##### Table of Contents

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U. S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549



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FORM 10-QSB



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|x | Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------



For the quarterly period ended December 31, 2005



| ̈ | Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------



For the transition period ended



Commission File Number 0-23521



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GREAT PEE DEE BANCORP, INC.

(Exact name of small business issuer as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|DELAWARE                                                       |  | 56-2050592                          
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification Number)



901 CHESTERFIELD
HIGHWAY, CHERAW, SC 29520

(Address of principal executive office)



(843) 537-7656

(Issuers telephone number)



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



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes ̈No  x



As of February 6, 2006, 1,802,555 shares of the issuers common stock, $.01 par
value, were outstanding. The registrant has no other classes of securities outstanding.



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##### Table of Contents

|         |  |                                                                                                    |  |   
|-------- |  | -------------------------------------------------------------------------------------------------- |  | --
|         |  | Page No.                                                                                          
|Part I.  |  | FINANCIAL INFORMATION                                                                              |  |   
|         |  |                                                                                                   
|Item 1 - |  | Financial Statements (Unaudited)                                                                   |  |   
|         |  |                                                                                                   
|         |  | Consolidated Statements of Financial Condition December 31, 2005 and June 30, 2005                 |  | 3 
|         |  |                                                                                                   
|         |  | Consolidated Statements of Operations Three Months and Six Months Ended December 31, 2005 and 2004 |  | 4 
|         |  |                                                                                                   
|         |  | Consolidated Statements of Stockholders Equity Six Months Ended December 31, 2005 and 2004        |  | 5 
|         |  |                                                                                                   
|         |  | Consolidated Statements of Cash Flows Six Months Ended December 31, 2005 and 2004                  |  | 6 
|         |  |                                                                                                   
|         |  | Notes to Consolidated Financial Statements                                                         |  | 7 
|         |  |                                                                                                   
|Item 2 - |  | Managements Discussion and Analysis of Financial Condition and Results of Operations              |  | 9 
|         |  |                                                                                                   
|Item 3 - |  | Controls and Procedures                                                                            |  | 14
|         |  |                                                                                                   
|Part II. |  | OTHER INFORMATION                                                                                  |  |   
|         |  |                                                                                                   
|Item 4 - |  | Submission of Matters to a Vote of Securities Holders                                              |  | 15
|         |  |                                                                                                   
|Item 6 - |  | Exhibits                                                                                           |  | 15



