<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             Washington D.C. 25049

                                   FORM 10-Q

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

     For the quarterly period ended       March 31, 2001
                                   -------------------------------------------

                                      OR

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from ____________________to____________________

                       Commission File Number 000-23465
                                              ---------

                         Coddle Creek Financial Corp.
                         ----------------------------
            (Exact name of registrant as specified in its charter)

          North Carolina                               56-2045998
          --------------                               ----------
     (State or other jurisdiction of        (I.R.S. Employer Identification No.)
     incorporation or organization)

                   347 North Main Street/Post Office Box 117
                       Mooresville, North Carolina 28115
                       ---------------------------------
              (Address of principal executive offices) (Zip code)

                                (704) 664-4888
                                --------------
                          (Issuer's telephone number)

                                      N/A
                                      ---
  (Former name, former address and former fiscal year, if changed since last
                                    report)

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

As of May 5, 2001 there were issued and outstanding 699,156 shares of the
Registrant's common stock, no par value.
<PAGE>

                  CODDLE CREEK FINANCIAL CORP. AND SUBSIDIARY

                                     INDEX


<TABLE>
<CAPTION>
PART I.    FINANCIAL INFORMATION                                                        Page
                                                                                        ----
<S>                                                                                     <C>
 Item 1.    Financial Statements
 Condensed Consolidated Statements of Financial Condition as of
   March 31, 2001 (Unaudited) and December 31, 2000                                        1

 Condensed Consolidated Statements of Income and Comprehensive Income for
   the Three Months ended March 31, 2001 and 2000 (Unaudited)                              2

 Condensed Consolidated Statements of Cash Flows for the Three Months
   ended March 31, 2001 and 2000 (Unaudited)                                           3 - 4

 Notes to Condensed Consolidated Financial Statements (Unaudited)                      5 - 7

 Item 2.    Management's Discussion and Analysis of Financial Condition and
             Results of Operations                                                    8 - 10
 Item 3.    Quantitative and Qualitative Disclosures about Market Risk                    10

PART II.    OTHER INFORMATION

 Item 1.     Legal Proceedings                                                            11
 Item 2.     Changes in Securities and Use of Proceeds                                    11
 Item 3.     Defaults Upon Senior Securities                                              11
 Item 4.     Submission of Matters to a Vote of Security Holders                          11
 Item 5.     Other Information                                                            11
 Item 6.     Exhibits and Reports on Form 8-K                                        11 - 14

 Signatures                                                                          15 - 16
</TABLE>

This Form 10-Q contains forward-looking statements consisting of estimates with
respect to the financial condition, results of operations and other business of
Coddle Creek Financial Corp. that are subject to various factors which could
cause actual results to differ materially from those estimates.  Factors which
could influence the estimates include changes in the national, regional and
local market conditions, legislative and regulatory conditions, and an adverse
interest rate environment.
<PAGE>

CODDLE CREEK FINANCIAL CORP. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
March 31, 2001 and December 31, 2000

<TABLE>
<CAPTION>
                                                                March 31,       December 31,
ASSETS                                                             2001            2000
---------------------------------------------------------------------------------------------
                                                                 (Unaudited)        (Note)
<S>                                                             <C>              <C>
Cash and cash equivalents                                       $  17,655,000    $ 10,812,000
Certificates of deposit                                               100,000         100,000
Securities available for sale                                       2,080,000       3,067,000
Securities held to maturity                                         1,182,000       1,182,000
Federal Home Loan Bank stock                                        1,241,000       1,188,000
Loans receivable, net                                             127,343,000     130,518,000
Office properties and equipment, net                                1,025,000       1,059,000
Accrued interest receivable                                           931,000         974,000
Cash value of life insurance                                        1,334,000       1,335,000
Deferred income taxes                                               1,189,000       1,200,000
Income tax refund claim receivable                                    710,000         223,000
Prepaid expenses and other assets                                      68,000          74,000
                                                             --------------------------------
       Total assets                                             $ 154,858,000    $151,732,000
                                                             ================================

