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|-------------------------------------------------------------------------|--------|-------------------------------------------|
| North      Carolina                                                     |   | 56-1980549                                |
| (State      or Other Jurisdiction ofIncorporation      or Organization) |   | (I.R.S.      Employer Identification No.) |
|                                                                    |   |
| 2634      Durham Chapel Hill Blvd.Durham,      North Carolina           |   | 27707-2800                                |
| (Address      of Principal Executive Offices)                           |   | (Zip      Code)                           |

| Large      accelerated filer   ̈ | Accelerated      filer   ̈                      | Nonaccelerated      filer   ̈ | Smaller      reporting company þ |
|------------------------------------------------|---------------------------------------------------------------|---------------------------------------------|---------------------------------------|
|                                           |  (Do not      check here if a smaller reporting company) |                                        |

| DOCUMENTS      INCORPORATED BY REFERENCE                                                                                                             |
|------------------------------------------------------------------------------------------------------------------------------------------------------|
| Document      Incorporated                                                                                                                           |   | Where |
| 11.       Portions      of the registrant’s Proxy Statement for the Annual Meeting of Stockholders      to be held on June 9, 2009.  |   | Part      III |

PART II

| ITEM 8. | FINANCIAL      STATEMENTS AND SUPPLEMENTARY DATA |
|--------------|--------------------------------------------------|

| CONSOLIDATED      STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY                |                                     |                              |                                                                                                              |                                                                                                   |                                                                                                   |                                                                                                                    |
|--------------------------------------------------------------------------------|------------------------------------------|-----------------------------------|-------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------|
| YEARS      ENDED DECEMBER 31, 2008 AND 2007                                    |                                     |                              |                                                                                                              |                                                                                                   |                                                                                                   |                                                                                                                    |   |   |   |   |
|                                                                           |                                     |                              |                                                                                                              |                                                                                                   |                                                                                                   |                                                                                                                    |   |   | Accumulated |   |   |
|                                                                           |                                     |                              | Number                                                                                                            |                                                                                                   |                                                                                                   |                                                                                                                    |   |   | Other |   |   |
|                                                                           |                                     |                              | of                                                                                                                |                                                                                                   | Common                                                                                                 |                                                                                                                    | Retained |   | Comprehensive |   |
| (Dollars      in thousands)                                                    |                                     | Shares                            |                                                                                                              | Stock                                                                                                  |                                                                                                   | Earnings                                                                                                                |   | Loss |   | Total |
|                                                                           |                                     |                              |                                                                                                              |                                                                                                   |                                                                                                   |                                                                                                                    |   |   |   |   |   |
| Balances      as of December 31, 2006                                          |                                     |     1,685,646 |                                                                                                              |  $               5,901 |                                                                                                   |  $             16,027                             |   |  $                (166) |   |  $             21,762 |
| Comprehensive      income:                                                     |                                     |                              |                                                                                                              |                                                                                                   |                                                                                                   |                                                                                                                    |   |   |   |   |
|                                                                           | Net      income                          |                              |                                                                                                              |                                                                                                   |                                                                                                   |                                                                                                                    |                      927 |   |   |   |                      927 |
|                                                                           | Other      comprehensive loss            |                              |                                                                                                              |                                                                                                   |                                                                                                   |                                                                                                                    |   |   |                    (192) |   |                    (192) |
|                                                                           | Total      comprehensive income          |                              |                                                                                                              |                                                                                                   |                                                                                                   |                                                                                                                    |   |   |   |   |                      735 |
| Dividends      declared ($0.20 per share)                                      |                                     |                              |                                                                                                              |                                                                                                   |                                                                                                   |                    (337) |   |   |   |                    (337) |
|                                                                           |                                     |                              |                                                                                                              |                                                                                                   |                                                                                                   |                                                                                                                    |   |   |   |   |   |
| Balances      as of December 31, 2007                                          |                                     |     1,685,646 |                                                                                                              |  $               5,901 |                                                                                                   |  $             16,617                             |   |  $                (358) |   |  $             22,895 |
|                                                                           |                                     |                              |                                                                                                              |                                                                                                   |                                                                                                   |                                                                                                                    |   |   |   |   |   |
| Balances      as of December 31, 2007 (as previously reported)                 |                                     |     1,685,646 |                                                                                                              |  $               5,901 |                                                                                                   |  $             16,617                             |   |  $                (358) |   |  $             22,160 |
| Adjustment      to reflect adoption of EITF Issue 06-04                        |                                     |                              |                                                                                                              |                                                                                                   |                                                                                                   |                                                                                                                    |   |   |   |   |
|                                                                           | effective      January 1, 2008           |                              |                                                                                                              |                                                                                                   |                                                                                                   |                                                                                                                    |                    (158) |   |   |   |                    (158) |
| Balances      as of January 1, 2008, following adoption of EITF Issue    06-04 |     1,685,646        |                              |                   5,901 |                                                                                                   |                 16,459 |                                                                                                                    |                    (358) |   |                 22,002 |
| Comprehensive      income:                                                     |                                     |                              |                                                                                                              |                                                                                                   |                                                                                                   |                                                                                                                    |   |   |   |   |
|                                                                           | Net      income                          |                              |                                                                                                              |                                                                                                   |                                                                                                   |                                                                                                                    |                      901 |   |   |   |                      901 |
|                                                                           | Other      comprehensive loss            |                              |                                                                                                              |                                                                                                   |                                                                                                   |                                                                                                                    |   |   |                 (1,027) |   |                 (1,027) |
|                                                                           | Total      comprehensive loss            |                              |                                                                                                              |                                                                                                   |                                                                                                   |                                                                                                                    |   |   |   |   |                    (126) |
| Acquisition      of Mutual Community Savings                                   |                                     |                              |                                                                                                              |                                                                                                   |                                                                                                   |                                                                                                                    |   |   |   |   |
|                                                                           | Bank,      Inc., SSB  ("MCSB") |                              |        345,691                                                                 |                                                                                                   | 2,831                                                                                                  |                                                                                                                    |   |   |   |   |                   2,831 |
| Dividends      declared ($0.20 per share)                                      |                                     |                              |                                                                                                              |                                                                                                   |                                                                                                   |                    (388) |   |   |   |                    (388) |
|                                                                           |                                     |                              |                                                                                                              |                                                                                                   |                                                                                                   |                                                                                                                    |   |   |   |   |   |
| Balances      as of December 31, 2008                                          |                                     |  $      2,031,337            |                                                                                                              |  $               8,732 |                                                                                                   |  $             16,972                             |   |  $             (1,385) |   |  $             24,319 |
|                                                                           |                                     |                              |                                                                                                              |                                                                                                   |                                                                                                   |                                                                                                                    |   |   |   |   |   |

