EXHIBIT 13.1
                                                           ------------
                             ISLANDS BANCORP
                        BEAUFORT, SOUTH CAROLINA

                    CONSOLIDATED FINANCIAL STATEMENTS
                           FOR THE YEARS ENDED
                       DECEMBER 31, 2001 AND 2000


                            TABLE OF CONTENTS
                            -----------------

REPORT OF INDEPENDENT ACCOUNTANTS                                       1

CONSOLIDATED FINANCIAL STATEMENTS

	Consolidated Balance Sheets                                       2

	Consolidated Statements of Operations                             3

	Consolidated Statements of Changes in Shareholders' Equity        4

	Consolidated Statements of Cash Flows                             5

	Notes to Consolidated Financial Statements                        6



                     Report of Independent Accountants
                     ---------------------------------

Board of Directors
Islands Bancorp
Beaufort, South Carolina

	We have audited the accompanying consolidated balance sheets of
Islands Bancorp, (the "Company"), and subsidiary as of December 31, 2001 and
2000, and the related consolidated statements of operations, changes in
shareholders' equity and cash flows for each of the two years in the period
ended December 31, 2001.  These consolidated financial statements are the
responsibility of the Company's management.  Our responsibility is to express
an opinion on these consolidated 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 consolidated financial
position of Islands Bancorp, and subsidiary at December 31, 2001 and 2000, and
the consolidated results of their operations and their cash flows for each of
the two years in the period ended December 31, 2001, in conformity with
generally accepted accounting principles.

/s/ Francis and Company, CPAs

Atlanta, Georgia
March 7, 2002



                                  ISLANDS BANCORP
                             BEAUFORT, SOUTH CAROLINA
                           CONSOLIDATED BALANCE SHEETS

                             ASSETS
                             ------                     As of December 31,
                                               --------------------------------
                                                     2001               2000
                                                     ----               ----
Cash and due from banks                        $     209,139      $      40,232
Federal funds sold, net                              225,000             -  -
                                               -------------      -------------
  Total cash and cash equivalents              $     464,139      $      40,232
Securities:
 Available-for-sale at fair value                  1,288,942             -  -
Loans, net                                         6,276,469             -  -
Property and equipment, net                        1,533,326            568,113
Other assets                                         400,578            298,375
                                               -------------      -------------
  Total Assets                                 $   9,963,454      $     906,720
                                               =============      =============

                   LIABILITIES AND SHAREHOLDERS' EQUITY
                   ------------------------------------

Liabilities:
-----------
 Deposits
  Non-interest bearing deposits                $     837,439      $      -  -
  Interest bearing deposits                        2,695,873             -  -
                                               -------------      -------------
       Total deposits                          $   3,533,312      $      -  -
Federal funds purchased and borrowings             1,000,000          1,371,856
Other liabilities                                     66,168             16,484
                                               -------------      -------------
  Total Liabilities                            $   4,599,480      $   1,388,340
                                               -------------      -------------

Commitments and Contingencies
-----------------------------

Shareholders' Equity:
--------------------
 Common stock, zero par value, 10,000,000
 shares authorized; 652,705 (2001) and
 550 (2000) shares issued and outstanding      $   6,213,061      $       5,500
Retained (deficit)                                  (848,572)          (487,120)
Accumulated other comprehensive (loss)                  (515)            -  -
                                               -------------      -------------
   Total Shareholders' Equity                  $   5,363,974      $    (481,620)
                                               -------------      -------------
   Total Liabilities and Shareholders' Equity  $   9,963,454      $     906,720
                                               =============      =============

             Refer to notes to the consolidated financial statements.



                                      ISLANDS BANCORP
                                 BEAUFORT, SOUTH CAROLINA
                           CONSOLIDATED STATEMENTS OF OPERATIONS

                                             For the Years Ended December 31,
                                             --------------------------------
Interest Income:                                   2001          2000
---------------                                    ----          ----
 Interest and fees on loans                     $    129,811  $     -  -
 Interest on investment securities                   266,363        -  -
 Interest on federal funds sold                       46,772        -  -
                                                ------------  ------------
    Total interest income                       $    442,946  $     -  -

Interest Expense:
----------------
 Interest on deposits and borrowings                 124,654        44,159
                                                ------------  ------------
Net interest income                             $    318,292  $    (44,159)
Provision for possible loan losses                    76,850        -  -
                                                ------------  ------------
Net interest income after provision
 for possible loan losses                       $    241,442  $    (44,159)
                                                ------------  ------------

Other Income:
------------
 Service fees on deposit accounts               $     21,978  $     -  -
 Miscellaneous, other                                    671        -  -
                                                ------------  ------------
     Total other income                         $     22,649  $     -  -
                                                ------------  ------------

Other Expenses:
--------------
  Salaries and benefits                         $    460,562  $    178,639
  Data processing and ATM                             42,512        -  -
  Advertising and public relations                    41,178        -  -
  Depreciation expense                                28,606         9,340
  Professional fees                                   44,202        13,205
  Rent expense                                        50,260        14,798
  Other operating expenses                           133,729        52,724
                                                ------------  ------------
     Total other expenses                       $    801,049  $    268,706
                                                ------------  ------------

Loss before income tax                          $   (536,958) $   (312,865)
Income tax (benefit)                                (175,506)       -  -
                                                ------------  ------------

Net (loss)                                      $   (361,452) $   (312,865)
                                                ============  ============

Basic (loss) per share                          $       (.66) $     N.A.
                                                ============  ============

Diluted (loss) per share                        $       (.66) $     N.A.
                                                ============  ============

         Refer to notes to the consolidated financial statements.