LIABILITIES AND STOCKHOLDERS' EQUITY
---------------------------------------------------------------------------------------------
Liabilities:
  Deposits                                                      $ 112,276,000    $104,369,000
  Note payable                                                     14,000,000       4,000,000
  Federal Home Loan Bank advances                                   5,000,000       5,000,000
  Advances from borrowers for taxes and insurance                     167,000          96,000
  Accounts payable and other liabilities                              473,000         755,000
  Deferred compensation                                             2,515,000       2,504,000
                                                             --------------------------------
                                                                  134,431,000     116,724,000
                                                             --------------------------------
Stockholders' Equity:
  Preferred stock, authorized 5,000,000 shares; none
    issued
  Common stock, no par value, authorized 20,000,000
    shares; March 31, 2001 issued 699,156 shares, December 31,
      2000 issued 699,156 shares
  Additional paid-in capital                                        9,989,000      22,889,000
  Unearned ESOP shares                                             (3,442,000)     (3,468,000)
  Management recognition plan                                        (278,000)       (370,000)
  Unearned compensation                                            (1,901,000)       (774,000)
  Retained earnings, substantially restricted                      16,039,000      16,732,000
  Accumulated other comprehensive income (loss)                        20,000          (1,000)
                                                             --------------------------------
       Total stockholders' equity                                  20,427,000      35,008,000
                                                             --------------------------------
       Total liabilities and stockholders' equity               $ 154,858,000    $151,732,000
                                                             ================================
</TABLE>

NOTE: The Condensed Consolidated Statement of Financial Condition as of December
      31, 2000 has been taken from the audited financial statements at that
      date.

See Notes to Condensed Consolidated Financial Statements.

                                       1
<PAGE>

CODDLE CREEK FINANCIAL CORP. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
  COMPREHENSIVE INCOME
For the Three Months Ended March 31, 2001 and 2000

<TABLE>
<CAPTION>
                                                                     2001            2000
---------------------------------------------------------------------------------------------
                                                                          (Unaudited)
<S>                                                           <C>                 <C>
Interest income:
  Loans                                                           $ 2,656,000     $ 2,474,000
  Investment securities                                                57,000          77,000
  Other                                                               179,000          97,000
                                                              -------------------------------
                                                                    2,892,000       2,648,000

Interest expense:
  Deposits                                                          1,443,000       1,007,000
  Federal Home Loan Bank advances and note payable                    341,000         279,000
                                                              -------------------------------
                                                                    1,784,000       1,286,000
                                                              -------------------------------
        Net interest income                                         1,108,000       1,362,000
Provision for loan losses                                                   -               -
                                                              -------------------------------
        Net interest income after provision for loan losses         1,108,000       1,362,000
                                                              -------------------------------
Noninterest income                                                     60,000         117,000
                                                              -------------------------------
Noninterest expenses:
  Compensation and employee benefits                                1,907,000         659,000
  Net occupancy                                                        81,000          50,000
  Deposit insurance premiums                                           10,000           5,000
  Data processing                                                      52,000          56,000
  Other                                                               211,000         162,000
                                                              -------------------------------
                                                                    2,261,000         932,000
                                                              -------------------------------
        Income (loss) before income taxes (benefit)                (1,093,000)        547,000
Income taxes (benefit)                                               (400,000)        216,000
                                                              -------------------------------
        Net income (loss)                                            (693,000)        331,000
Other comprehensive income, unrealized holding gains (losses)
  arising during the period, net of tax                                21,000          (7,000)
                                                              -------------------------------
        Comprehensive income (loss)                               $  (672,000)    $   324,000
                                                              ===============================

Basic earnings (loss) per share                                   $     (1.09)    $      0.53
                                                              ===============================
Diluted earnings (loss) per share                                 $     (1.09)    $      0.53
                                                              ===============================
Dividends per share                                               $         -     $      0.34
                                                              ===============================
Return of capital dividend per share                              $     20.00     $         -
                                                              ===============================
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                       2
<PAGE>

CODDLE CREEK FINANCIAL CORP. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2001 and 2000

<TABLE>
<CAPTION>
                                                               2001          2000
-------------------------------------------------------------------------------------
                                                                   (Unaudited)
<S>                                                       <C>           <C>
Cash Flows From Operating Activities
 Net income (loss)                                        $   (693,000) $    331,000
 Adjustments to reconcile net income (loss) to cash
 provided by (used in) operating activities:
 Provision for depreciation                                     34,000        32,000
 Vesting of management recognition plan                         92,000        96,000
 ESOP contribution                                             (76,000)      (80,000)
 Amortization of unearned compensation                          32,000        16,000
 Changes in assets and liabilities:
  (Increase) decrease in:
    Interest receivable                                         43,000         2,000
    Cash value of life insurance                                 1,000         3,000
    Income tax refund claim receivable                        (487,000)      142,000
    Prepaid expenses and other assets                            6,000       (23,000)
  Increase (decrease) in:
    Accounts payable and other liabilities                      89,000       (18,000)
    Deferred compensation                                       11,000         6,000
                                                          --------------------------

