<PAGE>

                                                                      EXHIBIT 13



                             CENTURY BANCORP, INC.


                              2000 Annual Report
<PAGE>

Century Bancorp, Inc. and Subsidiary

================================================================================

TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                    Page No.
                                                    --------
<S>                                                 <C>
Selected Financial and Other Data.................      1

Report to Stockholders............................      2

Management's Discussion and Analysis..............      3

Independent Auditors' Report......................     12

Consolidated Financial Statements

 Consolidated Statements of Financial Condition...     13

 Consolidated Statements of Operations............     14

 Consolidated Statements of Stockholders' Equity..     15

 Consolidated Statements of Cash Flows............     16

 Notes to Consolidated Financial Statements.......     18

Corporate Information.............................     41
</TABLE>
<PAGE>

Century Bancorp, Inc. and Subsidiary
Selected Financial and Other Data

================================================================================

<TABLE>
<CAPTION>
                                                              At or for the Year Ended June 30,
                                                     -----------------------------------------------------
                                                       2000       1999       1998       1997        1996
                                                     --------   --------   --------   --------    --------
                                                        (Dollars in thousands, except per share amounts)
<S>                                                  <C>        <C>       <C>       <C>           <C>
Financial Condition Data:
 Total assets                                        $100,542   $93,709   $96,866   $100,640      $81,304
 Investments/(1)/                                      10,792    13,499    23,935     35,180       22,823
 Loans receivable, net                                 87,254    75,649    69,997     62,333       55,193
 Deposits                                              73,846    74,300    73,023     69,699       69,669
 Stockholders' equity                                  17,868    17,650    18,732     30,303       11,245
Operating Data:
 Interest income                                     $  6,908   $ 6,740   $ 7,225   $  6,663      $ 5,869
 Interest expense                                       3,804     3,652     3,709      3,512        3,541
                                                     --------   -------   -------   --------      -------
   Net interest income                                  3,104     3,088     3,516      3,151        2,328
 Provision for loan losses                                 18        18        18         17          165
                                                     --------   -------   -------   --------      -------
   Net interest income after provision for
    loan losses                                         3,086     3,070     3,498      3,134        2,163
 Noninterest income                                        40        37        42         47           35
 Noninterest expense                                    1,728     1,663     1,731      1,507        1,169
                                                     --------   -------   -------   --------      -------
   Income before income taxes                           1,398     1,444     1,809      1,674        1,029
 Income tax expense                                       499       488       605        558          352
                                                     --------   -------   -------   --------      -------
   Net income                                        $    899   $   956   $ 1,204   $  1,116      $   677
                                                     ========   =======   =======   ========      =======

Per Common Share Data:
 Net income, basic/(2), (4)/                         $   0.93   $  0.90   $  1.06   $   0.82(3)         -
 Net income, diluted/(2)(4)/                             0.93      0.90      1.06       0.82(3)         -
 Regular cash dividends/(4)/                             0.68      0.68      0.67       0.17            -
 Dividend payment ratio/(5)/                            73.12%    75.56%    63.27%     20.73%           -
 Special return of capital dividend/(4)/             $      -   $     -   $ 10.00   $      -            -
 Book value per common share/(4)/                    $  16.17   $ 15.57   $ 14.74   $  24.80            -

Selected Other Data:
 Return on average assets                                0.93%     1.02%     1.19%      1.22%       0.86%
 Return on average equity                                5.09%     5.16%     4.51%      5.43%       6.19%
 Average equity to average assets                       18.32%    19.83%    26.40%     22.44%      13.94%
 Interest rate spread                                    2.50%     2.58%     2.26%      2.54%       2.41%
 Net yield on average interest-earning assets            3.32%     3.45%     3.59%      3.56%       3.05%
 Average interest-earning assets to average
  interest-bearing liabilities                         120.10%   121.26%   135.21%    125.89%     113.86%
 Ratio of noninterest expense to average total
  assets                                                 1.79%     1.78%     1.71%      1.64%       1.49%
 Nonperforming assets to total assets                    0.19%     0.25%     0.35%      0.13%       0.76%
 Nonperforming loans to total loans                      0.21%     0.31%     0.47%      0.12%       0.52%
 Allowance for loan losses to total loans                0.67%     0.75%     0.78%      0.88%       0.97%
 Allowance for loan losses to nonperforming loans      313.37%   246.10%   166.82%    423.08%     187.02%
</TABLE>

/(1)/  Includes interest-earning balances in other banks, FHLB stock and
       investment securities.

/(2)/  On December 20, 1996, Home Savings, Inc., SSB converted from a state-
       chartered mutual savings bank to a state-chartered stock savings bank and
       became a wholly-owned subsidiary of Century Bancorp, Inc.

/(3)/  Earnings per share is based on earnings from December 20, 1996 to June
       30, 1997 divided by the weighted average number of shares outstanding
       during the same period.

/(4)/  Adjusted for the effects of the three-for-one stock split effected in the
       form of a stock dividend paid April 6, 1998.

/(5)/  The dividend payment ratio represents regular dividends per share as a
       percentage of earnings per share, and excludes the special nonrecurring
       $10.00 return of capital dividend paid during the year ended June 30,
       1998.

                                      -1-
<PAGE>

                     Century Bancorp, Inc. and Subsidiary
                     Management's Discussion and Analysis
================================================================================

Management's discussion and analysis is intended to assist readers in the
understanding and evaluation of the financial condition and results of
operations of Century Bancorp, Inc. and its wholly-owned subsidiary, Home
Savings, Inc., SSB. It should be read in conjunction with the audited
consolidated financial statements and accompanying notes included in this report
and the supplemental financial data appearing throughout this discussion and
analysis.


                            Description of Business

Century Bancorp, Inc. ("Century" or "Parent") was incorporated under the laws of
the State of North Carolina for the purpose of becoming the bank holding company
of Home Savings, Inc., SSB (the "Bank" or "Home Savings") in connection with the
Bank's conversion from a state-chartered mutual savings bank to a state-
chartered stock savings bank (the "Conversion"), pursuant to its Plan of
Conversion. Century was organized to acquire all of the common stock of Home
Savings upon its conversion to stock form. A subscription offering (the
"Offering") of Century's common stock closed on December 20, 1996, at which time
Century acquired all of the outstanding common stock of the Bank and commenced
operations.

In accordance with the Plan of Conversion, Century issued common stock with a
value of $20.4 million in the Offering and received proceeds of $19.5 million,
net of Conversion costs. Century transferred $9.0 million of the net proceeds to
Home Savings for the purchase of all of the outstanding common stock of the
Bank. On April 6, 1998, Century paid a special $10.00 per share return of
capital dividend, returning to shareholders approximately $12.7 million.

Century has no operations and conducts no business of its own other than owning
Home Savings, and lending funds to the Home Savings, Inc., SSB Employee Stock
Ownership Plan (the "ESOP") which was formed in connection with the Conversion.
The principal business of the Bank is accepting deposits from the general public
and using those deposits and other sources of funds to make loans secured by
real estate located in the Bank's primary market area within approximately a ten
mile radius of Thomasville, North Carolina. On June 30, 2000, approximately 98%
of the Bank's net loan portfolio was composed of real estate loans.

Century's principal sources of income are interest payments received from the
ESOP with respect to the ESOP loan and dividends paid by the Bank to Century, if
any. Revenues of Home Savings are derived primarily from interest on loans. In
addition, Home Savings receives interest income from its investment securities
and interest-earning deposit balances. The major expenses of Home Savings are
interest on deposits and general and administrative expenses such as salaries,
employee benefits, federal deposit insurance premiums, data processing expenses
and occupancy and related expenses.

Because Century has no operations and conducts no business other than as
described above, the discussion contained in this "Management's Discussion and
Analysis" concerns primarily the business of the Bank; however, for ease of
reading, and because the financial statements are presented on a consolidated
basis, Century and Home Savings are collectively referred to herein as the
"Company," unless otherwise noted.

                                      -3-
<PAGE>

                     Century Bancorp, Inc. and Subsidiary
                     Management's Discussion and Analysis

================================================================================


               Asset/Liability and Interest Rate Risk Management

The Company's asset/liability management, or interest rate risk management,
program is focused primarily on evaluating and managing the composition of its
assets and liabilities in view of various interest rate scenarios. Factors
beyond the Company's control, such as market interest rates and competition, may
also have an impact on the Company's interest income and interest expense.

In the absence of other factors, the yield or return associated with the
Company's earning assets generally will increase from existing levels when
interest rates rise over an extended period of time, and conversely interest
income will decrease when interest rates decrease. In general, interest expense
will increase when interest rates rise over an extended period of time, and
conversely interest expense will decrease when interest rates decrease.

Interest Rate Gap Analysis.  As a part of its interest rate risk management
policy, the Company calculates an interest rate "gap." Interest rate "gap"
analysis is a common, though imperfect, measure of interest rate risk, which
measures the relative dollar amounts of interest-earning assets and interest-
bearing liabilities which reprice within a specific time period, either through
maturity or rate adjustment. The "gap" is the difference between the amounts of
such assets and liabilities that are subject to repricing. A "negative" gap for
a given period means that the amount of interest-bearing liabilities maturing or
otherwise repricing within that period exceeds the amount of interest-earning
assets maturing or otherwise repricing within the same period. Accordingly, in a
declining interest rate environment, an institution with a negative gap would
generally be expected, absent the effects of other factors, to experience a
lower decrease in the yield of its assets relative to the cost of its
liabilities and its income should be positively affected. Conversely, the cost
of funds for an institution with a negative gap would generally be expected to
increase more quickly than the yield on its assets in a rising interest rate
environment, and such institution's net interest income generally would be
expected to be adversely affected by rising interest rates. Changes in interest
rates generally have the opposite effect on an institution with a "positive
gap."

The Company's one-year interest sensitivity gap as a percentage of total
interest-earning assets at June 30, 2000 was a negative 54.37%. At June 30,
2000, the Company's three-year and five-year cumulative interest sensitivity
gaps as a percentage of total interest-earning assets were a negative 41.22% and
a negative 25.68%, respectively.

The following table sets forth the amounts of interest-earning assets and
interest-bearing liabilities outstanding at June 30, 2000 which are projected to
reprice or mature in each of the future time periods shown. Except as stated
below, the amounts of assets and liabilities shown which reprice or mature
within a particular period were determined in accordance with the contractual
terms of the assets or liabilities. Loans with adjustable rates are shown as
being due at the end of the next upcoming adjustment period. Passbook accounts,
money market deposit accounts and negotiable order of withdrawal or other
transaction accounts are assumed to be subject to immediate repricing and
depositor availability and have been placed in the shortest period. In making
the gap computations, none of the assumptions sometimes made regarding
prepayment rates and deposit decay rates have been used for any other interest-
earning assets or interest-bearing liabilities. In addition, the table does not
reflect scheduled principal payments

                                      -4-
<PAGE>

                     Century Bancorp, Inc. and Subsidiary
                     Management's Discussion and Analysis

================================================================================


which will be received throughout the lives of the loans. The interest rate
sensitivity of the Company's assets and liabilities illustrated in the following
table would vary substantially if different assumptions were used or if actual
experience differs from that indicated by such assumptions.