                                ISLANDS BANCORP
                           BEAUFORT, SOUTH CAROLINA
              CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                    FOR THE YEARS ENDED DECEMBER 31, 2000 AND 2001


                                                       Accumulated
                          Common Stock                   Other
                        ------------------               Compre-
                        No. of    Common      Retained   hensive
                        Shares    Stock       (Deficit)  (Loss)      Total
                        ------   ---------    --------   ------      -----

Balance,
December 31,
  1999                       550 $    5,500 $ (174,255) $   --     $  (168,755)
                       ---------  ---------  ---------   --------   ----------

Comprehensive income:
 Net loss,
  2000                    --          --      (312,865)     --        (312,865)
                       ---------  ---------  ---------   ---------  ----------
Total
 comprehensive
 income                   --          --      (312,865)     --        (312,865)
                       ---------  ---------  ---------   ---------  ----------

Balance,
 December 31,
 2000                        550 $    5,500 $ (487,120) $   --     $  (481,620)
                       ---------  ---------  ---------   ---------  ----------
Comprehensive income:
 Net loss,
  2001                    --          --       (361,452)     --       (361,452)
Net unrealized
  loss,
  securities              --          --         --           (515)       (515)
                       ---------  ---------  ---------   ---------  ----------
Total
 comprehensive
 income                   --          --       (361,452)      (515)   (361,967)

Sale of
 common
 stock                   652,155  6,521,550      --          --      6,521,550

Selling
 expenses                 --       (313,989)     --          --       (313,989)
                       ---------  ---------  ---------   ---------  ----------

Balance,
 December 31,
 2001                    652,705 $6,213,061 $ (848,572) $     (515)$ 5,363,974
                       =========  =========  =========   =========  ==========

           Refer to notes to the consolidated financial statements.



                                  ISLANDS BANCORP
                             BEAUFORT, SOUTH CAROLINA
                        CONSOLIDATED STATEMENTS OF CASH FLOWS

                                              For the Years Ended December 31,
                                                --------------------------
Cash flows from operating activities:               2001          2000
------------------------------------                ----          ----
  Net (loss)                                    $   (361,452) $   (312,865)
  Adjustments to reconcile net
    loss to net cash used in
    operating activities:
      Provisions for loan losses                $     76,850  $     -  -
      Depreciation                                    28,606         9,340
      Net amortization on securities                   4,470        -  -
  (Increase) in receivables
   and other assets                                 (102,203)     (251,032)
  Increase in payables
   and other liabilities                              49,684        (5,123)
                                                ------------  ------------
Net cash used by
  operating activities                          $   (304,045) $   (559,680)
                                                ------------  ------------

Cash flows from investing activities:
------------------------------------
   Purchase of securities, AFS                  $ (1,293,927) $     -  -
   (Increase) in loans, net                       (6,353,319)       -  -
   Purchase of premises
     and equipment                                  (993,819)     (548,623)
                                                ------------  ------------
Net cash used in investing activities           $ (8,641,065) $   (548,623)
                                                ------------  ------------

Cash flows from financing activities:
------------------------------------
   Issuance of common stock, net                $  6,207,561  $     -  -
   Increase in deposits                            3,533,312        -  -
   (Decrease) in borrowed funds                     (371,856)    1,124,474
                                                ------------  ------------
Net cash provided
   by financing activities                      $  9,369,017  $  1,124,474
                                                ------------  ------------

Net increase in cash
   and cash equivalents                         $    423,907  $     16,171
Cash and cash equivalents,
    beginning of period                               40,232        24,061
                                                ------------  ------------
Cash and cash equivalents, end period           $    464,139  $     40,232
                                                ============  ============

Supplemental Information:

Income taxes paid                               $     -  -    $     -  -
                                                ============  ============

Interest paid                                   $    123,310  $     38,443
                                                ============  ============

        Refer to notes to the consolidated financial statements



                                ISLANDS BANCORP
                           BEAUFORT, SOUTH CAROLINA
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000


NOTE 1 - ORGANIZATION OF THE BUSINESS

     Islands Bancorp (the "Company") is a one bank holding company with
respect to Islands Community Bank, N.A., Beaufort, South Carolina, (the
"Bank").  The Company was incorporated on July 23, 1999, and principal
operations commenced on July 9, 2001, when the Bank opened for business.  The
Bank engages in the business of obtaining deposits and providing commercial,
consumer and real estate loans to the general public.

     The Company is authorized to issue up to 10.0 million shares of its zero
par value per share common stock.  In the public offering which was completed
in early 2001, 652,155 shares of the Company's common stock were sold and
issued.  Proceeds from the offering, net of selling expenses, amounted to
$6,207,561.

	The Company is also authorized to issue of up to 2.0 million shares of
preferred stock.  The Company's Board  of  Directors may,  without further
action by the shareholders, direct the issuance of preferred stock for any
proper corporate purpose with preferences, voting powers, conversion rights,
qualifications, special or relative rights and privileges which could
adversely affect the voting power or other rights of shareholders of common
stock.  As of December 31, 2001, there were no shares of the Company's
preferred stock issued or outstanding.

	The Company's Articles of Incorporation and Bylaws contain certain
provisions that might be deemed to have potential defensive "anti takeover"
effects.  These certain provisions include: (i)  provisions relating to
meetings of shareholders which limit who may call meetings and what matters
will be voted upon; (ii) the ability of the Board of Directors to issue
additional shares of authorized preferred stock without shareholder approval,
thus retaining the ability to dilute any potential acquirer attempting to gain
control by purchasing Company stock; (iii) a staggered Board of Directors,
limiting the ability to change the members of the Board in a timely manner,
and (iv) a provision that requires two-thirds of the shareholders to approve
mergers and similar transactions, and amendments to the articles of
incorporation.

	The Company ceased to be a development stage enterprise since July 9,
2001, when the Bank commenced banking operations.