      Net cash provided by (used in) operating activities     (948,000)      507,000
                                                          --------------------------
Cash Flows From Investing Activities
 Net (increase) decrease in investments                        966,000      (227,000)
 Net (increase) decrease in loans receivable                 3,175,000    (3,420,000)
 Net decrease in real estate owned                                   -        65,000
 Purchase of office properties and equipment                         -       (50,000)
 Principal payment received on note receivable from ESOP        26,000             -
                                                          --------------------------
      Net cash provided by (used in) investing activities    4,167,000    (3,632,000)
                                                          --------------------------
Cash Flows From Financing Activities
 Net (increase) decrease in deposits                         7,907,000      (782,000)
 Proceeds from Federal Home Loan Bank advances                       -     8,000,000
 Payments on note payable                                   (2,000,000)   (1,000,000)
 Proceeds on note payable                                   12,000,000             -
 Increase in advances from borrowers for taxes and
 insurance                                                      71,000        64,000
 Cash dividends paid                                       (14,354,000)     (405,000)
                                                          --------------------------
      Net cash provided by financing activities              3,624,000     5,877,000
                                                          --------------------------
      Net increase in cash and cash equivalents              6,843,000     2,752,000
Cash and cash equivalents:
Beginning                                                   10,812,000     8,414,000
                                                          --------------------------
Ending                                                    $ 17,655,000  $ 11,166,000
                                                          ==========================
</TABLE>

                                  (Continued)

                                       3
<PAGE>

CODDLE CREEK FINANCIAL CORP. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Three Months Ended March 31, 2001 and 2000

<TABLE>
<CAPTION>
                                                              2001         2000
------------------------------------------------------------------------------------
                                                                 (Unaudited)
<S>                                                        <C>          <C>
Supplemental Disclosure of Cash Flow Information
  Cash payments for:
   Interest                                                $ 1,777,000  $ 1,308,000
   Income taxes                                                 87,000       74,000

  Change in accrued dividends                              $  (371,000) $ (189,000)
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                       4
<PAGE>

CODDLE CREEK FINANCIAL CORP. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

Note 1.  Nature of Business

On December 30, 1997, pursuant to a Plan of Conversion which was approved by it
members and regulators, Mooresville Savings Bank, Inc., SSB (the "Bank" or
"Mooresville Savings") converted from a North Carolina-chartered mutual savings
bank to a North Carolina-chartered stock savings bank (the "Conversion") and
became a wholly-owned subsidiary of Coddle Creek Financial Corp. (the
"Company").  Coddle Creek was formed to acquire all of the common stock of the
Bank upon its conversion to stock form.  The Company has no operations and
conducts no business of its own other than owning Mooresville Savings, investing
its portion of the net proceeds received in the Conversion, and lending funds to
the Employee Stock Ownership Plan (the "ESOP"), which was established in
connection with the Conversion.

Mooresville Savings' results of operations depend primarily on its net interest
income, which is the difference between interest income from interest-earning
assets and interest expense on interest-bearing liabilities.  The Bank's
operations are also affected by noninterest income, such as miscellaneous income
from loans, customer deposit account service charges, and other sources of
revenue.  The Bank's principal operating expenses, aside from interest expense,
consist of compensation and associated benefits, occupancy costs, furniture and
fixture expense, data processing charges, and other general and administrative
expenses.

Concurrent with the Conversion, and pursuant to North Carolina regulations, the
Bank established a liquidation account in an amount equal to its net worth as
reflected in its statement of financial condition contained in the prospectus
used in connection with the Company's initial public offering.  The liquidation
account will be maintained for the benefit of eligible deposit account holders
who continue to maintain their deposit accounts in the Bank after Conversion.
Only in the event of a complete liquidation of the Company will each deposit
account holder be entitled to receive a liquidation distribution from the
liquidation account in the amount of the then current adjusted subaccount
balance for deposit accounts then held before any liquidation distribution may
be made with respect to common stock.  Dividends paid by the Bank subsequent to
the Conversion cannot be paid from this liquidation account.

The Bank may not declare or pay a cash dividend on or repurchase any of its
common stock if its net worth would thereby be reduced below either the
aggregate amount then required for the liquidation account or the minimum
regulatory capital requirements imposed by federal and state regulations.  For a
period of five years after its Conversion, the Bank must obtain written approval
from the Administrator of the North Carolina Savings Institutions Division
before declaring or paying a cash dividend on its common stock in an amount  in
excess of one-half of the greater of (i) the Bank's net income for the most
recent fiscal year end, or (ii) the average of the Bank's net income after
dividends for the most recent year end and  not more than two of the immediately
preceding fiscal year ends.

On January 2, 2001, the Board of Directors of the Company declared a special
return of capital dividend of $20.00 per share for stockholders of record as of
January 19, 2000 and payable on January 24, 2001.  The ESOP purchased an
additional 318 shares of stock in the open market with a portion of the special
dividend awarded to ESOP shares and intends to continue investing the dividend
by purchasing the common stock as it becomes available.