<TABLE>
<CAPTION>
                                                                          Terms to Repricing at June 30, 2000
                                                       --------------------------------------------------------------------
                                                                         More Than     More Than
                                                           1 Year        1 Year to     3 Years to     More Than
                                                           or less        3 Years       5 Years        5 Years      Total
                                                       --------------  ------------  -------------   -----------  ---------
                                                                                 (Dollars in Thousands)
<S>                                                    <C>             <C>           <C>             <C>          <C>
INTEREST-EARNING ASSETS
 Loans receivable:
  Adjustable rate residential 1-4 family                      $  4,471     $      -      $      -      $     -   $ 4,471
  Fixed rate residential 1-4 family                              9,800       16,073        12,445       32,445    70,763
  Other secured - real estate - fixed                              285          646           763        3,278     4,972
  Other secured - real estate - adjustable                       3,680           42            22        2,096     5,840
  Other loans                                                    1,058          736             -            -     1,794
                                                              --------     --------      --------      -------   -------

   Total loans receivable                                       19,294       17,497        13,230       37,819    87,840

 Interest-earnings balances in other banks                         889            -             -            -       889
 Investments                                                       798        2,716         2,096        3,559     9,169
 FHLB common stock/(1)/                                              -            -             -          734       734
                                                              --------     --------      --------      -------   -------

   Total interest-earning assets                              $ 20,981     $ 20,213      $ 15,326      $42,112   $98,632
                                                              ========     ========      ========      =======   =======

INTEREST-BEARING LIABILITIES
 Deposits:
  Passbook and statement accounts                             $  5,350     $      -      $      -      $     -   $ 5,350
  NOW and money market checking accounts                        15,222            -             -            -    15,222
  Noninterest-bearing accounts                                     276            -             -            -       276
  Certificate accounts                                          45,764        7,234             -            -    52,998
                                                              --------     --------      --------      -------   -------

   Total deposits                                               66,612        7,234             -            -    73,846

 Borrowings                                                      8,000            -             -            -     8,000
                                                              --------     --------      --------      -------   -------


   Total interest-bearing liabilities                         $ 74,612     $  7,234      $      -      $     -   $81,846
                                                              ========     ========      ========      =======   =======

INTEREST SENSITIVITY GAP PER PERIOD                           $(53,631)    $ 12,979      $  15326      $42,112   $16,786

CUMULATIVE INTEREST SENSITIVITY GAP                           $(53,631)    $(40,652)     $(25,326)     $16,786   $16,786

CUMULATIVE GAP AS A PERCENTAGE OF TOTAL
 INTEREST-EARNING ASSETS                                        (54.37%)     (41.22%)      (25.68%)      17.02%    17.02%

CUMULATIVE INTEREST-EARNING ASSETS AS A
 PERCENTAGE OF INTEREST-BEARING LIABILITIES                      28.12%       50.33%        69.06%      120.51%   120.51%
</TABLE>

/(1)/ Nonmarketable equity security; substantially all required to be maintained
and assumed to mature in periods greater than 5 years.

In addition to the traditional gap analysis, the Company also uses a computer
based interest rate risk simulation model. This comprehensive model includes
rate sensitivity gap analysis, rate shock net interest margin analysis, and
asset/liability term and rate analysis. The Company uses this model to monitor
interest rate risk on a quarterly basis and to detect trends that may affect
overall interest income. As a result, this analysis more accurately predicts the
risk to net interest income over the upcoming twelve-month period. The Company
has a policy establishing the maximum allowable risk to net interest income
caused by changes in interest rates. The modeling results indicate that the
Company is within the established parameters of the interest rate risk policy.

                                      -5-
<PAGE>

                     Century Bancorp, Inc. and Subsidiary
                     Management's Discussion and Analysis
================================================================================


                              Net Interest Income

Net interest income represents the difference between income derived from
interest-earning assets and interest expense incurred on interest-bearing
liabilities. Net interest income is affected by both (i) the difference between
the rates of interest earned on interest-earning assets and the rates paid on
interest-bearing liabilities ("interest rate spread") and (ii) the relative
amounts of interest-earning assets and interest-bearing liabilities ("net
earning balance"). The following table sets forth information relating to
average balances of the Company's assets and liabilities for the years ended
June 30, 2000 and 1999. For the periods indicated, the table reflects the
average yield on interest-earning assets and the average cost of interest-
bearing liabilities (derived by dividing income or expense by the monthly
average balance of interest-earning assets or interest-bearing liabilities,
respectively) as well as the net yield on interest-earning assets (which
reflects the impact of the net earning balance). Nonaccruing loans were included
in the computation of average balances.  Yields on tax exempt securities were
not adjusted for tax effects.

<TABLE>
<CAPTION>
                                                   Year Ended June 30, 2000     Year Ended June 30, 1999
                                                 ----------------------------  ---------------------------
                                                 Average             Average   Average            Average
                                                 Balance  Interest     Rate    Balance  Interest    Rate
                                                 -------  ---------  --------  -------  --------  --------
                                                                  (Dollars in Thousands)
<S>                                              <C>      <C>        <C>       <C>      <C>       <C>
Interest-earning assets:
 Interest-earning balances                       $ 1,061   $    62      5.84%  $ 1,444    $   85     5.89%
 Investments                                      11,417       666      5.83%   15,685       996     6.35%
 Loans                                            80,955     6,180      7.63%   72,429     5,659     7.81%
                                                 -------   -------    ------   -------    ------     ----

   Total interest-earning assets                  93,433     6,908      7.39%   89,558     6,740     7.53%
                                                           -------    ------              ------     ----

Other assets                                       2,928                         3,791
                                                 -------                       -------

   Total assets                                  $96,361                       $93,349
                                                 =======                       =======

Interest-bearing liabilities:
 Deposits                                        $73,872     3,571      4.83%  $73,275     3,626     4.95%
 Borrowings                                        3,923       233      5.86%      583        26     4.46%
                                                 -------   -------    ------   -------    ------     ----

   Total interest-bearing liabilities             77,795     3,804      4.89%   73,858     3,652     4.94%
                                                           -------    ------              ------     ----

Other liabilities                                    911                           981
Stockholders' equity                              17,655                        18,510
                                                 -------                       -------

   Total liabilities and stockholders' equity    $96,361                       $93,349
                                                 =======                       =======

Net interest income and interest rate spread               $ 3,104      2.50%             $3,088     2.58%
                                                           =======    ======              ======     ====

Net yield on average interest-earning assets                            3.32%                        3.45%
                                                                      ======                         ====

Ratio of average interest-earning assets to
 average interest-bearing liabilities                       120.10%                       121.26%
                                                           =======                        ======
</TABLE>

                                      -6-
<PAGE>

                     Century Bancorp, Inc. and Subsidiary
                     Management's Discussion and Analysis
================================================================================

                              Rate/Volume Analysis

The following table analyzes the dollar amount of changes in interest income and
interest expense for major components of interest-earning assets and interest-
bearing liabilities. The table distinguishes between (i) changes attributable to
volume (changes in volume multiplied by the prior period's rate), (ii) changes
attributable to rate (changes in rate multiplied by the prior period's volume),
and (iii) net change (the sum of the previous columns). The change attributable
to both rate and volume (changes in rate multiplied by changes in volume) has
been allocated equally to both the changes attributable to volume and the
changes attributable to rate.

<TABLE>
<CAPTION>
                                      Year Ended June 30, 2000 vs. 1999
                                     ------------------------------------
                                          Increase (Decrease) Due To
                                     ------------------------------------
                                        Volume        Rate       Total
                                     ------------  ----------  ----------
                                            (Dollars in Thousands)
<S>                                  <C>           <C>         <C>
     Interest income:
      Interest-bearing balances            $ (22)      $  (1)      $ (23)
      Investments                           (260)        (70)       (330)
      Loans                                  658        (137)        521
                                           -----       -----       -----

           Total interest income             376        (208)        168
                                           -----       -----       -----

     Interest expense:
      Deposits                                29         (84)        (55)
      Borrowings                             174          33         207
                                           -----       -----       -----

           Total interest expense            203         (51)        152
                                           -----       -----       -----

     Net interest income                   $ 173       $(157)      $  16
                                           =====       =====       =====
</TABLE>

          Comparison of Financial Condition at June 30, 2000 and 1999

Consolidated total assets increased by $6.8 million during the year, from $93.7
million at June 30, 1999 to $100.5 million at June 30, 2000.  Loan growth fueled
this increase, as net loans have grown by $11.6 million, from $75.6 million at
June 30, 1999 to $87.3 million at June 30, 2000. Substantially all of this loan
growth consisted of loans secured by real estate in the Bank's market area.
During the year, reductions of $2.3 million and $1.1 million, respectively, in
investment securities available for sale and investment securities held to
maturity, together with proceeds of $7.0 million from Federal Home Loan Bank
advances, were the principal sources of funding for the growth in loans.
Deposit accounts remained stable throughout the year, decreasing by $454,000,
from $74.3 million at June 30, 1999 to $73.8 million at the end of the year.

Total stockholders' equity was $17.9 million at June 30, 2000, as compared with
$17.7 million at June 30, 1999, an increase of $218,000.  Stockholders' equity
was increased during the year as a result of net income of $899,000 and
amortization of unearned compensation aggregating $562,000.  These increases
were offset, however, by the regular quarterly dividends aggregating $664,000 or
$.68 per share, share repurchases aggregating $389,000, and a decrease of
$191,000 in the net unrealized gain on available for sale investment securities.
At June 30, 2000, the Bank continued to significantly exceed all applicable
regulatory capital requirements.

                                      -7-
<PAGE>

                     Century Bancorp, Inc. and Subsidiary
                     Management's Discussion and Analysis
================================================================================

                                 Asset Quality

Non-performing assets include non-accrual loans, accruing loans contractually
past due 90 days or more, restructured loans, foreclosed real estate and other
real estate under contract for sale. Loans are placed on non-accrual when
management has concerns relating to the ability to collect the loan principal
and interest, and when such loans are 90 days or more past due. While non-
performing assets represent potential losses to the Company, management does not
anticipate any aggregate material losses since most loans are believed to be
adequately secured. Management believes the allowance for loan losses is
sufficient to absorb known risks in the portfolio. However, no assurance can be
given that economic conditions will not adversely affect borrowers and result in
increased losses. The following table summarizes non-performing assets by type
at the dates indicated. Other than the amounts listed, there were no other loans
that (i) represent or result from trends or uncertainties which management
reasonably expects will materially impact future operating results, liquidity or
capital resources or (ii) represent material credits about which management has
information that causes them to have serious doubts as to the ability of such
borrowers to comply with the loan repayment terms.

<TABLE>
<CAPTION>

                                                           At June 30,
                                                           ------------
                                                            2000   1999
                                                           -----  -----
     <S>                                                   <C>    <C>
     Non-performing assets:
      Non-accrual loans                                    $ 187  $ 231
      Loans past due 90 days or more and still accruing        -      -
      Other real estate                                        -      -
      Renegotiated troubled debt                               -      -
                                                           -----  -----

      Total non-performing assets                          $ 187  $ 231
                                                           =====  =====
</TABLE>

Comparison of Results of Operations for the Years Ended June 30, 2000 and 1999

Net Income. Net income for the year ended June 30, 2000 was $899,000 or $.93 per
share, as compared with net income of $956,000, or $.90 per share, for the year
ended June 30, 1999.  While net income decreased by $57,000, net income per
share increased by $.03 as a result of a reduction in the weighted average
shares outstanding during the current year.  This decrease in shares outstanding
is attributable to a share repurchase plan that commenced during the second
quarter of the fiscal year that ended June 30, 1999.

Net Interest Income.  Net interest income was $3.1 million for the year ended
June 30, 2000, representing a small increase of $16,000 over the corresponding
amount for the previous fiscal year.  The Company's average deposit balances and
average rates paid on deposits were comparable for the two fiscal years.
Average interest-bearing liabilities increased by $3.9 million principally as a
result of advances from the Federal Home Loan Bank.  The resultant increase in
interest costs was offset by increased interest income resulting from a
significant increase in the concentration of interest-earning assets in higher
yielding loans during the current fiscal year.