|   | Exhibits and Index of      Exhibits |
|--------|-------------------------------------|

| Exhibit No.                                                          |   | Exhibit Description                                                                                                                                                                                                                                                                                     |
|----------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Exhibit      3(i)                                                    |   | Articles      of Incorporation of the Company incorporated by reference to Exhibit (3)      to the Form 10-QSB for the quarter ended September 30, 1999, filed with      the SEC on November 12, 1999.                                                                                                  |
| Exhibit      3(ii)                                              |   | Amended      Articles of Incorporation of the Company, adopted by the Shareholders of      the Company on May 3, 2000, incorporated by reference to      Exhibit 3(v) to the Form 10-KSB for the year ended      December 31, 2005, filed with the SEC on March 31,      2006. |
| Exhibit      3(iii)                                                  |   | Restated      Bylaws of the Company, incorporated by reference to Exhibit 99.1 to the      Form 8K filed with the SEC on April 6, 2009.                                                                                                                                                                 |
| Exhibit      4                                                       |   | Specimen      Stock Certificate, incorporated by reference to Exhibit 4 to the Form      10-KSB for the year ended December 31, 2000, filed with the SEC on April      2, 2001.                                                                                                                         |
| Exhibit      10(i)                                                   |   | Employment      Agreement dated January 12, 2007 by and among Kim D. Saunders, the Company      and the Bank, incorporated by reference to Exhibit 99.1 to the Form 8-K      filed with the SEC on January 18, 2007.                                                                                    |
| Exhibit      10(ii)                                                  |   | Agreement      and Plan of Reorganization and Merger by and among the Company, the Bank      and MCSB, dated August 9, 2007, incorporated by reference to Exhibit 2.1      to the Form 8-K, filed with the SEC on August 10, 2007.                                                                      |
| Exhibit      21                                                      |   | Subsidiaries      of the Company, incorporated by reference to Exhibit 21 to the Form      10-KSB, filed with the SEC on March 31, 2006.                                                                                                                                                                |
| Exhibit      23 *                                                    |   | Consent      of McGladrey & Pullen, LLP.                                                                                                                                                                                                                                                            |
| Exhibit      31(i)                                                   |   | Certification      of Kim D. Saunders.                                                                                                                                                                                                                                                                  |
| Exhibit      31(ii)                                                  |   | Certification      of Lyn Hittle.                                                                                                                                                                                                                                                                       |
| Exhibit      32                                                      |   | Certification      pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                                                                  |
|  *      Previously filed as an exhibit to the Original  Filing. |

| Exhibit No.         |   | Exhibit Description                                    |
|---------------------|--------|--------------------------------------------------------|
| Exhibit      31(i)  |   | Certification      of Kim D. Saunders.                 |
| Exhibit      31(ii) |   | Certification      of Lyn Hittle.                      |
| Exhibit      32     |   | Certification      pursuant to 18 U.S.C. Section 1350. |
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