                                       5
<PAGE>

CODDLE CREEK FINANCIAL CORP. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

Note 2.  Basis of Presentation

The accompanying unaudited financial statements (except for the statement of
financial condition at December 31, 2000, which is from audited financial
statements at that date) have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Regulation S-X.  Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements.  In the opinion of management, all
adjustments (none of which were other than normal recurring accruals) necessary
for a fair presentation of the financial position and results of operations for
the periods presented have been included.  The results of operations for the
three month period ended March 31, 2001 are not necessarily indicative of the
results of operations that may be expected for the year ended December 31, 2001.
The accounting policies followed are as set forth in Note 1 of the Notes to
Consolidated  Financial Statements in the 2000 Annual Report to Shareholders of
the Company.

Note 3.  Earnings Per Share

Earnings per share has been calculated in accordance with Financial Accounting
Standards Board Statement No. 128, Earnings Per Share, and Statement of Position
93-6, Employers' Accounting for Employee Stock Ownership Plans. For purposes
of this computation, the number of shares of common stock purchased by the
Bank's ESOP which have not been allocated to participant accounts are not
assumed to be outstanding. Options to purchase 58,131 shares of common stock at
$31.00 per share were outstanding during the first quarter of 2001, and because
the average market price is lower than the exercise price of $31.00, the
incremental shares are not considered dilutive and are not included in the
calculation of dilutive earnings per share.

The following are reconciliations of the amounts used in the per share
calculations for 2001 and 2000:

<TABLE>
<CAPTION>
                                                  For the Three Months Ended
                                                    March 31, 2001 and 2000
                                        -------------------------------------------------
                                                            Weighted
                                                             Average
                                               Income         Shares         Per Share
                                            (Numerator)    (Denominator)       Amount
                                        -------------------------------------------------
<S>                                     <C>                 <C>            <C>
Basic and diluted EPS for 2001                 (693,000)        637,373         $ (1.09)
Basic EPS and diluted EPS for 2000              331,000         624,528            0.53
</TABLE>

                                       6
<PAGE>

CODDLE CREEK FINANCIAL CORP. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

Note 4.  Stock Option and Management Recognition Plans

The Company's stockholders approved the Company's Stock Option Plan and the
Bank's Management Recognition Plan (the "MRP") on January 26, 2000.  The Stock
Option Plan reserves for issuance up to 67,447 stock options to officers,
directors, and employees at the time of the adoption either in the form of
incentive stock options or non-incentive stock options.  The exercise price of
the stock options may not be less than the fair value of the Company's common
stock at date of grant, as adjusted for the stock splits and dividends affecting
market value.  As permitted under generally accepted accounting principles,
grants under the plan will be accounted for following the provisions of APB
Opinion No. 25 and its related interpretations.  At March 31, 2001, 58,131
options have been granted at an exercise price of $31.00, of which 34,124
options are currently exercisable.  No options have been exercised to date and
all options granted are outstanding at March 31, 2001.  During the quarter
ending March 31, 2001, simultaneous with the payment of the $20 per share
special dividend to shareholders, all officers, directors and employees holding
options received an option bonus of $20 per option share resulting in a one time
recorded compensation expense of $1.2 million.

The MRP reserved for issuance 26,979 shares of common stock to officers,
directors, and employees at the time of the adoption. The Bank issued 24,281
shares and 400 shares from authorized but unissued common stock to fund the MRP
on January 26, 1999 and January 26, 2000, respectively. The restricted common
stock under the MRP vests 25% at the date of grant and 25% annually beginning on
the one year anniversary of the date of grant. The Company recorded
compensation expense in the amount of $235,000 during the first quarter of 2001
for the special $20 per share return of capital dividend that was paid to
holders of unvested MRP shares.

Note 5.  Note Payable and Federal Home Loan Bank Advances

In January 2001, the Company borrowed an additional $12,000,000 from an outside
bank primarily to fund the special return of capital dividend. At March 31,
2001, the total principal balance outstanding to the outside bank is
$14,000,000. The note requires monthly payments of interest only at the prime
rate less 1.00% with the entire principal balance due on July 24, 2003. The
note is collateralized by all of the Bank's common stock, which is owned by the
Company.

The Bank has an outstanding advance from the Federal Home Loan Bank in the
amount of $5,000,000, which bears interest at 6.18% per annum and is due
September 2001.