Provision for Loan Losses.  The provision for loan losses was $18,000 for each
of the years ended June 30, 2000 and 1999.  There were no loan charge-offs
during either year. Non-accrual loans

                                      -8-
<PAGE>

                     Century Bancorp, Inc. and Subsidiary
                     Management's Discussion and Analysis
================================================================================

aggregated $187,000 at June 30, 2000, while the allowance for loan losses
totaled $586,000 at that date.

General and Administrative Expenses.  General and administrative expenses
totaled $1.7 million for the year ended June 30, 2000, an increase of $65,000
over the total for the prior fiscal year.  Total general and administrative
expenses represented 1.79% of average total assets for the year ended June 30,
2000 as compared with 1.78% for the year ended June 30, 1999, well below peer
averages for both years.

Provision for Income Taxes.  The provision for income taxes, as a percentage of
income before income taxes, was 35.7% and 33.8% for the years ended June 30,
2000 and 1999, respectively.

                        Liquidity and Capital Resources

Century paid regular cash dividends of $.68 a share during each of the years
ended June 30, 2000 and 1999. Although Century Bancorp anticipates that it will
continue to declare cash dividends on a regular basis, the Board of Directors
will continue to review its policy on the payment of dividends on an ongoing
basis, and such payment will be subject to future earnings, cash flows, capital
needs, regulatory restrictions and other factors.

Maintaining adequate liquidity while managing interest rate risk is the primary
goal of the Company's asset and liability management strategy. Liquidity is the
ability to fund the needs of the Bank's borrowers and depositors, pay operating
expenses, and meet regulatory liquidity requirements. Maturing investments, loan
and mortgage-backed security principal repayments, deposits and income from
operations are the main sources of liquidity. The Company's primary uses of
liquidity are to fund loans and to make investments.

As of June 30, 2000, liquid assets (cash and marketable investment securities)
were approximately $11.2 million, which represents 15.1% of deposits. As a North
Carolina-chartered savings bank, Home Savings is required to maintain liquid
assets equal to at least 10% of its total assets. For purposes of this
requirement, liquid assets consist of cash and readily marketable investment
securities. At June 30, 2000, this liquidity ratio, based on North Carolina
regulations, was 11.1%. Management considers current liquidity levels to be
adequate to meet Home Savings' foreseeable needs.

At June 30, 2000, outstanding mortgage loan commitments were $1.7 million,
available line-of-credit balances were $1.5 million, and the undisbursed portion
of construction loans was $2.1 million. Funding for these commitments is
expected to be provided from deposits, loan and mortgage-backed securities
principal repayments, maturing investments and income generated from
operations.

                                      -9-
<PAGE>

                     Century Bancorp, Inc. and Subsidiary
                     Management's Discussion and Analysis
================================================================================

Under federal capital regulations, Home Savings must satisfy certain minimum
leverage ratio requirements and risk-based capital requirements. Failure to meet
such requirements can initiate certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct
material effect on Home Savings' financial statements. At June 30, 2000, Home
Savings exceeded all such requirements.

                              Regulatory Matters

Management is not aware of any known trends, events, uncertainties or current
recommendations by regulatory authorities that will have or that are reasonably
likely to have a material effect on the Company's liquidity, capital resources,
or other operations.

                    Impact of Inflation and Changing Prices

The financial statements and notes thereto presented in this report 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 considering the change in the relative purchasing
power of money over time and due to inflation. The impact of inflation is
reflected in the increased cost of operations. Unlike most industrial companies,
nearly all the assets and liabilities of the Company are monetary in nature. As
a result, interest rates have a greater impact on the Company's performance than
do the effects of general levels of inflation. Interest rates do not necessarily
move in the same direction or to the same extent as the price of goods and
services.

                      Impact of New Accounting Standards

FASB Statement on Accounting for Derivative Instruments and Hedging Activities.
In June 1998, the FASB issued Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities.  In June 1999, this Statement was amended by
SFAS No. 137 to defer the effective date to 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 statement of financial condition
and measure them at fair value. If certain conditions are met, an entity may
elect to designate a derivative as follows:  (a) a hedge of exposure to changes
in the fair value of a recognized asset or liability or an unrecognized firm
commitment, (b) a hedge of the exposure to variable cash flows of a forecasted
transaction, or (c) a hedge of the foreign currency exposure of an unrecognized
firm commitment, an available-for-sale security, a foreign currency denominated
forecasted transaction, or a net investment in a foreign operation.  The
Statement generally provides for matching the timing of the recognition of the
gain or loss on derivatives designated as hedging instruments with the
recognition of the changes in the fair value of the item being hedged.
Depending on the type of hedge, such recognition will be in either net income or
other comprehensive income.  For a derivative not designated as a hedging
instrument, changes in fair value will be recognized in net income in the period
of change. Management anticipates that the statement will have no material
effect on the Company's consolidated financial statements.

                                     -10-
<PAGE>

                     Century Bancorp, Inc. and Subsidiary
                     Management's Discussion and Analysis
================================================================================

                  A Warning About Forward-Looking Statements

This document contains forward-looking statements about the Company. These
statements can be identified by use of words like "expect," "may," "could,"
"intend," "project," "estimate" or "anticipate." These forward-looking
statements reflect current views of the Company's management, but they are based
on assumptions and are subject to risks, uncertainties and other factors. These
factors include the following:

 .    Competitive pressure in the banking industry may increase significantly;

 .    Changes in the interest rate environment may reduce margins;

 .    General economic conditions, either national or regional, may be less
     favorable than expected, resulting in, among other things, deterioration of
     asset quality;

 .    Changes may occur in the regulatory environment;

 .    Changes may occur in business conditions and inflation; and

 .    Changes may occur in the securities markets.


                                   Year 2000

The Year 2000 issue has posed business risk to most business organizations,
including the Company. The Company's management is pleased, but not surprised,
that business continued as normal without adverse impact to the Company during
the critical date change.  The Bank has continued monitoring external entities
to assure that they have not experienced Year 2000 problems that could impact
their relationship with the Company.  The Company estimates that its total Year
2000 compliance costs aggregated approximately $28,000, including capital
expenditures of approximately $5,000 and other expenses charged to operations of
approximately $23,000.  In addition to the estimated costs of its Year 2000
compliance, the Company routinely makes annual investments in technology in its
efforts to improve customer service and to efficiently manage its product and
service delivery systems

                                     -11-
<PAGE>

                         INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Stockholders
Century Bancorp, Inc.
Thomasville, North Carolina


We have audited the accompanying consolidated statements of financial condition
of Century Bancorp, Inc. and subsidiary as of June 30, 2000 and 1999 and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Century Bancorp,
Inc. and subsidiary at June 30, 2000 and 1999, and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.



Dixon Odom PLLC
Sanford, North Carolina
July 28, 2000

                                     -12-
<PAGE>

CENTURY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, 2000 and 1999
================================================================================

<TABLE>
<CAPTION>
ASSETS                                                                  2000         1999
                                                                  -------------   ------------
<S>                                                               <C>             <C>
Cash on hand and in banks                                         $   1,105,279   $  3,273,308
Interest-earning balances in other banks                                889,250        264,846
Investment securities available for sale, at
 fair value (amortized cost of $4,211,625 and
 $6,151,157 at June 30, 2000 and 1999,
 respectively) (Note B)                                               4,736,634      6,989,327
Investment securities held to maturity, at amortized
 cost (fair value of $4,405,005 and $5,590,565 at
 June 30, 2000 and 1999, respectively) (Note B)                       4,432,612      5,571,204
Loans receivable, net (Note C)                                       87,253,991     75,649,487
Accrued interest receivable                                             503,929        479,881
Premises and equipment, net (Note D)                                    620,725        647,554
Stock in the Federal Home Loan Bank of Atlanta, at cost                 733,600        673,500
Other assets                                                            265,493        159,956
                                                                  -------------   ------------
                                                                  $ 100,541,513   $ 93,709,063
                                                                  =============   ============

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
  Deposit accounts (Note G)                                       $  73,846,212   $ 74,300,223
  Advances from Federal Home Loan Bank (Note F)                       8,000,000      1,000,000
  Accrued interest payable                                              141,505         98,321
  Advance payment by borrowers for property taxes and insurance         233,056        204,606
  Deferred income taxes (Note J)                                         94,114        159,607
  Accrued expenses and other liabilities                                359,096        296,257
                                                                  -------------   ------------

                                            TOTAL LIABILITIES        82,673,983     76,059,014
                                                                  -------------   ------------

Commitments and contingencies (Notes C and L)

STOCKHOLDERS' EQUITY (Note H, I and K)
  Preferred stock, no par value, 5,000,000 shares
    authorized, no shares issued and outstanding                              -              -
  Common stock, no par value, 20,000,000 shares authorized:
    1,105,019 and 1,133,469 issued and outstanding at
    June 30, 2000 and 1999, respectively                              8,098,710      8,373,418
  Deferred management recognition plan                                 (362,920)      (689,656)
  ESOP note receivable                                               (1,179,923)    (1,352,494)
  Unearned ESOP compensation                                           (742,117)      (910,763)
  Retained earnings, substantially restricted                        11,734,299     11,719,396
  Accumulated other comprehensive income                                319,481        510,148
                                                                  -------------   ------------

                                   TOTAL STOCKHOLDERS' EQUITY        17,867,530     17,650,049
                                                                  -------------   ------------

                                        TOTAL LIABILITIES AND
                                         STOCKHOLDERS' EQUITY     $ 100,541,513   $ 93,709,063
                                                                  =============   ============
</TABLE>

See accompanying notes.

                                     -13-
<PAGE>

CENTURY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended June 30, 2000 and 1999
================================================================================

<TABLE>
<CAPTION>
                                                                       2000           1999
                                                                    -----------   ------------
<S>                                                                 <C>           <C>
INTEREST INCOME
  Loans                                                             $ 6,179,974   $  5,658,916
  Investments and deposits in other banks                               727,940      1,080,754
                                                                    -----------   ------------

                                            TOTAL INTEREST INCOME     6,907,914      6,739,670
                                                                    -----------   ------------

INTEREST EXPENSE
  Deposit accounts (Note G)                                           3,571,423      3,625,547
  Borrowings                                                            232,573         26,159
                                                                    -----------   ------------

                                           TOTAL INTEREST EXPENSE     3,803,996      3,651,706
                                                                    -----------   ------------

                                              NET INTEREST INCOME     3,103,918      3,087,964

PROVISION FOR LOAN LOSSES (Note C)                                       18,000         18,000
                                                                    -----------   ------------
                                        NET INTEREST INCOME AFTER
                                        PROVISION FOR LOAN LOSSES     3,085,918      3,069,964
                                                                    -----------   ------------

OTHER INCOME (EXPENSES)
  Service charges and other fees                                         45,347         38,838
  Loss on sale of foreclosed real estate                                      -           (412)
  Loss on disposal of equipment                                          (4,909)             -
  Other                                                                       -           (856)
                                                                    -----------   ------------
                                                                         40,438         37,570
                                                                    -----------   ------------

GENERAL AND ADMINISTRATIVE EXPENSES
  Compensation and benefits                                           1,158,001      1,068,082
  Occupancy                                                              88,795         85,178
  Data processing expenses                                              124,441        150,420
  Federal deposit insurance premiums                                     29,107         39,766
  Other expenses                                                        328,218        319,750
                                                                    -----------   ------------
                                                TOTAL GENERAL AND
                                          ADMINISTRATIVE EXPENSES     1,728,562      1,663,196
                                                                    -----------   ------------
                                       INCOME BEFORE INCOME TAXES     1,397,794      1,444,338

INCOME TAXES (Note J)                                                   499,000        488,051
                                                                    -----------   ------------
                                                       NET INCOME   $   898,794   $    956,287
                                                                    ===========   ============
EARNINGS PER COMMON SHARE (Note A)
  Basic and diluted                                                 $       .93   $        .90
                                                                    ===========   ============
  Weighted average shares outstanding                                   964,117      1,068,192
                                                                    ===========   ============

DIVIDENDS PER COMMON SHARE
  Regular dividends per common share                                $       .68   $        .68
                                                                    ===========   ============
</TABLE>

See accompanying notes.