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##### Table of Contents

Part I. FINANCIAL INFORMATION



Item 1 - Financial Statements



Great Pee Dee Bancorp, Inc. and Subsidiary

Consolidated Statements of Financial Condition



|                                                                                           |  |                                                 |         |   |               |   |         |  
|------------------------------------------------------------------------------------------ |  | ----------------------------------------------- | ------- | - | ------------- | - | ------- | -
|                                                                                           |  | December 31, 2005(Unaudited)                    |         |   | June 30,2005* |  
|                                                                                           |  | (In thousands, except share and per share data) |        
|ASSETS                                                                                     |  |                                                 |         |   |               |   |         |  
|                                                                                           |  |                                                
|Cash on hand and in banks                                                                  |  | $                                               | 2,772   |   |               | $ | 1,601   |  
|Interest-earning balances in other banks                                                   |  |                                                 | 726     |   |               |   | 432     |  
|                                                                                           |  |                                                 |         |   |               |   |         |  
|Cash and cash equivalents                                                                  |  |                                                 | 3,498   |   |               |   | 2,033   |  
|                                                                                           |  |                                                
|Investment securities available for sale, at fair value                                    |  |                                                 | 26,934  |   |               |   | 28,779  |  
|                                                                                           |  |                                                
|Loans                                                                                      |  |                                                 | 174,691 |   |               |   | 155,724 |  
|Allowance for loan losses                                                                  |  |                                                 | (1,760  | ) |               |   | (1,593  | )
|                                                                                           |  |                                                 |         |   |               |   |         |  
|Net loans                                                                                  |  |                                                 | 172,931 |   |               |   | 154,131 |  
|                                                                                           |  |                                                
|Loans held for sale                                                                        |  |                                                 | 907     |   |               |   | 1,116   |  
|Accrued interest receivable                                                                |  |                                                 | 1,066   |   |               |   | 890     |  
|Restricted stock, at cost                                                                  |  |                                                 | 1,960   |   |               |   | 1,681   |  
|Premises and equipment, net                                                                |  |                                                 | 5,053   |   |               |   | 4,098   |  
|Real estate acquired in settlement of loans                                                |  |                                                 | 250     |   |               |   | 183     |  
|Intangible assets                                                                          |  |                                                 | 771     |   |               |   | 863     |  
|Other assets                                                                               |  |                                                 | 2,280   |   |               |   | 1,972   |  
|                                                                                           |  |                                                 |         |   |               |   |         |  
|TOTAL ASSETS                                                                               |  | $                                               | 215,650 |   |               | $ | 195,746 |  
|                                                                                           |  |                                                 |         |   |               |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                       |  |                                                 |         |   |               |   |         |  
|                                                                                           |  |                                                
|LIABILITIES                                                                                |  |                                                 |         |   |               |   |         |  
|Deposit accounts                                                                           |  | $                                               | 150,748 |   |               | $ | 136,573 |  
|Short-term borrowings                                                                      |  |                                                 | 2,677   |   |               |   | 8,448   |  
|Long-term borrowings                                                                       |  |                                                 | 34,200  |   |               |   | 23,000  |  
|Accrued interest payable                                                                   |  |                                                 | 198     |   |               |   | 191     |  
|Advance payments by borrowers for property taxes and insurance                             |  |                                                 | 51      |   |               |   | 157     |  
|Accrued expenses and other liabilities                                                     |  |                                                 | 1,444   |   |               |   | 1,121   |  
|                                                                                           |  |                                                 |         |   |               |   |         |  
|TOTAL LIABILITIES                                                                          |  |                                                 | 189,318 |   |               |   | 169,490 |  
|                                                                                           |  |                                                 |         |   |               |   |         |  
|STOCKHOLDERS EQUITY                                                                       |  |                                                 |         |   |               |   |         |  
|Preferred stock, no par value, 400,000 shares authorized, no shares issued and outstanding |  |                                                 |        |   |               |   |        |  
|Common stock, $.01 par value, 3,600,000 shares authorized; 2,224,617 shares issued         |  |                                                 | 22      |   |               |   | 22      |  
|Additional paid-in capital                                                                 |  |                                                 | 22,041  |   |               |   | 22,009  |  
|Unearned compensation                                                                      |  |                                                 | (784    | ) |               |   | (873    | )
|Retained earnings, substantially restricted                                                |  |                                                 | 11,420  |   |               |   | 11,242  |  
|Accumulated other comprehensive loss                                                       |  |                                                 | (620    | ) |               |   | (388    | )
|Common stock in treasury, at cost (422,062 and 423,107 shares, respectively)               |  |                                                 | (5,747  | ) |               |   | (5,756  | )
|                                                                                           |  |                                                 |         |   |               |   |         |  
|TOTAL STOCKHOLDERS EQUITY                                                                 |  |                                                 | 26,332  |   |               |   | 26,256  |  
|                                                                                           |  |                                                 |         |   |               |   |         |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                 |  | $                                               | 215,650 |   |               | $ | 195,746 |  
|                                                                                           |  |                                                 |         |   |               |   |         |  

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|* | Derived from audited consolidated financial statements
|- | ------------------------------------------------------



See accompanying notes.



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##### Table of Contents

Great Pee Dee Bancorp, Inc. and Subsidiary

Consolidated Statements of Operations (Unaudited)