                                       7
<PAGE>

CODDLE CREEK FINANCIAL CORP. AND SUBSIDIARY

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
--------------------------------------------------------------------------------

Comparison of Financial Condition at March 31, 2001 and December 31, 2000:

At March 31, 2001 and December 31, 2000 total assets amounted to $154.9 million
and $151.7 million, respectively.  Loans receivable, net, decreased from $130.5
million at December 31, 2000 to $127.3 million at March 31, 2001, a $3.2 million
decrease.  Savings deposits increased $7.9 from $104.4 million at December 31,
2000 to $112.3 million at March 31, 2001.  Investment securities decreased $0.9
million from $5.5 million at December 31, 2000 to $4.6 million at March 31, 2001
due to maturities of securities during the first quarter of 2001.  Stockholders'
equity decreased by $14.6 million for the three months ended March 31, 2001.
This decrease is primarily due to return of capital dividend of $14.0 million
paid during the first quarter of 2001.  The Company's liquidity position
strengthened during the quarter as cash and cash equivalents increased $6.8
million to $17.6 million at March 31, 2001 from $10.8 million at December 31,
2000.  This increase is a result of the decrease in loans and investments and
the increase in savings deposits, offset in part by the return of capital
dividend that was not funded by notes payable.

The Bank's level of nonperforming loans, defined as loans past due 90 days or
more, has historically been and continues to be low as a percentage of total
loans outstanding.  The Bank had $1.8 million of loans outstanding which were
delinquent more than 90 days at March 31, 2001, compared to $2.1 million at
December 31, 2000.  Based on management's analysis of the adequacy of the
allowance for loan losses, the composition of the loan portfolio, the credit
risk inherent in the portfolio and historical loan loss experience, the
allowance for loan losses is $905,000 at March 31, 2001 and at December 31,
2000.  Management believes the allowance to be adequate to absorb any future
losses in the portfolio.

At March 31, 2001, the Company's capital amounted to $20.4 million, which as a
percentage of total consolidated assets was 13%, and was in excess of the
regulatory capital requirements at such date.

Comparison of Operating Results for the Three Months Ended March 31, 2001 and
2000:

General.  Net income (loss) for the three months ended March 31, 2001 was
$(693,000) compared to $331,000 during the same quarter in 2000.  As discussed
below, the decrease in earnings was primarily attributable to return of capital
dividend of $14.0 million paid during the first quarter of 2001.  This dividend
was funded by a note payable resulting in an increase to interest expense.  In
addition, compensation expense increased as $1.2 million was paid in bonuses to
officers, directors and employees holding options under the Company's stock
option plan and $235,000 was expensed due to dividends paid on unvested MRP
shares.

Interest income.  Interest income increased by $0.3 million from $2.6 million
for the three months ended March 31, 2000 to $2.9 million for the three months
ended March 31, 2001.  The increase is primarily due to an increase in the
average balance of interest-earning assets during the first quarter of 2001 as
compared to 2000.  Approximately 97% of the Bank's assets were interest-earning
at March 31, 2001, and approximately 85% of such interest-earning assets were
held in the form of loans receivable.

                                       8
<PAGE>

CODDLE CREEK FINANCIAL CORP. AND SUBSIDIARY

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
--------------------------------------------------------------------------------

Interest expense.  Interest expense increased by $0.5 million from $1.3 million
during the three months ended March 31, 2000 to $1.8 million for the three
months ended March 31, 2001.  The increase is due to a higher level of average
interest-bearing liabilities outstanding during the first quarter of 2001 in
comparison to the same quarter a year earlier.  Increases in average interest
bearing liabilities resulted from strong growth in  deposits and additional
borrowings on the note payable to fund the special return of capital dividend.
The increases in these balances were offset, in part, by a reduction in the
advances from the FHLB.

Net interest income.  Net interest income decreased by $0.3 million from $1.4
million for the three months ended March 31, 2000 to $1.1 million for the three
months ended March 31, 2001, primarily due to the increase in interest expense
discussed above.

Provision for loan losses.  The Bank did not make any loan loss provisions
during the quarters ended March 31, 2001 and 2000.  Provisions, which are
charged to operations, and the resulting loan loss allowances, are amounts the
Bank's management believes will be adequate to absorb losses on existing loans
that may become uncollectible. Loans are charged off against the allowance when
management believes that collectibility is unlikely.  The evaluation to increase
or decrease the provision and resulting allowances is based both on prior loan
loss experience and other factors, such as changes in the nature and volume of
the loan portfolio, overall portfolio quality, and current economic conditions.

The Bank's level of nonperforming loans has remained consistently low in
relation to prior periods and total loans outstanding.  At March 31, 2001, the
Bank's level of general valuation allowances for loan losses amounted to
$905,000, which management believes is adequate to absorb potential losses in
its loan portfolio.

Noninterest expense.  Noninterest expense increased from $932,000 to $2.3
million for the three months ended March 31, 2000 compared to 2001.
Compensation expense increased by $1.4 million from 2000 to 2001 due to increase
in MRP expense related to the special dividends paid on unvested MRP shares and
option bonuses paid to all option holders.  All other categories of noninterest
expense fluctuated by insignificant amounts between the two periods.