                                      -14-
<PAGE>

CENTURY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended June 30, 2000 and 1999
===============================================================================

<TABLE>
<CAPTION>
                                                     Deferred                                           Accumulated
                                                    management     ESOP       Unearned                     other           Total
                                Common stock        recognition    note         ESOP        Retained   comprehensive   stockholders'
                           ----------------------
                            Shares       Amount        plan     receivable   compensation   earnings      income          equity
                           ---------   ----------   ----------- -----------  ------------  ----------- -------------  -------------
<S>                        <C>         <C>          <C>         <C>          <C>           <C>         <C>            <C>
Balance at June 30, 1998   1,270,869   $9,223,975   $(1,016,392) $(1,525,938)  $(977,580)  $12,579,161   $ 448,447     $18,731,673

Comprehensive income:
 Net income                        -            -             -            -           -       956,287           -         956,287
 Change in net unrealized
  gain (loss) on
   securities available
   for sale, net of
   reclassification
   adjustment and
   income taxes of
   $39,643                         -            -             -            -           -             -      61,701          61,701
                                                                                                                       -----------
    Total comprehensive income     -            -             -            -           -             -           -       1,017,988
                                                                                                                       -----------

Cash dividends paid                -            -             -            -           -      (742,133)          -        (742,133)

Vesting of deferred
 management recognition
 plan                              -            -       326,736            -           -             -           -         326,736

Release of ESOP shares             -      (37,177)            -      173,444      66,817             -           -         203,084

Repurchase and retirement
 of common
 shares                     (137,400)    (813,380)            -            -           -    (1,073,919)          -      (1,887,299)
                           ---------   ----------   -----------  -----------   ---------   -----------   ---------     -----------
Balance at June 30, 1999   1,133,469    8,373,418      (689,656)  (1,352,494)   (910,763)   11,719,396     510,148      17,650,049

Comprehensive income:
 Net income                        -            -             -            -           -       898,794           -         898,794
 Change in net unrealized
  gain (loss) on
   securities available
   for sale, net of
   reclassification
   adjustment and
   income taxes of
   $(122,493)                      -            -             -            -           -             -    (190,667)       (190,667)
                                                                                                                       -----------
    Total comprehensive income     -            -             -            -           -             -           -         708,127
                                                                                                                       -----------

Cash dividends paid                -            -             -            -           -      (663,599)          -        (663,599)

Vesting of deferred
 management recognition
 plan                              -            -       326,736            -           -             -           -         326,736

Release of ESOP shares             -     (106,290)            -      172,571     168,646             -           -         234,927

Repurchase and retirement
 of common
 shares                      (28,450)    (168,418)            -            -           -      (220,292)          -        (388,710)
                           ---------   ----------   -----------  -----------   ---------   -----------   ---------     -----------

Balance at June 30, 2000   1,105,019   $8,098,710   $  (362,920) $(1,179,923)  $(742,117)  $11,734,299   $ 319,481     $17,867,530
                           =========   ==========   ===========  ===========   =========   ===========   =========     ===========
</TABLE>

See accompanying notes.

                                      -15-
<PAGE>

CENTURY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended June 30, 2000 and 1999
================================================================================

<TABLE>
<CAPTION>
                                                                       2000           1999
                                                                   -----------     ------------
<S>                                                                <C>             <C>
CASH FLOWS FROM OPERATING
 ACTIVITIES
  Net income                                                       $    898,794    $   956,287
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Depreciation                                                         30,432         48,432
    Deferred income taxes                                                57,000        (65,031)
    Deferred compensation                                                22,000         22,000
    Amortization of discounts and premiums on securities                  1,382          5,005
    Provision for loan losses                                            18,000         18,000
    ESOP contribution expense                                           234,927        203,084
    Vesting of deferred management recognition plan                     326,736        326,736
    Loss on disposal of equipment                                         4,909              -
    Loss on sale of real estate acquired in foreclosure                       -            412
    Change in assets and liabilities
     (Increase) decrease in accrued interest receivable                 (24,048)        65,308
     (Increase) decrease in other assets                               (105,537)        84,645
     Increase (decrease) in accrued interest payable                     43,184        (53,257)
     Increase (decrease) in accrued expense and other liabilities        40,839       (129,101)
                                                                    -----------   ------------

                    NET CASH PROVIDED BY OPERATING ACTIVITIES         1,548,618      1,482,520
                                                                    -----------   ------------

CASH FLOWS FROM INVESTING
 ACTIVITIES
  Purchases of:
   Available for sale investment securities                          (1,000,000)      (505,150)
   Held to maturity investment securities                                     -       (500,000)
  Proceeds from maturities and calls of:
   Available for sale investment securities                           2,929,622      1,303,652
   Held to maturity investment securities                             1,147,121      5,162,662
  Purchases of FHLB stock                                               (60,100)       (20,900)
  Net increase in loans                                             (11,622,504)    (5,669,994)
  Purchases of property and equipment                                    (8,512)        (8,691)
  Proceeds from sale of real estate acquired
   in settlement of loans                                                     -          7,088
                                                                    -----------   ------------

                    NET CASH USED BY INVESTING ACTIVITIES            (8,614,373)      (231,333)
                                                                    -----------   ------------
</TABLE>

                                      -16-
<PAGE>

CENTURY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended June 30, 2000 and 1999
================================================================================

<TABLE>
<CAPTION>
                                                                           2000           1999
                                                                       -----------    ------------
<S>                                                                    <C>            <C>
CASH FLOWS FROM FINANCING ACTIVITIES
  Net increase (decrease) in demand deposits                           $  (241,084)   $    601,001
  Net increase (decrease) in certificate accounts                         (212,927)        676,251
  Increase in advances from borrowers for property
   taxes and insurance                                                      28,450          33,466
  Repayment of note payable                                                      -      (4,200,000)
  Net increase in advances from FHLB                                     7,000,000       1,000,000
  Repurchase of common stock                                              (388,710)     (1,887,300)
  Regular cash dividends paid                                             (663,599)       (742,133)
                                                                       -----------    ------------

               NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES          5,522,130      (4,518,715)
                                                                       -----------    ------------

               NET DECREASE IN CASH AND CASH EQUIVALENTS                (1,543,625)     (3,267,528)

CASH AND CASH EQUIVALENTS, BEGINNING                                     3,538,154       6,805,682
                                                                       -----------    ------------

               CASH AND CASH EQUIVALENTS, ENDING                       $ 1,994,529    $  3,538,154
                                                                       ===========    ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Cash paid during the year for:
   Interest                                                            $ 3,760,812    $  3,704,963
                                                                       ===========    ============
   Income taxes                                                        $   503,522    $    458,300
                                                                       ===========    ============

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES
  Unrealized gain (loss) on investment securities available
   for sale, net of deferred income taxes                              $  (190,667)   $     61,701
                                                                       ===========    ============
</TABLE>

See accompanying notes.

                                      -17-
<PAGE>

CENTURY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE A - SIGNIFICANT ACCOUNTING POLICIES

Organization and Operations
---------------------------

In December 1996, pursuant to a Plan of Conversion which was approved by its
members and regulators, Home Savings, Inc., SSB ("Home Savings" or "Bank")
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 Century Bancorp, Inc. ("Century" or "Parent"). Century was
formed to acquire all of the common stock of Home Savings upon its conversion to
stock form. Century has no operations and conducts no business on its own other
than owning Home 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 formed in connection with the Conversion.

Nature of Business
------------------

Home Savings maintains its offices and conducts its primary business in
Thomasville, Davidson County, North Carolina. The Bank is primarily engaged in
the business of attracting deposits from the general public and using such
deposits to make mortgage loans secured by one-to-four family residential real
estate located in its primary market area. The Bank also makes home equity line
of credit loans, multi-family residential loans, commercial loans, construction
loans, loans secured by deposit accounts, and various types of consumer loans.
Home Savings is a portfolio lender in that it does not originate its fixed or
adjustable rate loans for sale in the secondary market. Home Savings has been
and intends to continue to be a community-oriented financial institution
offering a variety of financial services to meet the needs of the communities it
serves.

Basis of Presentation
---------------------

The accompanying consolidated financial statements include the accounts of the
Parent and the Bank, together referred to as the "Company." All significant
intercompany transactions and balances are eliminated in consolidation.

Use of 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 sensitive to significant change relate
to the determination of the allowance for losses on 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.

                                      -18-
<PAGE>

CENTURY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Use of Estimates (Continued)
----------------

A majority of the Bank's loan portfolio consists of single-family residential
loans in its market area. The regional economy is currently stable and consists
of various types of industry. Real estate prices in this market are also stable;
however, the ultimate collectibility of a substantial portion of the Bank's loan
portfolio is susceptible to changes in local market conditions.

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.

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

For purposes of the consolidated statements of cash flows, cash and cash
equivalents include cash on hand and in banks and interest-earning balances in
other banks.

Investment Securities
---------------------

The Company classifies its securities in one of three categories:  trading,
available for sale, or held to maturity. There were no trading securities at
June 30, 2000 or 1999. Securities held to maturity are those securities for
which the Bank has the ability and intent to hold to maturity. All other
securities are classified as available for sale.

Available for sale securities consist of investment securities not classified as
trading securities or held to maturity securities and are recorded at fair
value. Held to maturity securities are recorded at cost, adjusted for the
amortization or accretion of premiums or discounts. Unrealized holding gains and
losses, net of the related tax effect, on securities available for sale are
excluded from earnings and are reported in other comprehensive income until
realized. Transfers of securities between categories are recorded at fair value
at the date of transfer. Unrealized holding gains or losses associated with
transfers of securities from held to maturity to available for sale are recorded
as a separate component of accumulated other comprehensive income in
stockholders' equity.

A decline in the market value of any available for sale or held to maturity
investment below cost that is deemed other than temporary is charged to earnings
and establishes a new cost basis for the security.

Premiums and discounts are amortized or accreted over the life of the related
security as an adjustment to the yield. Realized gains and losses are included
in earnings and the costs of securities sold are derived using the specific
identification method.

                                      -19-
<PAGE>

CENTURY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

Loans receivable are stated at unpaid balances, less the allowance for loan
losses and net deferred loan fees.

Loan origination and commitment fees, as well as certain direct origination
costs, are deferred and amortized as a yield adjustment over the lives of the
related loans using the interest method. Amortization of deferred loan fees is
discontinued when a loan is placed on nonaccrual status.

Loans are placed on nonaccrual when a loan is specifically determined to be
impaired or when principal or interest is delinquent for 90 days or more.
Interest income generally is not recognized on specific impaired loans unless
the likelihood of further loss is remote. Interest payments received on such
loans are applied as a reduction of the loan principal balance. Interest income
on other nonaccrual loans is recognized only to the extent of interest payments
received.

The Bank accounts for impaired loans in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 114, Accounting by Creditors for Impairment of
a Loan, as amended by SFAS No. 118, Accounting by Creditors for Impairment of a
Loan - Income Recognition and Disclosure. A loan is impaired when, based on
current information and events, it is probable that all amounts due according to
the contractual terms of the loan agreement will not be collected. Impaired
loans are measured based on the present value of expected future cash flows,
discounted at the loan's effective interest rate, or at the loan's observable
market price, or the fair value of the collateral of the loan if the loan is
collateral dependent. Interest income from impaired loans is recognized using
the cash basis method of accounting during the time within that period in which
the loans were impaired.

