 was $1,600.


NOTE 12 - COMMITMENTS AND CONTINGENCIES

In the ordinary  course of business,  the Bank may, from time to time,  become a
party to legal claims and disputes.  At December 31, 2000,  management and legal
counsel  are not aware of any pending or  threatened  litigation  or  unasserted
claims or  assessments  that  could  result in  losses,  if any,  that  would be
material to the financial statements.


NOTE 13 - STOCK WARRANTS

In accordance  with the provision of the Bank's initial public stock sale,  each
of the twelve  organizers  received  5,000 stock  warrants  which gives them the
right to purchase  5,000 shares of the Bank's  common stock at a price of $10.00
per share. The warrants  vested/vest  equally over a three-year period beginning
June 15,  2000 and  expire on June 15,  2010 or ninety  days  after the  warrant
holder ceases to serve as a member of the Board of Directors.




                                       37
<PAGE>



NOTE 13 - STOCK WARRANTS (continued)

A summary of the status of the Bank's stock warrants as of December 31, 2000 and
1999, and changes during the periods is presented below:

                                                            2000         1999
                                                            ----         ----
                                                          Warrants     Warrants
                                                          --------     --------
Outstanding at beginning of year .................         60,000              -
Granted ..........................................              -         60,000
Exercised ........................................              -              -
Cancelled ........................................              -              -
                                                           ------         ------

Outstanding at ending of year ....................         60,000         60,000
                                                           ======         ======

At December  31, 2000,  there were 20,000  warrants  exercisable.  There were no
warrants exercisable at December 31, 1999.


NOTE 14 - EARNINGS PER SHARE

Net  income  per  share - basic  is  computed  by  dividing  net  income  by the
weighted-average  number of common  shares  outstanding.  Net income per share -
diluted is  computed by dividing  net income by the  weighted-average  number of
common  shares  outstanding  and  dilutive  common share  equivalents  using the
treasury stock method.  Dilutive common share equivalents  include common shares
issuable upon exercise of  outstanding  stock  warrants.  There were no dilutive
common share  equivalents  outstanding  during 2000 or 1999 due to the net loss;
therefore,  basic  earnings  per share and diluted  earnings  per share were the
same.

                                                            2000          1999
                                                            ----          ----
Net income (loss) per share - basic computation:

Net income (loss) available to common shareholders ..   $ (355,367)   $(607,845)
                                                        ==========    =========

Average common shares outstanding - basic ...........      560,270      560,270
                                                        ==========    =========

Net income (loss) per share - basic .................   $    (0.63)   $   (1.08)
                                                        ==========    =========


NOTE 15 - REGULATORY MATTERS

The Bank is subject to various regulatory capital  requirements  administered by
the federal banking agencies.  Failure to meet minimum capital  requirements can
initiate certain mandatory,  and possibly  additional  discretionary  actions by
regulators  that,  if  undertaken,  could have a direct  material  effect on the
Bank's  financial   statements.   Under  capital  adequacy  guidelines  and  the
regulatory  framework for prompt corrective  action, the Bank must meet specific
capital  guidelines  that involve  quantitative  measures of the Bank's  assets,
liabilities,  and certain off-balance-sheet items as calculated under regulatory
accounting  practices.  The Bank's capital amounts and  classification  are also
subject to  qualitative  judgments  by the  regulators  about  components,  risk
weightings, and other factors.



                                       38
<PAGE>



NOTE 15 - REGULATORY MATTERS (continued)

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Bank to  maintain  minimum  ratios of Tier 1 and total  capital as a
percentage of assets and off-balance-sheet exposures,  adjusted for risk weights
ranging from 0% to 100%. Tier 1 capital consists of common shareholders' equity,
excluding the unrealized  gain or loss on securities  available-for-sale,  minus
certain  intangible  assets.  Tier 2 capital  consists of the allowance for loan
losses subject to certain  limitations.  Total capital for purposes of computing
the  capital  ratios  consists  of the sum of  Tier 1 and  Tier 2  capital.  The
regulatory  minimum  requirements  are 4% for Tier 1 and 8% for total risk-based
capital.

The Bank is also required to maintain  capital at a minimum level based on total
assets,  which is known as the  leverage  ratio.  Only the  strongest  banks are
allowed to  maintain  capital at the minimum  requirement  of 3%. All others are
subject to maintaining ratios 1% to 2% above the minimum.