Capital Resources and Liquidity:

The term "liquidity" generally refers to an organization's ability to generate
adequate amounts of funds to meet its needs for cash.  More specifically for
financial institutions, liquidity ensures that adequate funds are available to
meet deposit withdrawals, fund loan and capital expenditure commitments,
maintain reserve requirements, pay operating expenses, and provide funds for
debt service, dividends to stockholders, and other institutional commitments.
Funds are primarily provided through financial resources from operating
activities, expansion of the deposit base, borrowings, through the sale or
maturity of investments, the ability to raise equity capital, or maintenance of
shorter term interest-bearing deposits.

                                       9
<PAGE>

CODDLE CREEK FINANCIAL CORP. AND SUBSIDIARY

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
--------------------------------------------------------------------------------

Mooresville Savings must maintain liquidity in the form of cash, cash
equivalents and investment securities, including mortgage-backed securities,
equal to at least 10% of total assets. The Bank's liquidity ratio at March 31,
2001 was considerably in excess of such requirements. The Bank's liquidity has
increased from December 31, 2000 in order to fund the Bank's expected loan
growth. Given its excess liquidity and its ability to borrow from the Federal
Home Loan Bank, the Bank believes that it will have sufficient funds available
to meet anticipated future loan commitments, unexpected deposit withdrawals, and
other cash requirements.

Impact of the Inflation and Changing Prices:

The financial statements and accompanying footnotes have been prepared in
accordance with generally accepted accounting principles, which require the
measurement of financial position and operating results in terms of historical
dollars without consideration for changes in the relative purchasing power of
money over time due to inflation. The assets and liabilities of the Bank are
primarily monetary in nature and changes in market interest rates have a greater
impact on the Bank's performance than do the effects of inflation.


Item 3.  Quantitative and Qualitative Disclosures about Market Risk

The Company has not experienced any substantive changes in its portfolio risk
during the three month period ended March 31, 2001.

                                       10
<PAGE>

Part II.  OTHER INFORMATION

  Item 1. Legal Proceedings

    The Company is not engaged in any material legal proceedings at the present
    time. From time to time, the Company is a party to legal proceedings within
    the normal course of business wherein it enforces its security interest in
    loans made by it, and other matters of a like kind.

  Item 2. Changes in Securities and Use of Proceeds

    Not applicable

  Item 3. Defaults Upon Senior Securities

    Not applicable

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

    Not applicable

  Item 5. Other Information

    Not applicable

  Item 6. Exhibits and Reports on Form 8-K

    (a)  Exhibits

         Exhibit (3)(i)   Certificate of Incorporation, incorporated herein by
                          reference to Exhibit (3)(i) to the Registration
                          Statement on Form S-1, Registration No. 333-35497,
                          dated September 12, 1997, and amended on November 5
                          and 10, 1997.

         Exhibit (3)(ii)  Bylaws, incorporated herein by reference to Exhibit
                          (3)(ii) to the Registration Statement on Form S-1,
                          Registration No. 333-35497, dated September 12, 1997,
                          and amended on November 5 and 10, 1997.

         Exhibit (4)      Specimen Stock Certificate, incorporated herein by
                          reference to Exhibit (4) to the Registration Statement
                          on Form S-1, Registration No. 333-35497, dated
                          September 12, 1997, and amended on November 5 and 10,
                          1997.

         Exhibit (10)(a)  Employment Agreement between Mooresville Savings Bank,
                          Inc., S.S.B. and George W. Brawley, Jr. dated December
                          30, 1997, as amended on December 15, 1998,
                          incorporated herein by reference to Exhibit 10 (a) to
                          the Company's Form 10-K for the year ended December
                          31, 1998.

         Exhibit (10)(b)  Employment Agreement between Mooresville Savings Bank,
                          Inc., S.S.B. and Dale W. Brawley dated December 30,
                          1997, as amended on December 15, 1998, incorporated
                          herein by reference to Exhibit 10 (b) to the Company's
                          Form 10-K for the year ended December 31, 1998.

                                       11
<PAGE>

         Exhibit (10)(c)  Employment Agreement between Mooresville Savings Bank,
                          Inc., S.S.B. and Billy R. Williams dated December 30,
                          1997, as amended on December 15, 1998, incorporated
                          herein by reference to Exhibit 10 (c) to the Company's
                          Form 10-K for the year ended December 31, 1998.

         Exhibit (10)(d)  Employee Stock Ownership Plan and Trust of Mooresville
                          Savings Bank, Inc., S.S.B., incorporated by reference
                          to Exhibit 10(d) to the Company's Form 10-K for the
                          year ended December 31, 1997.