NOTE 2 - SUMMARY OF  SIGNIFICANT ACCOUNTING POLICIES

	BASIS OF PRESENTATION AND RECLASSIFICATION.  The consolidated financial
statements include the accounts of the Company and its subsidiary.  All
significant intercompany accounts and transactions have been eliminated in
consolidation.  Certain prior year amounts have been reclassified to conform
to the current year presentation.  Such reclassifications had no impact on net
loss or shareholders' equity.

	BASIS OF ACCOUNTING.  The accounting and reporting policies of the
Company conform to generally accepted accounting principles and to general
practices in the banking industry. In preparing the financial statements,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the financial
statements and income and expenses during the reporting period.  Actual
results could differ significantly from those estimates.  Material estimates
that are particularly susceptible to significant change in the near term
relate to the determination of the allowance for loan losses and the valuation
of real estate acquired in connection with foreclosure proceedings.

	CASH AND DUE FROM BANKS.  The Company maintains deposit relationships
with other banks which deposits amounts, at times, may exceed federally
insured limits.  The Company has never experienced any material losses from
such deposit relationships.

     INVESTMENT SECURITIES.  Investment securities that the Company has the
positive intent and ability to hold to maturity are classified as held-to-
maturity and are reported at amortized cost.  Investment securities held for
current resale are classified as trading securities and are reported at fair
value, with unrealized gains and losses included in earnings.  Investment
securities not classified either as securities held-to-maturity or trading
securities are classified as available-for-sale and reported at fair value;
net unrealized gains or losses (net of related taxes) are excluded from
earnings and are reported as accumulated other comprehensive income/(loss)
within shareholders' equity.  The classification of investment securities as
held-to-maturity, trading or available-for-sale is determined at the date of
purchase.

     Realized gains and losses from sales of investment securities are
determined based upon the specific identification method.  Premiums and
discounts are recognized in interest income using the level-yield method over
the period to maturity.

     Management periodically evaluates investment securities for other than
temporary declines in value and records losses, if any, through an adjustment
to earnings.

     LOANS, INTEREST AND FEE INCOME ON LOANS.  Loans are reported at their
outstanding principal balance adjusted for charge-off, unearned discount,
unamortized loan fees and the allowance for possible loan losses.  Interest
income is recognized over the term of the loan based on the principal amount
outstanding.  Non-refundable loan fees are taken into income to the extent
they represent the direct cost of initiating a loan; the amount in excess of
direct costs is deferred and amortized over the expected life of the loan.

     Accrual of interest on loans is discontinued either when (i) reasonable
doubt exists as to the full or timely collection of interest or principal or
when (ii) a loan becomes contractually past due by 90 days or more with
respect to interest or principal.  When a loan is placed on non-accrual
status, all interest previously accrued but not collected is reversed against
current period interest income.  Income on such loans is then recognized only
to the extent that cash is received and where the future collection of
principal is probable. Loans are returned to accruing status only when they
are brought fully current with respect to interest and principal and when, in
the judgment of management, the loans are estimated to be fully collectible as
to both principal and interest.

     Impaired loans are:  (i) non-performing loans that have been placed on
nonaccrual status; and  (ii) loans which are performing according to all
contractual terms of the loan agreement, but may have substantive indication
of potential credit weakness.  Accounting standards require impaired loans to
be measured based on: (a) the present value of expected future cash flows
discounted at the loan's original effective interest rate; or (b) the loan's
observable market price; or (c) the fair value of the collateral if the loan
is  collateral dependent.

	ALLOWANCE FOR LOAN LOSSES.   The allowance for loan losses (the
"Allowance") represents management's estimate of probable losses inherent in
the loan portfolio.  The Allowance is established through provisions charged
to operations.  Loans deemed to be uncollectible are charged against the
Allowance, and subsequent recoveries, if any, are credited to the Allowance.
The adequacy of the Allowance is based on management's evaluation of the loan
portfolio under current economic conditions, past loan loss experience,
adequacy of underlying collateral, changes in the nature and volume of the
loan portfolio, review of specific problem loans, and such other factors
which, in management's judgment, deserve recognition in estimating loan
losses.  The evaluation for the adequacy of the Allowance is inherently
subjective as it requires material estimates, including the amounts and timing
of future cash flows expected to be received on impaired loans that may be
susceptible to significant change.  Various regulatory agencies, as an
integral part of their examination process, periodically review the Company's
Allowance.  Such agencies may require the Company to recognize additions to
the Allowance based on their judgments about information available to them at
the time of their examination.

	PROPERTY AND EQUIPMENT.  Building, furniture, and equipment are stated
at cost, net of accumulated depreciation.  Land is carried at cost.
Depreciation is computed using the straight line method over the estimated
useful lives of the related assets.  Maintenance and repairs are charged to
operations, while major improvements are capitalized.  Upon retirement, sale
or other disposition of property and equipment, the cost and accumulated
depreciation are eliminated from the accounts, and gain or loss is included in
income from operations.

     OTHER REAL ESTATE.  Other real estate represents property acquired
through foreclosure proceedings.  Other real estate is carried at the lower
of:  (i) cost; or (ii) fair value less estimated selling costs.  Fair value is
determined on the basis of current appraisals, comparable sales and other
estimates of value obtained principally from independent sources.  Any excess
of the loan balance at the time of foreclosure over the fair value of the real
estate held as collateral is treated as a loan loss and charged against the
allowance for loan losses.  Gain or loss on the sale of the property and any
subsequent adjustments to reflect changes in fair value of the property are
reflected in the income statement.  Recoverable costs relating to the
development and improvement of the property are capitalized whereas routine
holding costs are charged to expense.

	INCOME TAXES. No income tax expense was recognized as taxable income is
less than $0.  An income tax benefit, however, was recognized for the year
ended December 31, 2001.

     Recognition of deferred tax balance sheet amounts is based on
management's belief that it is more likely than not that the tax benefit
associated with certain temporary differences, tax operating loss
carryforwards, and tax credits will be realized.  A valuation allowance is
recorded for those deferred tax items for which it is more likely than not
that realization will not occur.