As of December 31, 2000,  the most recent  notification  from the Bank's primary
regulator categorized it as well-capitalized  under the regulatory framework for
prompt  corrective  action.  There are no conditions  or events that  management
believes have changed the Bank's category.

The following  table  summarizes the capital  amounts and ratios of the Bank and
the regulatory minimum requirements at December 31, 2000 and 1999.

<TABLE>
<CAPTION>
                                                                                                                     To Be Well-
                                                                                                                  Capitalized Under-
                                                                                           For Capital            Prompt Corrective
                                                                     Actual             Adequacy Purposes         Action Provisions
                                                              Amount        Ratio      Amount        Ratio      Amount         Ratio
                                                              ------        -----      ------        -----      ------         -----
December 31, 2000
<S>                                                        <C>             <C>       <C>             <C>      <C>             <C>
 Total capital (to risk-weighted assets) ..............    $4,729,329      27.77%    $1,362,662      8.00%    $1,703,327      10.00%
 Tier 1 capital (to risk-weighted assets) .............     4,570,329      26.83%       681,331      4.00%     1,021,996       6.00%
 Tier 1 capital (to average assets) ...................     4,570,329      21.70%       842,285      4.00%     1,052,856       5.00%

December 31, 1999
 Total capital (to risk-weighted assets) ..............    $4,980,325      75.06%    $  530,805      8.00%    $  663,507      10.00%
 Tier 1 capital (to risk-weighted assets) .............     4,925,696      74.24%       265,403      4.00%       398,104       6.00%
 Tier 1 capital (to average assets) ...................     4,925,696      47.02%       419,000      4.00%       523,750       5.00%
</TABLE>

NOTE 16 - UNUSED LINES OF CREDIT

As of December 31, 2000, the Bank had unused lines of credit to purchase federal
funds  from  unrelated  banks  totaling  $2,650,000.  These  lines of credit are
available on a one to fourteen day basis for general corporate purposes.




                                       39
<PAGE>



NOTE 17 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

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
financial  instruments  consist of commitments to extend credit.  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.  Commitments  generally
have fixed expiration dates or other termination clauses and may require payment
of a fee. A  commitment  involves,  to varying  degrees,  elements of credit and
interest rate risk in excess of the amount  recognized in the balance sheet. The
Bank's exposure to credit loss in the event of nonperformance by the other party
to the  instrument is  represented  by the  contractual  notional  amount of the
instrument. Since certain commitments are expected to expire without being drawn
upon, the total  commitment  amounts do not  necessarily  represent  future cash
requirements.  The Bank uses the same credit  policies in making  commitments to
extend credit as it does for on-balance-sheet instruments.

Collateral held for commitments to extend credit varies but may include accounts
receivable,   inventory,   property,   plant,   equipment  and  income-producing
commercial properties.

The  following   table   summarizes  the  Bank's   off-balance-sheet   financial
instruments whose contract amounts represent credit risk as of December 31, 2000
and 1999:

                                                       2000               1999
                                                       ----               ----
Commitments to extend credit ...............        $2,597,058        $  449,508
Standby letters of credit ..................                 -                 -

Management is not aware of any significant concentrations of loans to classes of
borrowers or industries that would be affected similarly by economic conditions.
Although the Bank's loan portfolio is diversified,  a substantial portion of its
borrowers'  ability  to  honor  the  terms of their  loans is  dependent  on the
economic conditions in Darlington County and surrounding areas.


NOTE 18 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair  value of a  financial  instrument  is the amount at which the asset or
obligation could be exchanged in a current  transaction between willing parties,
other than in a forced or liquidation  sale.  Fair value estimates are made at a
specific  point in time based on relevant  market  information  and  information
about  the  financial  instruments.   Because  no  market  value  exists  for  a
significant portion of the financial instruments, fair value estimates are based
on  judgments  regarding  future  expected  loss  experience,  current  economic
conditions,  risk  characteristics of various financial  instruments,  and other
factors.

The following  methods and  assumptions  were used to estimate the fair value of
significant financial instruments:

Cash and Due from Banks - The carrying  amount is a reasonable  estimate of fair
value.