Allowance for Loan Losses
-------------------------

The Bank provides for loan losses on the allowance method. Accordingly, all loan
losses are charged to the related allowance and all recoveries are credited to
it. Additions to the allowance for loan losses are provided by charges to
operations based on various factors which, in management's judgment, deserve
current recognition in estimating possible losses. Such factors considered by
management include the market value of the underlying collateral, growth and
composition of the loan portfolio, the relationship of the allowance for loan
losses to outstanding loans, delinquency trends, and economic conditions.
Management evaluates the carrying value of loans periodically and the allowance
is adjusted accordingly. While management uses the best information available to
make evaluations, future adjustments to the allowance may be necessary if
conditions differ substantially from the assumptions used in making the
evaluations.

In addition, various regulatory agencies, as an integral part of their
examination process, periodically review the Bank's allowance for loan losses.
Such agencies may require the Bank to recognize additions to the allowance based
on their judgments of information available to them at the time of their
examination.

                                      -20-
<PAGE>

CENTURY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Premises and Equipment
----------------------

Bank premises and equipment are stated at cost less accumulated depreciation.
Depreciation of premises and equipment is recorded on a straight-line basis over
the estimated useful lives of the related assets.

Expenditures for maintenance and repairs are charged to expense as incurred,
while those for improvements are capitalized. The costs and accumulated
depreciation relating to premises and equipment retired or otherwise disposed of
are eliminated from the accounts, and any resulting gains or losses are credited
or charged to earnings.

Investment in Federal Home Loan Bank Stock
------------------------------------------

As a requirement for membership, the Bank invests in stock of the Federal Home
Loan Bank of Atlanta ("FHLB"). This investment is carried at cost.

Real Estate Acquired In Settlement of Loans
-------------------------------------------

Real estate acquired in settlement of loans is carried at the lower of cost or
fair value less estimated costs to dispose. Generally accepted accounting
principles define fair value as the amount that is expected to be received in a
current sale between a willing buyer and seller other than in a forced or
liquidation sale. Fair values at foreclosure are based on appraisals. Losses
arising from the acquisition of foreclosed properties are charged against the
allowance for loan losses. Subsequent writedowns are provided by a charge to
operations through the allowance for losses on other real estate in the period
in which the need arises.

Income Taxes
------------

Deferred tax assets and liabilities are recorded for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Future tax
benefits are recognized to the extent that realization of such benefits is more
likely than not. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which the assets
and liabilities are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income tax
expense in the period that includes the enactment date.

In the event the future tax consequences of differences between the financial
reporting bases and the tax bases of the Company's assets and liabilities result
in deferred tax assets, applicable accounting standards require an evaluation of
the probability of being able to realize the future benefits indicated by such
assets. A valuation allowance is provided when it is more likely than not that
some portion or all of the deferred tax assets will not be realized. In
assessing the realizability of the deferred tax assets, management considers the
scheduled reversals of deferred tax liabilities, projected future taxable
income, and tax planning strategies.

                                      -21-
<PAGE>

CENTURY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes (Continued)
------------

A deferred tax liability is not recognized for portions of the allowance for
loan losses for income tax purposes in excess of the financial statement
balance, as described in Note J. Such a deferred tax liability will only be
recognized when it becomes apparent that those temporary differences will
reverse in the foreseeable future.

Stock Compensation Plans
------------------------

Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for
Stock-Based Compensation, encourages all entities to adopt a fair value based
method of accounting for employee stock compensation plans, whereby compensation
cost is measured at the grant date based on the value of the award and is
recognized over the service period, which is usually the vesting period.
However, it also allows an entity to continue to measure compensation cost for
those plans using the intrinsic value based method of accounting prescribed by
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, whereby compensation cost is the excess, if any, of the quoted market
price of the stock at the grant date (or other measurement date) over the amount
an employee must pay to acquire the stock. Stock options issued under the
Company's stock option plan have no intrinsic value at the grant date, and,
under Opinion No. 25, no compensation cost is recognized for them. The Company
has elected to continue with the accounting methodology in Opinion No. 25 and,
as a result, has provided pro forma disclosures of net income and earnings per
share and other disclosures, as if the fair value based method of accounting had
been applied.

Earnings Per Common Share
-------------------------

Basic earnings per share represent income available to common shareholders
divided by the weighted-average number of common shares outstanding during the
period. Diluted earnings per share reflect 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 Company relate to outstanding
stock options and unvested shares in the Management Recognition Plan and are
determined using the treasury stock method. All potential common shares were
anti-dilutive for the years ended June 30, 2000 and 1999, therefore, basic and
diluted earnings per share were the same number in each year.

Comprehensive Income
--------------------

The Company adopted SFAS 130, Reporting Comprehensive Income, as of July 1,
1998. 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. The Adoption of SFAS 130 had no effect on the Company's
net income or shareholders' equity.

                                      -22-
<PAGE>

CENTURY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncement
-------------------------------

FASB Statement on Accounting for Derivative Instruments and Hedging Activities.
In June 1998, the FASB issued Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities.  In June 1999, this Statement was amended by
SFAS No. 137 to defer the effective date to 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 statement of financial condition
and measure them at fair value. If certain conditions are met, an entity may
elect to designate a derivative as follows:  (a) a hedge of exposure to changes
in the fair value of a recognized asset or liability or an unrecognized firm
commitment, (b) a hedge of the exposure to variable cash flows of a forecasted
transaction, or (c) a hedge of the foreign currency exposure of an unrecognized
firm commitment, an available-for-sale security, a foreign currency denominated
forecasted transaction, or a net investment in a foreign operation.  The
Statement generally provides for matching the timing of the recognition of the
gain or loss on derivatives designated as hedging instruments with the
recognition of the changes in the fair value of the item being hedged.
Depending on the type of hedge, such recognition will be in either net income or
other comprehensive income.  For a derivative not designated as a hedging
instrument, changes in fair value will be recognized in net income in the period
of change. Management anticipates that the statement will have no material
effect on the Company's consolidated financial statements.

                                      -23-
<PAGE>

CENTURY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE B - INVESTMENT SECURITIES

The following is a summary of the securities portfolios by major classification:

<TABLE>
<CAPTION>
                                                                  June 30, 2000
                                                -------------------------------------------------
                                                  Gross         Gross        Gross
                                                Amortized    Unrealized    Unrealized     Fair
                                                   Cost         Gains        Losses      Value
                                                ----------  -------------  ----------  ----------
<S>                                             <C>         <C>            <C>         <C>
Securities available for sale:
 U. S. government securities and obligations
  of U. S. government agencies                  $1,499,496  $           -  $   16,677  $1,482,819
 Mortgage-backed securities                      1,206,791             66      31,586   1,175,271
 Municipal bonds                                 1,485,735          5,180      15,281   1,475,634
 Equity securities                                  19,603        583,644         337     602,910
                                                ----------  -------------  ----------  ----------

                                                $4,211,625  $     588,890  $   63,881  $4,736,634
                                                ==========  =============  ==========  ==========

Securities held to maturity:
 U. S. government securities and obligations
  of U. S. government agencies                  $3,937,177  $           -  $   58,909  $3,878,268
 Municipal bonds                                   495,435         31,771         469     526,737
                                                ----------  -------------  ----------  ----------

                                                $4,432,612  $      31,771  $   59,378  $4,405,005
                                                ==========  =============  ==========  ==========

</TABLE>

<TABLE>
<CAPTION>
                                                                  June 30, 1999
                                                -------------------------------------------------
                                                  Gross         Gross        Gross
                                                Amortized    Unrealized    Unrealized     Fair
                                                   Cost         Gains        Losses      Value
                                                ----------  -------------  ----------  ----------
<S>                                             <C>         <C>            <C>         <C>
Securities available for sale:
 U. S. government securities and obligations
  of U. S. government agencies                  $2,504,146  $      13,042  $    1,523  $2,515,665
 Mortgage-backed securities                      1,642,148          1,773      19,720   1,624,201
 Municipal bonds                                 1,985,261         12,596       9,776   1,988,081
 Equity securities                                  19,602        841,778           -     861,380
                                                ----------  -------------  ----------  ----------

                                                $6,151,157  $     869,189  $   31,019  $6,989,327
                                                ==========  =============  ==========  ==========

Securities held to maturity:
 U. S. government securities and obligations
  of U. S. government agencies                  $5,079,584  $       9,691  $   31,028  $5,058,247
 Municipal bonds                                   491,620         40,698           -     532,318
                                                ----------  -------------  ----------  ----------

                                                $5,571,204  $      50,389  $   31,028  $5,590,565
                                                ==========  =============  ==========  ==========
</TABLE>

There were no realized gains or losses on sales of available-for-sale securities
during the years ended June 30, 2000 and June 30, 1999.

                                     -24-
<PAGE>

CENTURY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE B - INVESTMENT SECURITIES (Continued)

The amortized cost and fair values of securities at June 30, 2000 by contractual
maturity are shown below. Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties.

<TABLE>
<CAPTION>
                                               Securities Available for Sale  Securities Held to Maturity
                                               -----------------------------  ---------------------------
                                                 Amortized         Fair         Amortized       Fair
                                                    Cost           Value           Cost         Value
                                               --------------  -------------  -------------  ------------
<S>                                            <C>             <C>            <C>            <C>
     Due within one year                           $  301,087     $  300,560  $     496,961  $    495,938
     Due after one year through five years          1,281,281      1,272,486      3,540,050     3,481,694
     Due after five years through ten years         2,462,432      2,410,235        395,601       427,373
     Due after ten years                              166,825        753,353              -             -
                                                   ----------     ----------  -------------  ------------

                                                   $4,211,625     $4,736,634  $   4,432,612  $  4,405,005
                                                   ==========     ==========  =============  ============
</TABLE>

For purposes of the maturity table, mortgage-backed securities, which are not
due at a single maturity date, have been allocated over maturity groupings based
on the weighted-average contractual maturities of underlying collateral. The
mortgage-backed securities may mature earlier than their weighted-average
contractual maturities because of principal prepayments.

Securities with a carrying value of $3,265,446 and $2,800,000 and a fair value
of $3,212,992 and $2,790,689 at June 30, 2000 and 1999, respectively, were
pledged to secure public monies on deposit as required by law.

The following table sets forth certain information regarding the carrying value,
weighted average yields and contractual maturities of the Company's investment
portfolio at June 30, 2000. FHLB and FHLMC common stock, nonmarketable equity
securities, substantially all of which are required to be maintained, are
assumed to mature in periods greater than ten years.  Yields on tax exempt
securities are presented at contractual rates.