     STATEMENT OF CASH FLOWS.  For purposes of reporting cash flows, cash and
cash equivalents include cash on hand, amounts due from banks, and federal
funds sold.  Generally, federal funds are purchased or sold for one day
periods.

	STOCK OPTIONS AND WARRANTS.  There are two major accounting standards
that address the accounting for stock options/warrants.  Entities are allowed
to freely choose between the two distinct standards.  The first standard, APB
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25")
measures stock options/warrants by the intrinsic value method.  Under the
above method, if the exercise price is the same or above the quoted market
price at the date of grant, no compensation expense is recognized.  The second
standard, SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123"), may recognize a compensation expense even in cases where the exercise
price is the same or above the quoted market price.  SFAS 123 takes into
account the time value of the options/warrants; that is, the value of being
able to defer a decision on whether or not to exercise the option/warrants
until the expiration date.  The Company follows the accounting standards of
APB 25.  Had the Company followed the accounting standards of SFAS 123, net
loss for the years ended December 31, 2001 and 2000 would have been increased
by $53,541 and $0, respectively.  On a per share basis, basic and diluted loss
per share would have been increased by $.10 for the year ended December 31,
2001, and by $0 for the year ended December 31, 2000.

     EARNINGS PER SHARE ("EPS").  The Company adopted Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128").
SFAS 128 establishes standards for computing and presenting EPS.  Because the
Company has a complex capital structure, it is required to report: (i) basic
EPS; and (ii) diluted EPS.  Basic EPS is defined as the amount of earnings
available to each share of common stock outstanding during the reporting
period.  Diluted EPS is defined as the amount of earnings available to each
share of common stock outstanding during the reporting period and to each
share that would have been outstanding assuming the issuance of common stock
for all dilutive potential common stock outstanding during the reporting
period.

     The following is a reconciliation of net loss (the numerator) and the
weighted average shares outstanding (the denominator) used in determining
basic and diluted EPS for the year ended December 31, 2001.  EPS for the year
ended December 31, 2000 is not presented because the Company's capital
structure had changed materially, and such presentation may be misleading.

                                  Year Ended December 31, 2001
                        --------------------------------------------------
                               Basic EPS                Diluted EPS
                               ---------                -----------
                        Numerator  Denominator      Numerator  Denominator
                        ---------  -----------      ---------  -----------
Net (loss)             $ (361,452)       -  -       $ (361,452)      -  -
Weighted average shares      - -      543,926             - -      543,926
Dilutive
options, warrants, net       - -         - -              - -       -  -
                        ---------   ---------        ---------   ---------
   Totals              $ (361,452)    543,926       $ (361,452)    543,926
                        =========   =========        =========   =========

EPS                             $(.66)                       $(.66)
                                 ====                         ====

     RECENT ACCOUNTING PRONOUNCEMENTS.  Statement of Financial Accounting
Standards No. 141, "Business Combinations", ("FASB 141") addresses financial
accounting and reporting for business combinations and supersedes both APB
Opinion No. 16, "Business Combinations", and FASB Statement No. 38, "Accounting
for Preacquisition Contingencies of Purchased Enterprises".  All business
combinations in the scope of FASB 141 are to be accounted for using one method -
the purchase method.  The provisions of FASB 141 apply to all business
combinations initiated after June 30, 2001.  The adoption of FASB 141 is not
expected to have a material impact on the financial position or results of
operations of the Company.

	Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets", ("FASB 142") addresses financial accounting and
reporting for acquired goodwill and other intangible assets and supersedes APB
Opinion No. 17, "Intangible Assets".  FASB 142 addresses how intangible
assets that are acquired individually or with a group of other assets (but not
those acquired in a business combination) should be accounted for in financial
statements upon their acquisition.  FASB 142 also addresses how goodwill and
other intangible assets should be accounted for after they have been initially
recognized in the financial statements.  FASB 142 is effective for fiscal
years beginning after December 15, 2001.  The adoption of FASB 142 is not
expected to have a material impact on the financial position or results of
operations of the Company.

	Statement of Financial Accounting Standards No. 143, "Accounting for
Asset Retirement Obligations", ("FASB 143") addresses financial accounting
and reporting for obligations associated with the retirement of tangible long-
lived assets and the associated asset retirement costs.  FASB 143 applies to
all entities.  FASB 143 also applies to legal obligations associated with the
retirement of long-lived assets that result from the acquisition,
construction, development and (or) the normal operation of a long-lived asset,
except for certain obligations of leases.  FASB 143 amends FASB Statement No.
19, "Financial Accounting and Reporting by Oil and Gas Producing Companies".
FASB 143 is effective for fiscal years beginning after December 15, 2002.  The
adoption of FASB 143 is not expected to have a material impact on the
financial position or results of operations of the Company.

	Statement of Financial Accounting Standards No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets", ("FASB 144") addresses
financial accounting and reporting for the impairment or disposal of long-
lived assets.  FASB 144 supersedes both FASB Statement No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of", and the accounting and reporting provisions of APB Opinion No.
30, "Reporting the Results of Operation - Reporting the Effects of Disposal
of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions",  for the disposal of a Segment of a
business (as previously defined in that opinion).  FASB 144 also amends ARB
No. 51, "Consolidated Financial Statements", to eliminate the exception to
consolidation for a subsidiary for which control is likely temporary.  The
provisions of FASB 144 are required to be applied with fiscal years beginning
after December 15, 2001.  Adoption of FASB 144 is not expected to have a
material impact on the financial position or results of operations of the
Company.