Federal  Funds  Sold -  Federal  funds  sold are for a term of one day,  and the
carrying amount approximates the fair value.

Investment Securities - The fair values of securities  available-for-sale  equal
the carrying  amounts,  which are the quoted  market  prices.  If quoted  market
prices  are not  available,  fair  values are based on quoted  market  prices of
comparable  securities.  The carrying value of nonmarketable  equity  securities
approximates the fair value since no ready market exists for the stocks.




                                       40
<PAGE>



NOTE 18 - FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

Loans - For certain  categories of loans,  such as variable rate loans which are
repriced  frequently  and have no  significant  change in credit risk and credit
card receivables,  fair values are based on the carrying amounts. The fair value
of other types of loans 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.

Deposits - The fair value of demand deposits, savings, and money market accounts
is the  amount  payable  on demand at the  reporting  date.  The fair  values of
certificates of deposit are estimated  using a discounted cash flow  calculation
that  applies  current  interest  rates to a  schedule  of  aggregated  expected
maturities.

Accrued  Interest   Receivable  and  Payable  -  The  carrying  value  of  these
instruments is a reasonable estimate of fair value.

Off-balance-sheet   Financial   Instruments  -  The  carrying  amount  for  loan
commitments which are off-balance-sheet  financial instruments  approximates the
fair value since the obligations are typically based on current market rates.

The  carrying  values  and  estimated  fair  values  of  the  Bank's   financial
instruments as of December 31, 2000 are as follows:

<TABLE>
<CAPTION>
                                                                 2000
                                                                 ----
                                                       Carrying   Estimated Fair
                                                       Amount          Value
                                                       ------          -----
Financial Assets:
<S>                                                <C>             <C>
  Cash and due from banks .......................  $  1,408,628    $  1,408,628
  Federal funds sold ............................     4,610,000       4,610,000
  Securities available-for-sale .................       346,709         346,709
  Nonmarketable equity securities ...............       238,603         238,603
  Loans .........................................    15,157,361      15,166,219
  Allowance for loan losses .....................      (159,000)       (159,000)
  Accrued interest receivable ...................        89,540          89,540

Financial Liabilities:
  Demand deposit, interest-bearing
    transaction, and savings accounts............     8,442,453       8,442,453
  Certificates of deposit and other time deposits    10,021,766       9,973,705
  Accrued interest payable ......................       245,113         245,113

<CAPTION>
                                                     Notional     Estimated Fair
 Off-balance-sheet Financial Instruments:              Amount         Value
                                                       ------         -----

   Commitments to extend credit                     $ 2,597,058     $ 2,597,058
   Letters of credit                                          -               -
</TABLE>

NOTE 19 - SUBSEQUENT EVENTS

On November 15, 2000,  the  shareholders  of Hartsville  Community  Bank,  N.A.,
approved a plan of corporate  reorganization  under which  Hartsville  Community
Bank, N.A., became a wholly-owned  subsidiary of Regional Bankshares,  Inc. (the
Company), which was organized at the direction of the Company's management.  The
original  authorized  common stock of Regional  Bankshares,  Inc., is 10,000,000
shares  with a par  value  of $1.00  per  share.  In  addition,  the  authorized
preferred   stock  of  the  Company  is  1,000,000   shares.   Pursuant  to  the
reorganization,  the  Company  issued  560,270  shares  of its  common  stock in
exchange  for all of the  560,270  outstanding  common  shares of the Bank.  The
effective date of the  reorganization  was January 1, 2001 and was accounted for
as if it were a pooling of interests.

On January 10, 2001, the Bank converted  from a  nationally-chartered  bank to a
state-chartered bank.



                                       41
<PAGE>




Item  8.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
          Financial Disclosure

          None.


                                    PART III


Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
        with Section 16(a) of the Exchange Act

     The  information  set forth under the captions  "Election of Directors" and
"Section 16(a) Beneficial Ownership Reporting Compliance" in the Proxy Statement
to be used in connection  with the Company's  2001 Annual  Stockholders  Meeting
(the "Proxy Statement"), is incorporated herein by reference.

Item 10.  Executive Compensation

         The information set forth under the caption  "Management  Compensation"
in the Proxy Statement is incorporated herein by reference.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

         The  information  set forth under the caption  "Security  Ownership  of
Management" in the Proxy Statement is incorporated herein by reference.