         Exhibit (10)(e)  Mooresville Savings Bank, Inc., S.S.B. Severance Plan,
                          incorporated herein by reference to Exhibit 10(f) to
                          the Registration Statement on Form S-1, Registration
                          No. 333-35497, dated September 12, 1997, and as
                          amended on November 5 and 10, 1997.

         Exhibit (10)(f)  Capital Maintenance Agreement between Coddle Creek
                          Financial Corp. and Mooresville Savings Bank, Inc.,
                          S.S.B., incorporated by reference to Exhibit 10(f) to
                          the Company's Form 10-K for the year ended December
                          31, 1997.

         Exhibit (10)(g)  Management Recognition Plan of Mooresville Savings
                          Bank, Inc., S.S.B., incorporated herein by reference
                          to Exhibit 10(g) to the Company's Form 10-K for the
                          year ended December 31, 1998.

         Exhibit (10)(h)  Stock Option Plan of Coddle Creek Financial Corp.,
                          incorporated herein by reference to Exhibit 10(h) to
                          the Company's Form 10-K for the year ended December
                          31, 1998.

         Exhibit (10)(i)  (i) Amended and Restated Retirement Payment Agreements
                          between Mooresville Savings Bank, Inc., S.S.B. and
                          each of Donald R. Belk, George W. Brawley and Claude
                          U. Voils, Jr. dated September 3, 1979, as amended and
                          restated September 8, 1997 and as amended on December
                          16, 1998, incorporated herein by reference to Exhibit
                          10(i)(i) to the Company's Form 10-K for the year ended
                          December 31, 1998.

                          (ii) Retirement Payment Agreement between Mooresville
                          Savings Bank, Inc., S.S.B. and Calvin E. Tyner dated
                          September 3, 1979, as amended on September 8, 1997,
                          incorporated herein by reference to Exhibit 10(i)(ii)
                          to the Company's Form 10-K for the year ended December
                          31, 1998.

                          (iii) Amended and Restated Director's Deferred
                          Compensation Agreements between Mooresville Savings
                          Bank, Inc., S.S.B. and each of Donald R. Belk, George
                          W. Brawley, Jr., and Claude U. Voils, Jr. dated
                          January 1, 1985, as amended and restated on March 31,
                          1988 and September 8, 1997 and as amended for Messrs.
                          Belk, Brawley, and Voils on December 16, 1998,
                          incorporated herein by reference to Exhibit 10(i)(iii)
                          to the Company's Form 10-K for the year ended December
                          31, 1998.

                                       12
<PAGE>

                          (iv) Amended and Restated Director's Deferred
                          Compensation Agreements between Mooresville Savings
                          Bank, Inc., S.S.B. and each of Donald R. Belk, George
                          W. Brawley, Jr.., Calvin E. Tyner, and Claude U.
                          Voils, Jr. dated December 1, 1985, as amended and
                          restated on September 8, 1997 and as amended for
                          Messrs. Belk, Brawley and Voils on December 16, 1998,
                          incorporated herein by reference to Exhibit 10(i)(iv)
                          to the Company's Form 10-K for the year ended December
                          31, 1998.

                          (v) Amended and Restated Retirement Plan Agreements
                          between Mooresville Savings Bank, Inc., S.S.B. and
                          each of George W. Brawley, Jr., Donald R. Belk, Claude
                          U. Voils, Jr. and Calvin E. Tyner dated November 1,
                          1993, as amended and restated on September 15, 1997,
                          and as amended for Messrs. Brawley, Belk, and Voils on
                          December 16, 1998, incorporated herein by reference to
                          Exhibit 10(i)(v) to the Company's Form 10-K for the
                          year ended December 31, 1998.

                          (vi) Amended and Restated Retirement Payment
                          Agreements between Mooresville Savings Bank, S.S.B.
                          and George W. Brawley, Jr. dated December 1, 1990, as
                          amended and restated on September 8, 1997 and as
                          amended on December 16, 1998, incorporated herein by
                          reference to Exhibit 10(i)(vi) to the Company's Form
                          10-K for the year ended December 31, 1998.

                          (vii) Amended and Restated Retirement Payment
                          Agreement between Mooresville Savings Bank, S.S.B. and
                          Dale W. Brawley dated November 1, 1990, amended and
                          restated on October 21, 1993, as amended and restated
                          on September 8, 1997, incorporated herein by reference
                          to Exhibit 10(i)(vii) to the Company's Form 10-K for
                          the year ended December 31, 1998.