NOTE 3 - FEDERAL FUNDS SOLD/PURCHASED

	  The Bank is required to maintain legal cash reserves computed by
applying prescribed percentages to its various types of deposits.  When the
Bank's cash reserves are in excess of the required amount, the Bank may lend
the excess to other banks on a daily basis.  At December 31, 2001, the Bank
was a net purchaser in the federal funds market.  Recall that at December 31,
2000, the Bank was not operational and thus did not participate in the Federal
funds market.  Below is pertinent information:

                                       December 31, 2001
                                       -----------------
	Federal funds sold                  $   255,000
	Federal funds purchased              (1,000,000)
                                          -----------
	Federal funds purchased, net        $  (745,000)
                                          ===========


NOTE 4 - SECURITIES AVAILABLE-FOR-SALE

     The amortized costs and estimated market values of securities available-
for-sale as of December 31, 2001 follow:

                                             Gross
                                           Unrealized
                          Amortized        ----------         Estimated
Description                  Costs       Gains    Losses    Market Values
-----------               -----------    -----    ------    -------------
U.S. Agency pool         $  1,109,721  $ -  -    $   (779)  $  1,108,942
FRB stock                     180,000    -  -       -  -         180,000
                         ------------  --------  --------   ------------
   Total securities      $  1,289,721  $ -  -    $   (779)  $  1,288,942
                         ============  ========  ========   ============

	All national banks are required to hold FRB stock.  Since no ready
market exists for the FRB stock, it is reported at cost.

	No securities were held by the Company as of December 31, 2000.

     The amortized costs and estimated market values of securities available-
for-sale at December 31, 2001, by contractual maturity, are shown in the
following chart.  Expected maturities may differ from contractual maturities
because issuers may have the right to call or prepay obligations with or
without call or prepayment penalties.

                                          Amortized         Estimated
                                            Costs         Market Values
                                         -----------      -------------
	Due in ten years or more           $ 1,109,721       $ 1,108,942
	FRB stock (no maturity)                180,000           180,000
                                         -----------       -----------
	    Total securities               $ 1,289,721       $ 1,288,942
                                         ===========       ===========

	No securities were sold by the Company in either calendar year 2001 or
2000, and none of the securities was pledged as of December 31, 2001 and 2000.


NOTE 5 - LOANS

	The composition of net loans by major loan category, as of December 31,
2001 and 2000, follows:
                                                        December 31,
                                              -----------------------------
                                                   2001            2000
                                                   ----            ----
	Commercial, financial, agricultural     $   1,111,807   $      -  -
	Real estate - construction                    134,389          -  -
	Real estate - mortgage                      4,331,284          -  -
	Installment                                   775,839          -  -
                                              -------------   -------------
	Loans, gross                            $   6,353,319   $      -  -
	Deduct:
	 Allowance for loan losses                    (76,850)         -  -
                                              -------------   -------------
	    Loans, net                          $   6,276,469   $           0
                                              =============   =============

	The Company considers impaired loans to include all restructured loans,
loans on which the accrual of interest had been discontinued and all other
loans which are performing according to the loan agreement, but may have
substantive indication of potential credit weakness.  At December 31, 2001,
none of the Bank's loans was considered to be impaired.  Consequently, the
allowance for loan losses did not contain any funds specifically allocated to
impaired loans.  In addition, since the average investment in impaired loans
for the year ended December 31, 2001 was $0, no interest income on impaired
loans was recognized during calendar year 2001.


NOTE 6 - ALLOWANCE FOR POSSIBLE LOAN LOSSES

	The allowance for possible loan losses is a valuation reserve available
to absorb future loan charge-offs.  The Allowance is increased by provisions
charged to operating expenses and by recoveries of loans which were previously
written-off.  The Allowance is decreased by the aggregate loan balances, if
any, which were deemed uncollectible during the year.

	Individual consumer loans are predominantly undersecured, and the
allowance for possible losses associated with these loans has been established
accordingly.  The majority of the non-consumer loan categories are generally
secured by real-estate, receivables, inventory, machinery, equipment, or
financial instruments.  The amount of collateral obtained is based upon
management's evaluation of the borrower.

     Activity within the Allowance account for the years ended December 31,
2001 and 2000 follows:
                                             Years ended December 31,
                                             ------------------------
                                                  2001         2000
                                                  ----         ----
     Balance, beginning of year              $    -  -    $    -  -
     Add:  Provision for loan losses              76,850       -  -
     Add:  Recoveries of previously
           charged off amounts                    -  -         -  -
                                             -----------  -----------
        Total                                $    76,850  $    -  -
     Deduct: Amount charged-off                   -  -         -  -
                                             -----------  -----------
     Balance, end of year                    $    76,850  $         0
                                             ===========  ===========


NOTE 7 - PROPERTY AND EQUIPMENT

	Buildings, furniture and equipment are stated at cost less accumulated
depreciation.  Components of property and equipment included in the
consolidated balance sheets at December 31, 2001 and 2000 follow:

                                                   December 31,
                                            -------------------------
                                                2001          2000
                                                ----          ----
	Land                                  $   750,614   $   546,829
	Buildings                                 461,609        -  -
	Furniture, equipment                      303,959        35,034
	Construction in progress                   59,499        -  -
                                            -----------   -----------
	  Property and equipment, gross       $ 1,575,681   $   581,863
	Deduct:
	 Accumulated depreciation                 (42,355)      (13,750)
                                            -----------   -----------
	    Property and equipment, net       $ 1,533,326   $   568,113
                                            ===========   ===========

	Depreciation expense for the years ended December 31, 2001 and 2000
amounted to $28,606 and $9,340, respectively.  Depreciation is charged to
operations over the estimated useful lives of the assets.  The estimated
useful lives and methods of depreciation for the principal items follow:


               Type of Asset        Life in Years  Depreciation Method
               -------------        -------------  -------------------
         Furniture and equipment       3 to 7        Straight-line
         Building                        39          Straight-line

	The Bank is in the process of renovating an older bank building from
which it intends to operate upon completion.  Renovation expense will
approximate $750,000, $59,499 of which was incurred and paid as of December
31, 2001.