<TABLE>
<CAPTION>
                                                                       Carrying Value
                                            ---------------------------------------------------------------
                                                              After One      After Five
                                                One Year     Year Through  Years Through    After
                                                or Less       Five Years     Ten Years    Ten Years   Total
                                             --------------  ------------  -------------  ---------  -------
<S>                                          <C>             <C>           <C>            <C>        <C>
                                                                     (In Thousands)

Securities available for sale
 U. S. government and agency securities      $            -  $        499  $         984  $       -  $ 1,483
 Mortgage-backed securities                               -           294            881          -    1,175
 Municipal bonds                                        301           480            545        150    1,476
 FHLMC stock and equity securities                        -             -              -        603      603

Securities held to maturity:
 U. S. government and agency securities                 497         3,440              -          -    3,937
 Municipal bonds                                          -           100            395          -      495

Other investments:
 Interest-earning balances in other banks               889             -              -          -      889
 Federal Home Loan Bank stock                             -             -              -        734      734
                                             --------------  ------------  -------------  ---------  -------

                                             $        1,687  $      4,813  $       2,805  $   1,487  $10,792
                                             ==============  ============  =============  =========  =======
</TABLE>

                                      -25-
<PAGE>

CENTURY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE B - INVESTMENT SECURITIES (Continued)

<TABLE>
<CAPTION>
                                                               Weighted Average Yields
                                             ------------------------------------------------------------
                                                          After One      After Five
                                             One Year   Year Through   Years Through     After
                                              or Less    Five Years      Ten Years     Ten Years   Total
                                             ---------  -------------  --------------  ----------  ------
                                                                    (In Thousands)
<S>                                          <C>        <C>            <C>             <C>         <C>
Securities available for sale
 U. S. government and agency securities             -%          7.42%           6.51%          -%   6.82%
 Mortgage-backed securities                         -%          6.24%           6.46%          -%   6.40%
 Municipal bonds                                 4.05%          4.68%           4.37%       5.60%   4.53%
 FHLMC stock and equity securities                  -%             -%              -%       1.58%   1.58%

Securities held to maturity:
 U. S. government and agency securities          6.70%          6.20%              -%          -%   6.26%
 Municipal bonds                                    -%          4.30%           6.20%          -%   5.82%

Other investments:
 Interest-earning balances in other banks        5.50%             -%              -%          -%   5.50%
 Federal Home Loan Bank stock                       -%             -%              -%       7.75%   7.75%

 Weighted average                                5.59%          6.14%           6.03%       5.03%   5.87%
</TABLE>

NOTE C - LOANS RECEIVABLE

Loans receivable consist of the following:

<TABLE>
<CAPTION>
                                                  2000                      1999
                                         -----------------------   -----------------------
                                                      Percentage                Percentage
                                           Amount      of Total      Amount      of Total
                                         -----------  ----------   -----------  ----------
     <S>                                 <C>          <C>          <C>          <C>
     Type of loan:
      Real estate loans:
       One-to-four family residential    $73,484,757       84.22%  $62,045,292       82.02%
       Multi-family residential and
        commercial                         9,240,542       10.59     7,936,702       10.49
       Construction                        4,213,000        4.83     6,846,845        9.05
       Home equity lines of credit         1,404,704        1.61     1,171,779        1.55
                                         -----------      ------   -----------      ------

            Total real estate loans       88,343,003      101.25    78,000,618      103.11
                                         -----------      ------   -----------      ------

      Other loans:
       Consumer loans                      1,868,382        2.14     1,582,414        2.09
       Loans secured by deposits             249,832        0.29       227,937        0.30
                                         -----------      ------   -----------      ------

            Total other loans              2,118,214        2.43     1,810,351        2.39
                                         -----------      ------   -----------      ------

            Total loans                   90,461,217      103.68    79,810,969      105.50

     Less:
      Construction loans in process        2,136,046        2.45     3,149,073        4.16
      Net deferred loan fees                 484,682        0.56       443,911        0.59
      Allowance for loan losses              586,498        0.67       568,498        0.75
                                         -----------      ------   -----------      ------

                                         $87,253,991      100.00%  $75,649,487      100.00%
                                         ===========      ======   ===========      ======
</TABLE>

                                      -26-
<PAGE>

CENTURY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE C - LOANS RECEIVABLE (Continued)

The allowance for loan losses is summarized as follows:

                                                            2000        1999
                                                          --------    --------

     Balance at beginning of year                         $568,498    $550,498
                                                          --------    --------
      Loans charged off:
        Real estate                                              -           -
        Other                                                    -           -
                                                          --------    --------
           Total loans charged off                               -           -
                                                          --------    --------
      Recoveries:
        Real estate                                              -           -
        Other                                                    -           -
                                                          --------    --------
           Total recoveries                                      -           -
                                                          --------    --------
      Provision for loan losses                             18,000      18,000
                                                          --------    --------
     Balance at end of year                               $586,498    $568,498
                                                          ========    ========

The allocation of the allowance for loan losses applicable to each category of
loans at June 30, 2000 and 1999 is as follows:

<TABLE>
<CAPTION>

                                                             2000                               1999
                                            --------------------------------   --------------------------------
                                                       Percent of   Percent               Percent of   Percent
                                                       Allowance    of Loans              Allowance    of Loans
                                            Amount of   to Total    to Total   Amount of   to Total    to Total
                                            Allowance  Allowance    Loans      Allowance  Allowance    Loans
                                            ---------  ----------   --------   ---------  ----------   --------
<S>                                         <C>        <C>          <C>        <C>        <C>          <C>
Real estate loans:
 One-to-four family residential              $316,176       53.91%     81.23%   $295,708       52.02%     77.74%
 Multi-family residential and commercial      114,850       19.58      10.21      94,484       16.62       9.94
 Construction                                  20,770        3.54       4.66      36,978        6.50       8.58
 Home equity lines of credit                   14,047        2.40       1.55      11,718        2.06       1.47

Other loans:
 Consumer loans                                56,051        9.56       2.07      47,472        8.35       1.98
 Loans secured by deposits                          -           -       0.28           -           -       0.29

Unallocated                                    64,604       11.01          -      82,138       14.45          -
                                            ---------  ----------   --------   ---------  ----------   --------

                                             $586,498      100.00%    100.00%   $568,498      100.00%    100.00%
                                            =========  ==========   ========   =========  ==========   ========
</TABLE>

Nonaccrual loans, which consisted of loans on which principal or interest was
delinquent for 90 days or more, totaled approximately $187,000 and $231,000 at
June 30, 2000 and 1999, respectively. Such loans had the effect of reducing
interest income by approximately $2,500 and $6,000 during the years ended June
30, 2000 and 1999, respectively.

                                      -27-
<PAGE>

CENTURY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE C - LOANS RECEIVABLE (Continued)

At June 30, 2000, the Bank had mortgage loan commitments outstanding of
$1,662,000 and pre-approved but unused lines of credit totaling $1,463,000 In
management's opinion, these commitments and undisbursed proceeds on construction
loans in process, reflected above, represent no more than normal lending risk to
the Bank and will be funded from normal sources of liquidity.

The Bank has had loan transactions with its directors and executive officers.
Such loans were made in the ordinary course of business and also on
substantially the same terms and collateral as those comparable transactions
prevailing at the time and did not involve more than the normal risk of
collectibility or present other unfavorable features. A summary of related party
loan transactions is as follows:

                                                          2000          1999
                                                       ----------    ----------

     Balance at beginning of year                      $1,424,608    $  638,740
     Additional borrowings                                      -     1,063,449
     Loan repayments                                      (46,980)     (277,581)
                                                       ----------    ----------

     Balance at end of year                            $1,377,628    $1,424,608
                                                       ==========    ==========


NOTE D - PREMISES AND EQUIPMENT

Premises and equipment consist of the following:

                                                          2000          1999
                                                       ----------    ----------

     Land                                              $   61,203    $   61,203
     Building and improvements                            737,557       737,557
     Office furniture, fixtures and equipment             198,857       242,080
     Automotive equipment                                  44,805        44,805
                                                       ----------    ----------
                                                        1,042,422     1,085,645
     Accumulated depreciation                            (421,697)     (438,091)
                                                       ----------    ----------

                                                       $  620,725    $  647,554
                                                       ==========    ==========

NOTE E - FEDERAL INSURANCE OF DEPOSITS

Eligible deposit accounts are insured up to $100,000 by the Federal Deposit
Insurance Corporation.

                                      -28-
<PAGE>

CENTURY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE F - BORROWINGS

At June 30, 2000, Home Savings had $14,000,000 available on a line of credit
from the Federal Home Loan Bank of which $8,000,000 had been advanced as of that
date. This advance is due October 6, 2000 and bears interest at 7.40%. All
advances are secured by a blanket floating lien on the Bank's one-to-four family
residential mortgage loans. An advance of $1,000,000 that was outstanding at
June 30, 1999 was repaid during the year ended June 30, 2000.  Average
borrowings outstanding for the years ended June 30, 2000 and 1999 were
$3,900,000 and $583,000, respectively, and the highest month-end balances
outstanding during each were $8,000,000 and $2,000,000, respectively.


NOTE G - DEPOSIT ACCOUNTS

A comparative summary of deposit accounts at June 30, 2000 and 1999 follows:

<TABLE>
<CAPTION>
                                                              2000                       1999
                                                     ----------------------   -------------------------
                                                                  Weighted                    Weighted
                                                       Balance    Avg. Rate      Balance      Avg. Rate
                                                     -----------  ---------   -------------   ---------
     <S>                                             <C>          <C>         <C>             <C>
     Demand deposits:
      Negotiable orders of withdrawal                $ 4,548,776       2.25%    $ 3,972,670        2.25%
      Passbook and statement accounts                  5,349,509       3.00%      5,366,722        3.00%
      Money market checking                           10,673,848       4.79%     11,431,327        4.18%
      Non-interest-bearing checking                      276,426          -         318,924           -
                                                     -----------                -----------
                                                      20,848,559       3.75%     21,089,643        3.49%
     Certificates of deposit                          52,997,653       5.40%     53,210,580        5.30%
                                                     -----------                -----------
       Total deposit accounts                        $73,846,212       4.93%    $74,300,223        4.92%
                                                     ===========                ===========
</TABLE>

A summary of certificate accounts by maturity as of June 30, 2000 follows:

<TABLE>
<CAPTION>
                                                                   Less than     $100,000
                                                                   $100,000       or More       Total
                                                                  ----------   ------------- -----------
     <S>                                                          <C>          <C>           <C>
                                                                             (In Thousands)

     Three months or less                                         $    8,826   $       3,665  $   12,491
     Over three months through six months                              6,329           5,991      12,320
     Over six months through twelve months                            12,977           7,976      20,953
     Over twelve months through twenty-four months                     5,917             580       6,497
     Over twenty-four months                                             737               -         737
                                                                  ----------   ------------- -----------

                                                                  $   34,786   $      18,212  $   52,998
                                                                  ==========   ============= ===========
</TABLE>

                                      -29-
<PAGE>

CENTURY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE G - DEPOSIT ACCOUNTS (Continued)

Interest expense on deposits for the years ended June 30 is summarized as
follows:


                                                          2000         1999
                                                       ----------   ----------

     Passbook and statement accounts                   $  160,230   $  157,980
     NOW accounts                                         112,323      114,260
     Money market accounts                                456,419      449,145
     Certificates of deposit                            2,844,689    2,906,229
                                                       ----------   ----------
                                                        3,573,661    3,627,614
     Penalties for early withdrawal                         2,238        2,067
                                                       ----------   ----------

                                                       $3,571,423   $3,625,547
                                                       ==========   ==========

NOTE H - EMPLOYEE AND DIRECTOR BENEFIT PLANS

Management Recognition Plan
---------------------------

At a special meeting of the Company's stockholders held on February 17, 1998,
the stockholders approved the Home Savings Bank, Inc., SSB Management
Recognition Plan ("MRP"). The MRP provides for the award of up to 48,879 shares
of the Company's common stock to directors, officers and employees of the Bank
with shares vesting over a three-year period. The Company may elect to fund the
plan through the issuance of authorized but unissued shares, or may elect to
purchase the shares in the open market.

During March of 1998, 43,995 shares of newly issued common stock were awarded
under the MRP at a value of $29.71 per share. In addition, 4,884 of newly issued
shares, which had a total value at issuance of $145,096, were issued to the MRP
for future grants. These additional shares had not been granted as of June 30,
2000. Personnel costs for the years ended June 30, 2000 and 1999 include
$326,736 and $326,736, respectively, which represents the value of MRP shares
earned through those dates.