|                                                    |  |                                       |       |                              |   |       |  |      |       |  |   |      
|--------------------------------------------------- |  | ------------------------------------- | ----- | ---------------------------- | - | ----- |  | ---- | ----- |  | - | -----
|                                                    |  | Three Months EndedDecember 31,        |       | Six Months EndedDecember 31,
|                                                    |  | 2005                                  |       | 2004                         |   | 2005  |  | 2004
|                                                    |  | (In thousands, except per share data)
|INTEREST INCOME                                     |  |                                       |       |                              |   |       |  |      |       |  |   |      
|Loans                                               |  | $                                     | 2,923 |                              | $ | 1,874 |  | $    | 5,570 |  | $ | 3,982
|Investments                                         |  |                                       | 307   |                              |   | 259   |  |      | 594   |  |   | 527  
|Deposits in other banks and federal funds sold      |  |                                       | 4     |                              |   | 21    |  |      | 11    |  |   | 28   
|                                                    |  |                                       |       |                              |   |       |  |      |       |  |   |      
|TOTAL INTEREST INCOME                               |  |                                       | 3,234 |                              |   | 2,154 |  |      | 6,175 |  |   | 4,537
|                                                    |  |                                       |       |                              |   |       |  |      |       |  |   |      
|                                                    |  |                                       |       |                             
|INTEREST EXPENSE                                    |  |                                       |       |                              |   |       |  |      |       |  |   |      
|Deposit accounts                                    |  |                                       | 1,175 |                              |   | 714   |  |      | 2,149 |  |   | 1,349
|Short-term borrowings                               |  |                                       | 48    |                              |   | 18    |  |      | 130   |  |   | 33   
|Long-term borrowings                                |  |                                       | 310   |                              |   | 107   |  |      | 561   |  |   | 270  
|                                                    |  |                                       |       |                              |   |       |  |      |       |  |   |      
|TOTAL INTEREST EXPENSE                              |  |                                       | 1,533 |                              |   | 839   |  |      | 2,840 |  |   | 1,652
|                                                    |  |                                       |       |                              |   |       |  |      |       |  |   |      
|NET INTEREST INCOME                                 |  |                                       | 1,701 |                              |   | 1,315 |  |      | 3,335 |  |   | 2,885
|                                                    |  |                                       |       |                             
|PROVISION FOR LOAN LOSSES                           |  |                                       | 97    |                              |   | 24    |  |      | 217   |  |   | 24   
|                                                    |  |                                       |       |                              |   |       |  |      |       |  |   |      
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |  |                                       | 1,604 |                              |   | 1,291 |  |      | 3,118 |  |   | 2,861
|                                                    |  |                                       |       |                              |   |       |  |      |       |  |   |      
|NON-INTEREST INCOME                                 |  |                                       | 210   |                              |   | 351   |  |      | 470   |  |   | 427  
|                                                    |  |                                       |       |                              |   |       |  |      |       |  |   |      
|NON-INTEREST EXPENSES                               |  |                                       |       |                              |   |       |  |      |       |  |   |      
|Personnel costs                                     |  |                                       | 591   |                              |   | 571   |  |      | 1,172 |  |   | 1,183
|Occupancy                                           |  |                                       | 144   |                              |   | 143   |  |      | 290   |  |   | 308  
|Other                                               |  |                                       | 455   |                              |   | 455   |  |      | 939   |  |   | 838  
|                                                    |  |                                       |       |                              |   |       |  |      |       |  |   |      
|TOTAL NON-INTEREST EXPENSES                         |  |                                       | 1,190 |                              |   | 1,169 |  |      | 2,401 |  |   | 2,329
|                                                    |  |                                       |       |                              |   |       |  |      |       |  |   |      
|INCOME BEFORE INCOME TAXES                          |  |                                       | 624   |                              |   | 473   |  |      | 1,187 |  |   | 959  
|                                                    |  |                                       |       |                             
|PROVISION FOR INCOME TAXES                          |  |                                       | 246   |                              |   | 169   |  |      | 463   |  |   | 345  
|                                                    |  |                                       |       |                              |   |       |  |      |       |  |   |      
|NET INCOME                                          |  | $                                     | 378   |                              | $ | 304   |  | $    | 724   |  | $ | 614  
|                                                    |  |                                       |       |                              |   |       |  |      |       |  |   |      
|NET INCOME PER SHARE                                |  |                                       |       |                              |   |       |  |      |       |  |   |      
|Basic                                               |  | $                                     | 0.22  |                              | $ | 0.18  |  | $    | 0.42  |  | $ | 0.36 
|Diluted                                             |  |                                       | 0.22  |                              |   | 0.18  |  |      | 0.42  |  |   | 0.36 
|CASH DIVIDEND PER SHARE                             |  | $                                     | 0.16  |                              | $ | 0.16  |  | $    | 0.32  |  | $ | 0.315
|                                                    |  |                                       |       |                             
|WEIGHTED AVERAGE SHARES OUTSTANDING                 |  |                                       |       |                              |   |       |  |      |       |  |   |      
|Basic                                               |  |                                       | 1,713 |                              |   | 1,712 |  |      | 1,713 |  |   | 1,708
|Effect of outstanding stock options                 |  |                                       | 7     |                              |   | 16    |  |      | 7     |  |   | 17   
|                                                    |  |                                       |       |                              |   |       |  |      |       |  |   |      
|Assuming dilution                                   |  |                                       | 1,720 |                              |   | 1,728 |  |      | 1,720 |  |   | 1,725
|                                                    |  |                                       |       |                              |   |       |  |      |       |  |   |      



See accompanying notes.