NOTE 8 - COMMITMENTS AND CONTINGENCIES

	In the normal course of business, there are various outstanding
commitments to extend credit in the form of unused loan commitments and
standby letters of credit that are not reflected in the consolidated financial
statements.  Since commitments may expire without being exercised, these
amounts do not necessarily represent future funding requirements.  The Company
uses the same credit and collateral policies in making commitments as those it
uses in making loans.

	At December 31, 2001 and 2000, the Company had unused loan commitments
of approximately $594,459 and $0, respectively.  Additionally, standby letters
of credit of approximately $134,462 and $0 were outstanding at December 31,
2001 and 2000, respectively.  The majority of these commitments are
collateralized by various assets.  No material losses are anticipated as a
result of these transactions.

	The Company and its subsidiary are subject to claims and lawsuits which
arise primarily in the ordinary course of business.  It is the opinion of
management that the disposition or ultimate resolution of such claims and
lawsuits will not have a material adverse effect on the consolidated financial
position of the Company and its subsidiary.

	On July 27, 1999, the Company entered into a five-year employment
agreement (the "Agreement") with its President and CEO (the "CEO").  In
exchange for his services, the CEO will receive an annual pay and possibly a
bonus if certain criteria are met.  The Agreement provides for other customary
benefits such as health and life insurance, retirement benefits, club dues,
etc.  If the CEO's employment is terminated by the Company/Bank without cause
or for any reason following a change in control of the Company, the CEO will
be entitled to a severance payment equal to two-times his annual pay plus any
accrued bonus.

	Please refer to Note 14 concerning warrants earned by directors and
executive officers.

	Please refer to Note 7 concerning the renovation expense with respect to
an older bank building from which the Bank intends to operate.


NOTE 9 - BORROWINGS

	As of December 31, 2001, total borrowings amounted to $1,000,000.  The
entire borrowings consist of Federal funds purchased.


	As of December 31, 2000, total borrowings amounted to $1,371,856.
Pertinent information follows:

                           Balance    Interest
     Lender                12-31-00     Rate    Collateral     Purpose
     ------                --------   --------  ----------     -------
   Organizers              100,000       0%        None     Working capital
   Financial institution   735,000    (P-1/2)%     None     Working capital
   Financial institution   520,000    (P-1/2)%     Land     Acquire land
   Financial institution    16,856      .9%     Automobile  Purchase automobile


NOTE 10 - DEPOSITS

	The following details deposit accounts at December 31, 2001 and 2000:

                                                    December 31,
                                           ------------------------------
                                               2001              2000
                                               ----              ----
	Non-interest bearing deposits        $   837,439       $    -  -
	Interest bearing deposits:
	   NOW accounts                          276,100            -  -
	   Money market accounts                 974,902            -  -
	   Savings                                41,135            -  -
	   Time, less than $100,000              692,244            -  -
	   Time, $100,000 and over               711,492            -  -
                                           -----------       ------------
	    Total deposits                   $ 3,533,312       $          0
                                           ===========       ============

	At December 31, 2001, the scheduled maturities of all certificates of
deposit were as follows:

                  Year Ended
                  December 31,                 Amount
                  ------------                 ------
                     2002                   $   720,053
                     2003                       581,265
                     2004                         6,100
                     2005                        -  -
                     2006                        96,318
                                            -----------
                     Total                  $ 1,403,736
                                            ===========


NOTE 11 - INTEREST ON DEPOSITS AND BORROWINGS

	A summary of interest expense for the years ended December 31, 2001 and
2000 follows:
                                                    December 31,
                                           ------------------------------
                                               2001              2000
                                               ----              ----
	Interest on NOW accounts             $     3,239       $    -  -
	Interest on money market accounts         11,828            -  -
	Interest on savings accounts                 343            -  -
	Interest on CDs, less than $100,000        6,665            -  -
	Interest on CDs, $100,000 and over         6,749            -  -
	Interest, other borrowings                95,830             44,159
                                           -----------       ------------
          Total interest on
	     deposits and borrowings         $   124,654       $     44,159
                                           ===========       ============


NOTE 12 - OTHER OPERATING EXPENSES

	A summary of other operating expenses for the years ended December 31,
2001 and 2000 follows:
                                                    December 31,
                                           ------------------------------
                                               2001              2000
                                               ----              ----
	Relocation expense                   $    -  -         $     24,161
	Postage and delivery                       7,345              1,548
      Supplies and printing                     38,114              6,623
	Taxes & insurance                         21,115                952
	Utilities & telephone                     16,894              6,122
	Repairs, maint. & service contracts       27,627                927
	All other operating expenses              22,634             12,391
                                           -----------       ------------
   	   Total other operating expenses    $   133,729       $     52,724
                                           ===========       ============


NOTE 13 - INCOME TAXES

	As of December 31, 2001 and 2000, the Company's provision for income
taxes consisted of the following:
                                                 December 31,
                                          ------------------------
                                              2001         2000
                                              ----         ----
      Current                             $    -  -    $    -  -
      Deferred                               (175,506)      -  -
                                          -----------  -----------
      Federal income tax (benefit)        $  (175,506) $         0
                                          ===========  ===========

	The Company's provision for income taxes differs from the amounts
computed by applying the federal income tax statutory rates to income before
income taxes.  A reconciliation of federal statutory income taxes to the
Company's actual income tax provision follows:
                                                 December 31,
                                          ------------------------
                                              2001         2000
                                              ----         ----
      Income taxes at statutory rate      $  (182,565) $  (106,374)
      State tax, net of Federal benefits       (6,114)      (4,490)
      Change in valuation allowance             2,569      110,864
      Other                                    10,604       -  -
                                          -----------  -----------
      Total                               $  (175,506) $         0
                                          ===========  ===========