                                      -30-
<PAGE>

CENTURY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE H - EMPLOYEE AND DIRECTOR BENEFIT PLANS (Continued)

Stock Option Plan
-----------------

At a special meeting of the Company's stockholders, held on February 17, 1998,
the stockholders approved the Century Bancorp, Inc. Stock Option Plan (the
"SOP"). The SOP provides for the issuance to directors, officers, and employees
of the Bank options to purchase up to 122,199 shares of the Company's common
stock. On March 10, 1998, the Company granted options to purchase 109,983 shares
of the Company's common stock at an exercise price of $20.45 per share,
including 24,444 options granted to the Company's directors and 85,539 options
granted to the Company's executive officers and employees. The exercise price
equals the market price of the Company's stock on the date of grant. Options
granted to directors were fully vested on the date of grant. Options granted to
executive officers and employees vested 25% on the date of grant and will vest
25% annually thereafter. All options will expire if not exercised within ten
years from the date of grant. As of June 30, 2000 and 1999, options to purchase
88,598 and 67,214 shares, respectively, were exercisable. As permitted by SFAS
No. 123, the Company has applied APB Opinion No. 25 for measurement of stock-
based compensation in the accompanying financial statements. If the Company had
used the fair value based method of accounting for stock-based compensation,
operating results for the years ended June 30, 2000 and 1999 would have been
affected as set forth below:

                                                          As Reported  Pro Forma
                                                          -----------  ---------

   2000 net income                                           $898,794   $804,439
   2000 net income per share, basic and diluted              $   0.93   $   0.83

   1999 net income                                           $956,287   $861,932
   1999 net income per share, basic and diluted              $   0.90   $   0.81


In determining the pro forma disclosures above, the fair value of options
granted was estimated as of the grant date under the Black-Scholes Option
Pricing Model using the following assumptions:  a risk-free interest rate of
5.5%, a dividend yield of 3.33%, an expected life of 7 years, and a volatility
ratio of 20%. The effects of applying SFAS No. 123 in the above pro forma
disclosure are not indicative of future amounts.

Employee Stock Ownership Plan
-----------------------------

The Bank established an ESOP to benefit all qualified employees. The ESOP
purchased 97,758 shares of common stock in a prior year with proceeds received
from a loan of $1,629,300 from the Parent. The loan is to be repaid over fifteen
years in quarterly installments of principal and interest. Interest is based
upon the prime rate and will be adjusted annually. The loan may be prepaid
without penalty. The unallocated shares of stock held by the ESOP are pledged as
collateral for the loan. The ESOP is funded by contributions made by the Bank in
amounts sufficient to retire the debt. At June 30, 2000 and 1999, the
outstanding balance of the loan is $1,179,923 and $1,352,494, respectively, and
is presented as a reduction of stockholders' equity.

                                      -31-
<PAGE>

CENTURY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE H - EMPLOYEE AND DIRECTOR BENEFIT PLANS (Continued)

Employee Stock Ownership Plan (Continued)
-----------------------------

Shares released as the debt is repaid and earnings from the common stock held by
the ESOP are allocated among active participants on the basis of compensation in
the year of allocation. Benefits become 100% vested after seven years of
credited service. Forfeitures of nonvested benefits will be reallocated among
remaining participating employees in the same proportion as contributions.

Dividends on unallocated shares may be used by the ESOP to repay the loan to the
Company and are not reported as dividends in the financial statements. Dividends
on allocated or committed to be allocated shares are credited to the accounts of
the participants and reported as dividends in the financial statements. Special
return of capital dividends on unallocated ESOP shares totaling $977,580 were
recorded as unearned ESOP compensation and reported as a separate component of
stockholders' equity. These funds were used by the ESOP to purchase 62,100
additional shares of the Company's common stock.

Expense of $234,927 and $203,084 during the years ended June 30, 2000 and 1999,
respectively, has been incurred in connection with the ESOP. The expense for the
years ended June 30, 2000 and 1999 includes, in addition to the cash
contributions necessary to fund the ESOP, $62,356 and $29,640, respectively,
which represents the differences between the fair value of the shares which have
been released or committed to be released to participants, and the cost of these
shares to the ESOP. The Bank has credited these amounts to common stock.

At June 30, 2000, 38,094 shares held by the ESOP have been released or committed
to be released to the plan's participants for purposes of computing earnings per
share. The fair value of the unallocated shares amounted to approximately $1.7
million at June 30, 2000.

Executive Deferred Compensation Plan
------------------------------------

The Bank has a deferred compensation plan for its chief executive officer under
which he will be paid specified amounts during the fifteen-year period following
retirement at or after age 65, or upon death or permanent disability. The Bank
has made current provision for future payments under this plan, and the related
liability and deferred income tax benefits are included in the accompanying
financial statements. The Bank has purchased life insurance policies with the
Bank named as beneficiary to fund the benefits. Expenses associated with this
plan were $22,000 for each of the years ended June 30, 2000 and 1999.

                                      -32-
<PAGE>

CENTURY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE H - EMPLOYEE AND DIRECTOR BENEFIT PLANS (Continued)

Employment Agreement
--------------------

The Bank has entered into an employment agreement with its chief executive
officer to ensure a stable and competent management base. The agreement provides
for a three-year term, but, upon each anniversary, the agreement may be extended
for an additional year so that the remaining term shall continue to be three
years. The agreement provides for benefits as spelled out in the contract and
cannot be terminated by the Board of Directors, except for cause, without
prejudicing the officer's right to receive certain vested rights, including
compensation, for the remaining term of the agreement. In the event of a change
in control of the Bank, as defined in the agreement, the agreement will
automatically be extended for three years from the date of such change in
control and the acquirer will be bound to the terms of the contract for that
period.

Termination Agreements
----------------------

The Bank has entered into special termination agreements with two key employees
which provide for severance pay benefits in the event of a change in control of
the Bank which results in the termination of such employees or diminished
compensation, duties or benefits within two years of a change in control. The
employees covered under this agreement are entitled to a cash payment equal to
two times their annual compensation for income tax purposes for the most recent
tax year prior to the change in control. The agreements are initially effective
for a three-year period and may be extended annually for an additional year.

Severance Plan
--------------

The Bank has also adopted a severance plan for the benefit of its employees in
the event of a change in control of the Bank which provides for varying
severance benefits for employees based on their salaries and length of service
with the Bank.


NOTE I - STOCK REPURCHASE PLAN

The Company's Board of Directors adopted stock repurchase plans under which the
Company is authorized to repurchase shares of its outstanding common stock in
the open market or in privately negotiated transactions at times deemed
appropriate. During the years ended June 30, 2000 and 1999, the Company
repurchased 28,450 and 137,400 shares, respectively, of its common stock at an
aggregate cost of approximately $389,000 and $1.9 million, respectively.

                                      -33-
<PAGE>

CENTURY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE J - INCOME TAXES

The components of income tax expense are as follows for the years ended June 30,
2000 and 1999:

                                                       2000        1999
                                                     --------    --------

     Current tax expense                             $442,000    $553,082
     Net deferred tax expense (benefit)                57,000     (65,031)
                                                     --------    --------

                                                     $499,000    $488,051
                                                     ========    ========

The differences between the provision for income taxes and the amount computed
by applying the statutory federal income tax rate of 34% to income before income
taxes were as follows for the years ended June 30, 2000 and 1999:

                                                       2000        1999
                                                     --------    --------

     Income tax at federal statutory rate            $475,250    $491,075
     State income tax, net of federal tax benefit      33,244      17,470
     Tax exempt interest income                       (23,573)    (28,638)
     Other                                             14,079       8,144
                                                     --------    --------

                                                     $499,000    $488,051
                                                     ========    ========

Deferred tax assets and liabilities arising from temporary differences at June
30, 2000 and 1999 are summarized as follows:

<TABLE>
<CAPTION>
                                                                2000          1999
                                                              --------      --------
     <S>                                                      <C>           <C>
     Deferred tax assets relating to:
      Deferred compensation                                   $ 140,539     $ 132,042
      Bad debt reserves                                         187,289       219,554
                                                              ---------     ---------
            Gross deferred tax assets                           327,828       351,596
      Valuation allowance                                             -             -
                                                              ---------     ---------
            Net deferred tax assets                             327,828       351,596
                                                              ---------     ---------

     Deferred tax liabilities relating to:
      Loan fees and costs                                       (77,772)      (38,746)
      Property and equipment                                    (35,000)      (40,794)
      FHLB stock dividends                                     (103,811)     (103,811)
      Net unrealized gain on securities available for sale     (205,359)     (327,852)
                                                              ---------     ---------
            Total deferred tax liabilities                     (421,942)     (511,203)
                                                              ---------     ---------

            Net deferred tax liability                        $ (94,114)    $(159,607)
                                                              =========     =========
</TABLE>

                                      -34-
<PAGE>

CENTURY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE J - INCOME TAXES (Continued)

Retained earnings at June 30, 2000 include approximately $1.5 million for which
no deferred income tax liability has been recognized. This amount represents an
allocation of income to bad debt deductions for income tax purposes only.
Reductions of the amount so allocated for purposes other than tax bad debt
losses or adjustments arising from carryback of net operating losses would
create income which would be subject to the then current corporate income tax
rate.

During 1996, Congress enacted certain tax legislation that exempted thrift
institutions from being taxed on these pre-1987 bad debt reserves. Further, the
use of the reserve method is now required for all thrifts. The Bank is
recapturing over a six year period $264,000 of its tax bad debt reserve created
subsequent to 1986 by using the percentage of taxable income method, requiring
payment of additional income taxes of approximately $100,000. Deferred income
taxes have been previously established for the taxes arising from the reserve
recapture, and therefore the ultimate payment of the taxes will not result in a
charge to earnings.


NOTE K - REGULATORY RESTRICTIONS

Capital Requirements
--------------------

The Parent is regulated by the Board of Governors of the Federal Reserve System
and is subject to securities registration and public reporting regulations of
the Securities and Exchange Commission. The Bank is regulated by the Federal
Deposit Insurance Corporation ("FDIC") and the Administrator, Savings
Institutions Division, North Carolina Department of Commerce (the
"Administrator").

The Bank is subject to the capital requirements of the FDIC and the
Administrator. The FDIC requires the Bank to maintain minimum ratios of Tier 1
capital to risk-weighted assets and total capital to risk-weighted assets of 4%
and 8%, respectively. Tier 1 capital consists of total shareholders' equity
calculated in accordance with generally accepted accounting principles less
intangible assets, and total capital is comprised of Tier 1 capital plus certain
adjustments, the only one of which applies to the Bank is the allowance for
possible loan losses. Risk-weighted assets refer to the on- and off-balance
sheet exposures of the Bank adjusted for their relative risk levels using
formulas set forth in FDIC regulations. The Bank is also subject to an FDIC
leverage capital requirement, which calls for a minimum ratio of Tier 1 capital
(as defined above) to quarterly average total assets of 3% to 5%, depending on
the institution's composite ratings as determined by its regulators. The
Administrator requires a net worth equal to at least 5% of total assets.

                                      -35-
<PAGE>

CENTURY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE K - REGULATORY RESTRICTIONS (Continued)

At June 30, 2000, the Bank was in compliance with all of the aforementioned
capital requirements as shown below:

<TABLE>
<CAPTION>
                                                Leverage      Tier I Risk-
                                                Ratio of        Adjusted      Risk-Based   N. C. Savings
                                             Tier I Capital      Capital       Capital      Bank Capital
                                             ---------------  -------------  ------------  --------------
 <S>                                         <C>              <C>            <C>           <C>
 Consolidated stockholders' equity              $17,867,530    $17,867,530   $17,867,530     $17,867,530
 Separate equity of Century Bancorp, Inc.          (323,206)      (323,206)     (323,206)       (323,206)
 Unrealized gain on securities                     (319,481)      (319,481)     (319,481)       (319,481)
 Loan loss allowance                                      -              -       586,498         586,498
                                                -----------    -----------   -----------     -----------

      Regulatory capital                         17,224,843     17,224,843    17,811,341      17,811,341

 Minimum capital requirement                      4,049,000      2,055,000     4,111,000       5,138,000
                                                -----------    -----------   -----------     -----------

      Excess regulatory capital                 $13,175,843    $15,169,843   $13,700,341     $12,673,341
                                                ===========    ===========   ===========     ===========
</TABLE>

Liquidation Account
-------------------

At the time of Conversion, the Bank established a liquidation account in an
amount equal to its net worth at June 30, 1996. 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 will each eligible 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 from the Bank to Century.
Dividends cannot be paid from this liquidation account.