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##### Table of Contents

Great Pee Dee Bancorp, Inc. and Subsidiary

Consolidated Statements of Stockholders Equity
(Unaudited)



|                                                                      |  |                       |  |            |                          |  |                                                 |    |  |                       |        |   |                   |   |        |                                    |  |   |                |   |  |                           |      |   |  |   |        |   |  |   |        |  
|--------------------------------------------------------------------- |  | --------------------- |  | ---------- | ------------------------ |  | ----------------------------------------------- | -- |  | --------------------- | ------ | - | ----------------- | - | ------ | ---------------------------------- |  | - | -------------- | - |  | ------------------------- | ---- | - |  | - | ------ | - |  | - | ------ | -
|                                                                      |  | Shares ofcommon stock |  |            | Par value ofcommon stock |  | Additionalpaid-in capital                       |    |  | Unearned compensation |        |   | Retained earnings |   |        | Accumulatedothercomprehensive loss |  |   | Treasury stock |   |  | Totalstockholders equity |     
|                                                                      |  | Issued                |  | Intreasury |                          |  |                                                 |    |  |                       |        |  
|                                                                      |  |                       |  |            |                          |  | (In thousands, except share and per share data) |    |  |                       |        |   |                   |   |        |                                    |  |   |                |  
|Balance at June 30, 2004                                              |  | 2,224,617             |  | 412,833    |                          |  | $                                               | 22 |  | $                     | 21,982 |   |                   | $ | (1,058 | )                                  |  | $ | 11,162         |   |  | $                         | (723 | ) |  | $ | (5,334 | ) |  | $ | 26,051 |  
|                                                                      |  |                       |  |            |                          |  |                                                 |    | 
|Comprehensive income:                                                 |  |                       |  |            |                          |  |                                                 |    |  |                       |        |   |                   |   |        |                                    |  |   |                |   |  |                           |      |   |  |   |        |   |  |   |        |  
|Net income                                                            |  |                      |  |           |                          |  |                                                 |   |  |                       |       |   |                   |   |       |                                    |  |   | 614            |   |  |                           |     |   |  |   |       |   |  |   | 614    |  
|Unrealized loss on securities available for sale, net of income taxes |  |                      |  |           |                          |  |                                                 |   |  |                       |       |   |                   |   |       |                                    |  |   |               |   |  |                           | 489  |   |  |   |       |   |  |   | 489    |  
|                                                                      |  |                       |  |            |                          |  |                                                 |    |  |                       |        |   |                   |   |        |                                    |  |   |                |   |  |                           |      |   |  |   |        |   |  |   |        |  
|Total comprehensive income                                            |  |                       |  |            |                          |  |                                                 |    |  |                       |        |   |                   |   |        |                                    |  |   |                |   |  |                           |      |   |  |   |        |   |  |   | 1,103  |  
|                                                                      |  |                       |  |            |                          |  |                                                 |    |  |                       |        |   |                   |   |        |                                    |  |   |                |   |  |                           |      |   |  |   |        |   |  |   |        |  
|Exercise of stock options                                             |  |                      |  | (3,000     | )                        |  |                                                 |   |  |                       | (6     | ) |                   |   |       |                                    |  |   |               |   |  |                           |     |   |  |   | 39     |   |  |   | 33     |  
|RRP and incentive shares earned                                       |  |                      |  |           |                          |  |                                                 |   |  |                       |        |   |                   |   | 34     |                                    |  |   |               |   |  |                           |     |   |  |   |       |   |  |   | 34     |  
|Release of ESOP shares                                                |  |                      |  |           |                          |  |                                                 |   |  |                       | 48     |   |                   |   | 63     |                                    |  |   |               |   |  |                           |     |   |  |   |       |   |  |   | 111    |  
|Cash dividends paid ($0.315 per share)                                |  |                      |  |           |                          |  |                                                 |   |  |                       |       |   |                   |   |       |                                    |  |   | (537           | ) |  |                           |     |   |  |   |       |   |  |   | (537   | )
|                                                                      |  |                       |  |            |                          |  |                                                 |    |  |                       |        |   |                   |   |        |                                    |  |   |                |   |  |                           |      |   |  |   |        |   |  |   |        |  
|Balance at December 31, 2004                                          |  | 2,224,617             |  | 409,833    |                          |  | $                                               | 22 |  | $                     | 22,024 |   |                   | $ | (961   | )                                  |  | $ | 11,239         |   |  | $                         | (234 | ) |  | $ | (5,295 | ) |  | $ | 26,795 |  
|                                                                      |  |                       |  |            |                          |  |                                                 |    |  |                       |        |   |                   |   |        |                                    |  |   |                |   |  |                           |      |   |  |   |        |   |  |   |        |  