                          (viii) Amended and Restated Retirement Payment
                          Agreements between (a) Mooresville Savings Bank, Inc.,
                          S.S.B. and each of Donald R. Belk, George W. Brawley,
                          Jr., and Claude U. Voils, Jr. dated March 1, 1993, as
                          amended and restated on September 8, 1997 and as
                          amended for each of them on December 16, 1998 and (b)
                          Mooresville Savings Bank, Inc., S.S.B. and Dale W.
                          Brawley dated February 11, 1993, as amended and
                          restated on October 21, 1993 and September 8, 1997,
                          incorporated herein by reference to Exhibit
                          10(i)(viii) to the Company's Form 10-K for the year
                          ended December 31, 1998.

                          (ix) Amended and Restated Retirement Payment
                          Agreements between Mooresville Savings Bank, Inc.,
                          S.S.B. and each of Dale W. Brawley and George W.
                          Brawley, Jr. dated August 1, 1993, amended and
                          restated on October 23, 1993 for Dale W. Brawley, as
                          amended and restated on September 8, 1997, and as
                          amended for George W. Brawley on December 16, 1998,
                          incorporated herein by reference to Exhibit 10(i)(ix)
                          to the Company's Form 10-K for the year ended December
                          31, 1998.

                                       13
<PAGE>

                          (x) Amended and Restated Retirement Payment Agreement
                          between Mooresville Savings Bank, Inc., S.S.B. and
                          Jack G. Lawler dated June 1, 1994, as amended and
                          restated on September 8, 1997, incorporated herein by
                          reference to Exhibit 10(i)(x) to the Company's Form
                          10-K for the year ended December 31, 1998.

                          (xi) Amended and Restated Salary Continuation
                          Agreements between Mooresville Savings Bank, Inc.,
                          S.S.B. and each of Dale W. Brawley, George W. Brawley,
                          Jr., Patricia B. Clontz, and Richard E. Woods dated
                          September 1, 1984, as amended and restated on
                          September 17, 1997, and as amended for George W.
                          Brawley on December 16, 1998, incorporated herein by
                          reference to Exhibit 10(i)(x) to the Company's Form
                          10-K for the year ended December 31, 1998.

                          (xii) Amended and Restated Supplemental Income
                          Agreements between Mooresville Savings Bank, Inc.,
                          S.S.B. and each of Dale W. Brawley, George W. Brawley,
                          Jr., Billy R. Williams, Donald G. Jones and Richard E.
                          Woods dated November 1, 1993, as amended and restated
                          on September 17, 1997, and as amended for George W.
                          Brawley on December 16, 1998, incorporated herein by
                          reference to Exhibit 10(i)(xii) to the Company's Form
                          10-K for the year ended December 31, 1998.

                          (xiii) Amended and Restated Salary Continuation
                          Agreements between Mooresville Savings Bank, S.S.B.
                          and each of Lucille Doster, Marie Hedrick, Carol
                          Huffman, Brenda Johnson, D. Glenn Jones, and Nancy Lee
                          Petrea dated February 1, 1988, as amended and restated
                          on September 17, 1997, incorporated herein by
                          reference to Exhibit 10(i)(xiii) to the Company's Form
                          10-K for the year ended December 31, 1998.

         Exhibit (10)(j)  Mooresville Savings Bank, Inc., S.S.B. Non-Qualified
                          Excess Savings Plan, incorporated herein by reference
                          to Exhibit 10(i) to the Registration Statement on Form
                          S-1, Registration No. 333-35497, dated September 12,
                          1997, as amended on November 5 and 10, 1997.

   (b)   Reports on Form 8-K

         The Company filed a Report on Form 8-K on January 8, 2001. The Form
         disclosed that on January 2, 2001, the Company declared a special
         dividend totaling $20 for each share of the Corporation's issued and
         outstanding common stock payable on January 24, 2001 to shareholders on
         record on January 19, 2001. A portion of the dividend may represent a
         regular dividend for the period ending December 31, 2001, and the
         remainder will be a special dividend. A copy of the press release and
         letter to shareholders regarding the special dividend was attached
         thereto.

                                       14
<PAGE>

SIGNATURES

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

                                         Coddle Creek Financial Corp.

  Dated      May 5, 2001            By:  /s/ George W. Brawley, Jr.
        -----------------------         ---------------------------
                                         George W. Brawley
                                         President and CEO

  Dated      May 5, 2001            By:  /s/ Billy R. Williams
        ------------------------        ---------------------------
                                         Billy R. Williams
                                         Secretary/Controller

                                       15
<PAGE>

SIGNATURES

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

                                         Coddle Creek Financial Corp.

  Dated      May 5, 2001                 By:  ______________________
        --------------------
                                         George W. Brawley
                                         President and CEO

  Dated      May 5, 2001                 By:  ______________________
        --------------------
                                         Billy R. Williams
                                         Secretary/Controller

                                       16