Dividends
---------

Subject to applicable law, the Boards of Directors of the Bank and the Parent
may each provide for the payment of dividends. Future declarations of cash
dividends, if any, by the Parent may depend upon dividend payments by the Bank
to the Parent. Subject to regulations of the Administrator, the Bank may not
declare or pay a cash dividend on or repurchase any of its common stock if its
stockholders' equity 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. In addition, for a period
of five years after the Conversion, the Bank will be required, under existing
North Carolina regulations, to obtain prior written approval of the
Administrator before it can declare and pay a cash dividend on its capital stock
in an amount in excess of one-half of the greater of (i) its net income for the
most recent fiscal year, or (ii) the average of its net income after dividends
for the most recent fiscal year and not more than two of the immediately
preceding fiscal years, if applicable.

During the years ended June 30, 2000 and 1999, the Bank paid dividends of $1.0
million and $6.4 million, respectively, to the Parent.

                                      -36-
<PAGE>

CENTURY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE L - CONCENTRATION OF CREDIT RISK AND OFF-BALANCE SHEET RISK

The Bank generally originates single-family residential loans within its primary
lending area within ten miles of Thomasville, North Carolina. The Bank's
underwriting policies generally require such loans to be made at no greater than
90% loan-to-value based upon appraised values unless private mortgage insurance
is obtained. Under the Bank's "First Time Homeowners Program," the loan-to-value
ratio can be as high as 95% without private mortgage insurance. These loans are
secured by the underlying properties.

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 include commitments to fund loans, standby letters of
credit and equity lines of credit. Those instruments involve, to varying
degrees, elements of credit and interest rate risk in excess of the amount
recognized in the statements of financial condition. The contract or notional
amounts of those instruments reflect the extent of involvement the Bank has in
particular classes of financial instruments.

A summary of the contract amount of the Bank's exposure to off-balance sheet
risk as of June 30, 2000 is as follows:

     Financial instruments whose contract amounts represent credit risk:
       Commitments to extend credit, mortgage loans                   $1,662,000
       Undisbursed construction loans                                  2,136,000
       Undisbursed lines of credit                                     1,463,000


NOTE M - DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS

The Company has implemented Statement of Financial Accounting Standards No. 107,
Disclosures about Fair Value of Financial Instruments ("SFAS 107"), which
requires disclosure of the estimated fair values of the Company's financial
instruments whether or not recognized in the balance sheet, where it is
practical to estimate that value. Such instruments include cash and interest-
earning balances in other banks, investment securities, loans receivable, stock
in the Federal Home Loan Bank of Atlanta, deposit accounts, borrowings and
commitments. Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial instrument.
These estimates do not reflect any premium or discount that could result from
offering for sale at one time the Company's entire holdings of a particular
financial instrument. Because no active market readily exists for a portion of
the Company's 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. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and, therefore, cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.

                                      -37-
<PAGE>

CENTURY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE M - DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)

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

     Cash and Interest-Earning Balances in Other Banks

       The carrying amounts for cash and interest-earning balances in other
       banks approximate fair value because of the short maturities of those
       instruments.

     Investment Securities

       Fair value for investment securities equals quoted market price if such
       information is available. If a quoted market price is not available, fair
       value is estimated using quoted market prices for similar securities.

     Loans Receivable

       For certain homogenous categories of loans, such as residential
       mortgages, fair value is estimated using the quoted market prices for
       securities backed by similar loans, adjusted for differences in loan
       characteristics. 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.

     Stock in Federal Home Loan Bank of Atlanta

       The fair value for FHLB stock is its carrying value, since this is the
       amount for which it could be redeemed. There is no active market for this
       stock and the Bank is required to maintain a minimum balance based on the
       unpaid principal of home mortgage loans.

     Deposit Liabilities

       The fair value of demand deposits is the amount payable on demand at the
       reporting date. The fair value of certificates of deposit is estimated
       using the rates currently offered for deposits of similar remaining
       maturities.

     Borrowings

       The fair value of borrowings is based upon the discounted value using
       current rates at which borrowings of similar maturity could be obtained.

     Financial Instruments with Off-Balance Sheet Risk

       With regard to financial instruments with off-balance sheet risk
       discussed in Note L, it is not practicable to estimate the fair value of
       future financing commitments.

                                      -38-
<PAGE>

CENTURY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE M - DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)

The carrying amounts and estimated fair values of the Company's financial
instruments, none of which are held for trading purposes, are as follows at June
30, 2000 and 1999:

<TABLE>
<CAPTION>
                                                    2000                      1999
                                          ------------------------  ------------------------
                                           Carrying     Estimated    Carrying     Estimated
                                            Amount     Fair Value     Amount     Fair Value
                                          -----------  -----------  -----------  -----------
<S>                                       <C>          <C>          <C>          <C>
   Financial assets:
    Cash and interest-bearing balances    $ 1,994,529  $ 1,994,529  $ 3,538,154  $ 3,538,154
    Investment securities:
     Available for sale                     4,736,634    4,736,634    6,989,327    6,989,327
     Held to maturity                       4,432,612    4,405,005    5,571,204    5,590,565
    Loans                                  87,253,991   83,836,472   75,649,487   74,178,000
    Stock in Federal Home Loan Bank
     of Atlanta                               733,600      733,600      673,500      673,500

   Financial liabilities:
    Deposits                               73,846,212   72,407,604   74,300,223   73,586,000
    Borrowings                              8,000,000    8,000,000    1,000,000    1,010,000
</TABLE>

NOTE N - PARENT COMPANY FINANCIAL DATA

The following is a summary of the condensed financial statements of Century
Bancorp, Inc. as of and for the years ended June 30, 2000 and 1999:

                       Condensed Statements of Operations
                       Years Ended June 30, 2000 and 1999


<TABLE>
<CAPTION>
                                                        2000        1999
                                                        ----        ----
<S>                                                   <C>        <C>
     Interest income                                  $110,323   $133,811
     Equity in earnings of Home Savings, Inc., SSB     905,336    906,536
     Interest expense                                        -     (2,427)
     Other expenses                                    (83,865)   (30,983)
     Income taxes                                      (33,000)   (50,650)
                                                      --------   --------

            Net income                                $898,794   $956,287
                                                      ========   ========
</TABLE>

                                      -39-
<PAGE>

CENTURY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999
================================================================================

NOTE N - PARENT COMPANY FINANCIAL DATA (Continued)

                  Condensed Statements of Financial Condition
                             June 30, 2000 and 1999

<TABLE>
<CAPTION>
                                                     2000          1999
                                                  -----------   -----------
<S>                                               <C>           <C>
     Assets:
      Cash                                        $   256,434   $   194,181
      Investment securities available for sale          5,130         5,300
      Investment in Home Savings, Inc., SSB        17,544,324    17,427,625
      Other assets                                     61,642        22,943
                                                  -----------   -----------

                                                  $17,867,530   $17,650,049
                                                  ===========   ===========


     Stockholders' equity:
      Common stock                                  8,098,710     8,373,418
      Deferred management recognition plan           (362,920)     (689,656)
      ESOP note receivable                         (1,179,923)   (1,352,494)
      Unearned ESOP compensation                     (742,117)     (910,763)
      Retained earnings                            11,734,299    11,719,396
      Accumulated other comprehensive income          319,481       510,148
                                                  -----------   -----------

                                                  $17,867,530   $17,650,049
                                                  ===========   ===========
</TABLE>

                                      -40-
<PAGE>

                             CENTURY BANCORP, INC.
                             CORPORATE INFORMATION
================================================================================

                              Executive Officers

                             James G. Hudson, Jr.
                         President, CEO and Treasurer

                  Drema A. Michael                    John E. Todd
           Secretary and Assistant Treasurer          Vice President


                                   Directors


     Henry H. Darr             James G. Hudson, Jr.         John R. Hunnicutt
      President,        President, CEO and Treasurer of  President, McThom, Inc.
J. L. Darr & Son, Inc.  Home Savings and Century Bancorp     and McLex, Inc.


         F. Stuart Kennedy                        Milton T. Riley, Jr.
       Chairman of the Board,                     Personal Investments,
          Rex Oil Company                    Retired Partner - Dixon Odom PLLC
                                                Certified Public Accountants

         Stock Transfer Agent                      Annual Meeting

    Registrar and Transfer Company  The 2000 annual meeting of stockholders of
         10 Commerce Street         Century Bancorp, Inc. will be held at 5:00
         Cranford, NJ  07016        p.m. on November 21, 2000 at the Company's
                                    corporate office at 22 Winston Street,
                                    Thomasville, NC.


       Special Legal Counsel                       Form 10-KSB

     Brooks, Pierce, McLendon,      A copy of Form 10-KSB, including financial
    Humphrey & Leonard, L.L.P.      statements and financial statement
     2000 Renaissance Plaza         schedules, as filed with the Securities and
     230 North Elm Street           Exchange Commission for the Company's most
     Greensboro, NC  27420          recent fiscal year will be furnished without
                                    charge to the Company's stockholders upon
                                    written request to James G. Hudson, Jr.,
                                    Century Bancorp, Inc., P. O. Box 989,
                                    Thomasville,NC  27361.




       Independent Auditors                        Corporate Office

         Dixon Odom PLLC                            22 Winston Street
         408 Summit Drive                        Thomasville, NC  27360
        Sanford, NC 27330

                                      -41-
<PAGE>

                             CENTURY BANCORP, INC.
                             CORPORATE INFORMATION
================================================================================


                           Common Stock Information

The Company's stock began trading on December 23, 1996. As of June 30, 2000,
there were 1,105,019 shares of common stock outstanding which were held by
approximately 285 stockholders of record (excluding shares held in street name).
The Company's common stock is quoted on the NASDAQ SmallCap Market under the
symbol "CENB." The following table reflects the stock trading and dividend
payment frequency of the Company for the years ended June 30, 2000 and 1999.

<TABLE>
<CAPTION>
                                                  Stock price(1)  Dividends
                                                  --------------
                                                   High      Low     Per Share
                                                  -------  -------   ---------
<S>                                               <C>     <C>       <C>
For the year ended June 30, 2000:

   First quarter                                  $ 13.81  $ 13.63   $ 0.17
   Second quarter                                 $ 13.75  $ 12.75   $ 0.17
   Third quarter                                  $ 13.25  $ 12.75   $ 0.17
   Fourth quarter                                 $ 14.25  $ 12.75   $ 0.17

For the year ended June 30, 1999:

   First quarter                                  $16.88  $12.00   $   0.17
   Second quarter                                 $14.50  $12.75   $   0.17
   Third quarter                                  $14.00  $13.50   $   0.17
   Fourth quarter                                 $14.00  $13.00   $   0.17
</TABLE>

(1)  This represents the high and low bid quotations on the NASDAQ SmallCap
     Market for the dates indicated. Such quotations reflect inter-dealer
     prices, without retail mark-up, mark-down or commissions and may not
     reflect actual sales transactions.


                                  Disclaimer

This annual report has not been reviewed or confirmed for accuracy or relevance
by the Federal Deposit Insurance Corporation.

                                      -42-