     The tax effects of the temporary differences that comprise the net
deferred tax assets at December 31, 2001 and 2000 are presented below:

                                                December 31,
                                          ------------------------
                                              2001         2000
                                              ----         ----
    Deferred tax assets:
      Allowance for loan losses           $    26,129  $    -  -
      Net operating loss carryforward          98,147      110,864
      Organization costs                      164,663       -  -
      Available-for-sale securities               264       -  -
                                          -----------  -----------
    Gross deferred tax assets             $   289,203  $   110,864
    Less, deferred tax liabilities:
      Accumulated depreciation                 (1,244)      -  -
                                          -----------  -----------
    Deferred tax assets net
    of deferred liabilities               $   287,959  $   110,864
    Less, valuation allowance                (113,433)    (110,864)
                                          -----------  -----------
        Net deferred tax assets           $   174,526  $         0
                                          ===========  ===========

     There was a net change in the valuation allowance during calendar years
2001 and 2000.  In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that some portion or
all of the deferred tax assets will not be realized.  The ultimate realization
of deferred tax assets is dependent upon the generation of future taxable
income during  the periods in which those temporary differences become
deductible.  Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income and tax planning strategies in
making this assessment.  Based upon the projection for future taxable income
over the periods which the temporary differences resulting in the deferred tax
assets are deductible, management believes it is more likely than not that the
Company will realize the benefits of those deductible differences, net of the
existing valuation allowance at December 31, 2001.


NOTE 14 - RELATED PARTY TRANSACTIONS

	DIRECTORS' WARRANTS.  The Directors of the Company received an aggregate
total of 210,115 stock warrants, or approximately one stock warrant for each
one share of the Company's common stock purchased by the directors in the
initial public offering.  Each warrant entitles its holder to purchase one
share of the Company's common stock for $10.00.  These warrants will vest
equally on July 9, 2002, 2003, and 2004.  All unexercised warrants will expire
on July 8, 2011.

	BORROWINGS AND DEPOSITS BY DIRECTORS AND EXECUTIVE OFFICERS.  Certain
directors, principal officers and companies with which they are affiliated are
customers of and have banking transactions with the Bank in the ordinary
course of business.  As of December 31, 2001 and 2000, loans outstanding to
directors, their related interests and executive officers aggregated $230,275
and $0, respectively.  These loans were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the same time
for comparable transactions with unrelated parties.  In the opinion of
management, loans to related parties did not involve more than normal credit
risk or present other unfavorable features.

	A summary of the related party loan transactions during the calendar
years 2001 and 2000 follows:
                                            Insider Loan Transactions
                                           ---------------------------
                                               2001           2000
                                               ----           ----
	Balance, beginning of year           $    -  -      $    -  -
	New loans                                233,553         -  -
	Less:  Principal reductions               (3,278)        -  -
                                           -----------    ------------
	Balance, end of year                 $   230,275    $          0
                                           ===========    ============

	Deposits by directors and their related interests, as of December 31,
2001 and 2000 approximated $669,421 and $0, respectively.


NOTE 15 - CONCENTRATIONS OF CREDIT

	The Company originates primarily commercial, residential, and consumer
loans to customers in Beaufort County, South Carolina, and surrounding
counties.  The ability of the majority of the Company's customers to honor
their contractual loan obligations is dependent on economic conditions
prevailing at the time in Beaufort County and the surrounding counties.

	Seventy percent of the Company's loan portfolio is concentrated in loans
secured by real estate, of which a substantial portion is secured by real
estate in the Company's primary market area.  Accordingly, the ultimate
collectibility of the loan portfolio is susceptible to changes in market
conditions in the Company's primary market area.  The other significant
concentrations of credit by type of loan are set forth under Note 5.

	The Company, as a matter of policy, does not generally extend credit to
any single borrower or group of related borrowers in excess of 15% of the
Bank's statutory capital, or approximately $801,000.


NOTE 16 - REGULATORY MATTERS

	The Company is governed by various regulatory agencies.  Bank holding
companies and their nonbanking subsidiaries are regulated by the FRB.
National banks are primarily regulated by the OCC.  All federally-insured
banks are also regulated by the FDIC.  The Company's banking subsidiary
includes a national bank, which is insured by the FDIC.

	Various requirements and restrictions under federal and state laws
regulate the operations of the Company.  These laws, among other things,
require the maintenance of reserves against deposits, impose certain
restrictions on the nature and terms of the loans, restrict investments and
other activities, and regulate mergers and the establishment of branches and
related operations.  The ability of the parent company to pay cash dividends
to its shareholders and service debt may be dependent upon cash dividends from
its subsidiary bank.  The subsidiary bank is subject to limitations under
federal law in the amount of dividends it may declare.  At December 31, 2001,
none of the subsidiary bank's capital accounts was available for dividend
declaration without prior regulatory approval.

	The banking industry is also affected by the monetary and fiscal
policies of regulatory authorities, including the FRB.  Through open market
securities transactions, variations in the discount rate, the establishment of
reserve requirements and the regulation of certain interest rates payable by
member banks, the FRB exerts considerable influence over the cost and
availability of funds obtained for lending and investing.  Changes in interest
rates, deposit levels and loan demand are influenced by the changing
conditions in the national economy and in the money markets, as well as the
effect of actions by monetary and fiscal authorities.  Pursuant to the FRB's
reserve requirements, the Bank was not required to maintain certain cash
reserve balances with the Federal Reserve System at December 31, 2001.

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

	Qualitative measures established by regulation to ensure capital
adequacy require the Company and the Bank to maintain minimum amounts and
ratios (set forth in the table below) of total and Tier 1 capital (as defined
in the regulations) to risk-weighted assets (as defined), and of Tier 1
capital to average assets (as defined).  Management believes that the Company
and the Bank, as of December 31, 2001, meet all capital adequacy requirements
to which they are subject.