Item 12.   Certain Relationships and Related Transactions

         The information set forth under the caption "Certain  Relationships and
Related   Transactions"  in  the  Proxy  Statement  is  incorporated  herein  by
reference.




                                       42
<PAGE>



                                     PART IV

Item 13.  Exhibits and Reports on Form 8-K

(a)      Exhibits required by Item 601 of Regulation S-B.

Exhibit
Number            Description
------            -----------

3.1            Articles of  Incorporation  of the  Registrant  (incorporated  by
               reference to exhibits to Registrant's  Registration  Statement on
               Form 8-A (the "Form 8-A")).

3.2            Bylaws of Registrant (incorporated by reference to the Form 8-A).

4.1            Specimen Common Stock  Certificate  (incorporated by reference to
               the Form 8-A).

4.2            Form of Warrant Agreement Issued to Organizers.

10.1           Employment  Agreement between Hartsville Community Bank, National
               Association and Curtis A. Tyner.

10.2           Lease  Agreement  dated  October  23,  1998  between   Hartsville
               Community   Investors,   LLC  and  Gordon  McBride   (assumed  by
               Registrant).

(b)      No Reports on Form 8-K were filed in the fourth quarter of 2000.




                                       43
<PAGE>


                                   SIGNATURES

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
Registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.


                                 REGIONAL BANKSHARES, INC.

March 28, 2001                   By: s/Curtis A. Tyner, Sr.
                                    --------------------------------------------
                                     Curtis A. Tyner, Sr.
                                     President, Chief Executive Officer and
                                        Chief Financial Officer

         In accordance with the Exchange Act, this Report has been signed by the
following  persons on behalf of the  registrant and in the capacities and on the
dates stated.

<TABLE>
<CAPTION>

                  Signature                                         Title                               Date
                  ---------                                         -----                               ----

<S>                                            <C>                                                 <C>

s/Gosnold G. Segars, Jr.
----------------------------                         Chairman of the Board of Directors            March 28, 2001
Gosnold G. Segars, Jr.

s/Curtis A. Tyner, Sr.
----------------------------                      President, Chief Executive Officer, Chief        March 28, 2001
Curtis A. Tyner, Sr.                              Financial Officer and Director (Principal
                                                 Executive Officer and Principal Accounting
                                                                  Officer)
s/Colon M. Abraham
----------------------------                                      Director                         March 28, 2001
Colon M. Abraham

s/Francine P. Bachman
----------------------------                                      Director                         March 28, 2001
Francine P. Bachman

s/T. James Bell, Jr.
----------------------------                                      Director                         March 28, 2001
T. James Bell, Jr.

s/Peter C. Coggeshall, Jr.
----------------------------                                      Director                         March 28, 2001
Peter C. Coggeshall, Jr.

s/Franklin Hines
----------------------------                                      Director                         March 28, 2001
Franklin Hines

s/J. Richard Jones
----------------------------                                      Director                         March 28, 2001
J. Richard Jones

s/Woodward H. Morgan III
----------------------------                                      Director                         March 28, 2001
Woodward H. Morgan III

s/Randolph G. Rogers
----------------------------                                      Director                         March 28, 2001
Randolph G. Rogers

s/Howard W. Tucker, Jr.
----------------------------                                      Director                         March 28, 2001
Howard W. Tucker, Jr.

s/Patricia M. West
----------------------------                                      Director                         March 28, 2001
Patricia M. West
</TABLE>



                                       44
<PAGE>

                                  EXHIBIT INDEX

Exhibit
Number            Description
------            -----------

3.1.           Articles of  Incorporation  of the  Registrant  (incorporated  by
               reference to exhibits to Registrant's  Registration  Statement on
               Form 8-A (the "Form 8-A")).

3.2            Bylaws of Registrant (incorporated by reference to the Form 8-A).

4.1            Specimen Common Stock  Certificate  (incorporated by reference to
               the Form 8-A).

4.2            Form of Warrant Agreement Issued to Organizers.

10.1           Employment  Agreement between Hartsville Community Bank, National
               Association and Curtis A. Tyner.

10.2           Lease  Agreement  dated  October  23,  1998  between   Hartsville
               Community   Investors,   LLC  and  Gordon  McBride   (assumed  by
               Registrant).


                                       45