	As of  December 31, 2001, the Bank was considered to be Well
Capitalized.  There are no conditions or events since December 31, 2001 that
management believes have changed the Bank's Well Capitalized category.  To be
categorized as Adequately Capitalized or Well Capitalized, the Bank must
maintain the following capital ratios:

                                              Adequately        Well
                                              Capitalized   Capitalized
                                              -----------   -----------
	Total risk-based capital ratio             8.0%           10.0%
	Tier 1 risk-based capital ratio            4.0%            6.0%
	Tier 1 leverage ratio                      4.0%            5.0%

     The Company's and the Bank's actual capital amounts and ratios are
presented in the following table:
                                              Minimum Regulatory Capital
                                                 Guidelines for Banks
                                             ----------------------------
                                              Adequately        Well
(Dollars in thousands)            Actual      Capitalized    Capitalized
                              -------------  -------------  -------------
                              Amount  Ratio  Amount  Ratio  Amount  Ratio
As of December 31, 2001:
Total capital-risk-based
(to risk-weighted assets):
   Bank                      $ 5,420  68.6%  $  632 >= 8%  $   791 >= 10%
   Consolidated                5,440  68.8%     633 >= 8%     N/A  >= N/A

Tier 1 capital-risk-based
(to risk-weighted assets):
   Bank                      $ 5,343  67.6%  $  316 >= 4%  $   474 >= 6%
   Consolidated                5,363  67.8%     316 >= 4%     N/A  >= N/A

Tier 1 capital-leverage
(to average assets):
   Bank                      $ 5,343  58.7%  $  364 >= 4%  $   455 >= 5%
   Consolidated                5,363  58.8%     365 >= 4%     N/A  >= N/A


NOTE 17 - DIVIDENDS

	The primary source of funds available to the Company to pay cash
dividends and other expenses is from the Bank.  Bank regulatory authorities
impose restrictions on the amounts of dividends that may be declared by the
Bank.  For example, the Bank may not pay cash dividends until it is
cumulatively profitable.  Cash dividends to shareholders are not expected for
the foreseeable future.


NOTE 18 - PARENT COMPANY FINANCIAL INFORMATION

	This information should be read in conjunction with the other notes to
the consolidated financial statements.

                        Parent Company Balance Sheets
                        -----------------------------

                                                          December 31,
                                                ---------------------------
Assets:                                              2001           2000
------                                               ----           ----
Cash                                            $     27,094   $     40,232
Investment in Bank                                 5,342,880         -  -
Fixed assets                                          -  -          568,113
Other assets                                          -  -          298,375
                                                ------------   ------------
   Total Assets                                 $  5,369,974   $    906,720
                                                ============   ============

Liabilities and Shareholders' Equity:
------------------------------------

Accounts payable                                $      6,000   $     16,484
Borrowings                                            -  -        1,371,856
                                                ------------   ------------
   Total Liabilities                            $      6,000   $  1,388,340
                                                ------------   ------------

Common stock                                    $  6,213,061   $      5,500
Retained (deficit)                                  (848,572)      (487,120)
Accumulated other comprehensive income                  (515)        -  -
                                                ------------   ------------
   Total Shareholders' equity                   $  5,363,974   $   (481,620)
                                                ------------   ------------
   Total Liabilities and Shareholders' equity   $  5,369,974   $    906,720
                                                ============   ============


                    Parent Company Statements of Operations
                    ---------------------------------------

                                        For the Years Ended December 31,
                                        --------------------------------
Revenues:                                      2001          2000
--------                                       ----          ----
Interest income                            $    17,062   $    -  -
                                           -----------   -----------
   Total revenues                          $    17,062   $    -  -
                                           -----------   -----------

Expenses:
--------
Interest expense                           $    20,480   $    44,159
Depreciation and amortization                   -  -           9,340
Other expenses                                  46,021       259,366
                                           -----------   -----------
   Total expenses                          $    66,501   $   312,865
                                           -----------   -----------

(Loss) before equity in undistributed
  earnings of Bank                         $   (49,439)  $  (312,865)
Equity in undistributed earnings
  of Bank                                     (312,013)       -  -
                                           -----------    ----------

Net (loss)                                 $  (361,452)  $  (312,865)
                                           ===========   ===========


                  Parent Company Statements of Cash Flows
                  ---------------------------------------

                                        For the Years Ended December 31,
                                        --------------------------------
Cash flows from operating activities:           2001          2000
------------------------------------            ----          ----
Net (loss)                                 $   (361,452) $   (312,865)
Adjustments to reconcile net loss
 to net cash used in operating
 activities:
   Equity in undistributed
   earnings of the Bank                         312,013)       -  -
   Depreciation                                  -  -           9,340
  Decrease in other assets                      866,488      (251,032)
  (Decrease) in payables                        (10,484)       (5,123)
                                           ------------  ------------
Net cash used
 by operating activities                   $    806,565  $   (559,680)
                                           ------------  ------------

Cash flows from investing activities:
------------------------------------
 Purchase of premises and equipment        $     -  -    $   (548,623)
 Investment in Bank                          (5,655,408)       -  -
                                           ------------  ------------
Net cash used by financing activities      $ (5,655,408) $   (548,623)
                                           ------------  ------------

Cash flows from financing activities:
------------------------------------
 Issuance of stock, net                    $  6,207,561  $     -  -
 (Decrease) in borrowings                    (1,371,856)    1,124,474
                                           ------------  ------------
Net cash provided
 by financing activities                   $  4,835,705  $  1,124,474
                                           ------------  ------------

Net (decrease) in cash
 and cash equivalents                      $    (13,138) $     16,171
Cash and cash equivalents,
 beginning of the year                           40,232        24,061
                                           ------------  ------------
Cash and cash equivalents,
 end of year                               $     27,094  $     40,232
                                           ============  ============