|Balance at June 30, 2005                                              |  | 2,224,617             |  | 423,107    |                          |  | $                                               | 22 |  | $                     | 22,009 |   |                   | $ | (873   | )                                  |  | $ | 11,242         |   |  | $                         | (388 | ) |  | $ | (5,756 | ) |  | $ | 26,256 |  
|                                                                      |  |                       |  |            |                          |  |                                                 |    | 
|Comprehensive income:                                                 |  |                       |  |            |                          |  |                                                 |    |  |                       |        |   |                   |   |        |                                    |  |   |                |   |  |                           |      |   |  |   |        |   |  |   |        |  
|Net income                                                            |  |                      |  |           |                          |  |                                                 |   |  |                       |       |   |                   |   |       |                                    |  |   | 724            |   |  |                           |     |   |  |   |       |   |  |   | 724    |  
|Change in accumulated other comprehensive loss, net of income taxes   |  |                      |  |           |                          |  |                                                 |   |  |                       |       |   |                   |   |       |                                    |  |   |               |   |  |                           | (232 | ) |  |   |       |   |  |   | (232   | )
|                                                                      |  |                       |  |            |                          |  |                                                 |    |  |                       |        |   |                   |   |        |                                    |  |   |                |   |  |                           |      |   |  |   |        |   |  |   |        |  
|Total comprehensive income                                            |  |                       |  |            |                          |  |                                                 |    |  |                       |        |   |                   |   |        |                                    |  |   |                |   |  |                           |      |   |  |   |        |   |  |   | 492    |  
|                                                                      |  |                       |  |            |                          |  |                                                 |    |  |                       |        |   |                   |   |        |                                    |  |   |                |   |  |                           |      |   |  |   |        |   |  |   |        |  
|Exercise of stock options                                             |  |                      |  | (1,045     | )                        |  |                                                 |   |  |                       | (9     | ) |                   |   |       |                                    |  |   |               |   |  |                           |     |   |  |   | 9      |   |  |   |       |  
|RRP and incentive shares earned                                       |  |                      |  |           |                          |  |                                                 |   |  |                       |       |   |                   |   | 29     |                                    |  |   |               |   |  |                           |     |   |  |   |       |   |  |   | 29     |  
|Release of ESOP shares                                                |  |                      |  |           |                          |  |                                                 |   |  |                       | 41     |   |                   |   | 60     |                                    |  |   |               |   |  |                           |     |   |  |   |       |   |  |   | 101    |  
|Cash dividends paid ($0.32 per share)                                 |  |                      |  |           |                          |  |                                                 |   |  |                       |       |   |                   |   |       |                                    |  |   | (546           | ) |  |                           |     |   |  |   |       |   |  |   | (546   | )
|                                                                      |  |                       |  |            |                          |  |                                                 |    |  |                       |        |   |                   |   |        |                                    |  |   |                |   |  |                           |      |   |  |   |        |   |  |   |        |  
|Balance at December 31, 2005                                          |  | 2,224,617             |  | 422,062    |                          |  | $                                               | 22 |  | $                     | 22,041 |   |                   | $ | (784   | )                                  |  | $ | 11,420         |   |  | $                         | (620 | ) |  | $ | (5,747 | ) |  | $ | 26,332 |  
|                                                                      |  |                       |  |            |                          |  |                                                 |    |  |                       |        |   |                   |   |        |                                    |  |   |                |   |  |                           |      |   |  |   |        |   |  |   |        |  



See accompanying notes.



- 5 -



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##### Table of Contents

Great Pee Dee Bancorp, Inc. and Subsidiary

Consolidated Statements of Cash Flows (Unaudited)



|                                                                                  |  |                              |         |   |      |   |         |  
|--------------------------------------------------------------------------------- |  | ---------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                  |  | Six Months EndedDecember 31, |        
|                                                                                  |  | 2005                         |         |   | 2004 |  
|                                                                                  |  | (In thousands)               |        
|CASH FLOWS FROM OPERATING ACTIVITIES                                              |  |                              |         |   |      |   |         |  
|Net income                                                                        |  | $                            | 724     |   |      | $ | 614     |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                              |         |   |      |   |         |  
|Depreciation and amortization                                                     |  |                              | 292     |   |      |   | 299     |  
|Loss (gain) on sale of foreclosed real estate                                     |  |                              | 1       |   |      |   | (87     | )
|Gain on sale of loans held for sale                                               |  |                              | (77     | ) |      |   | (109    | )
|Provision for loan losses                                                         |  |                              | 217     |   |      |   | 24      |  
|Release of ESOP shares                                                            |  |                              | 101     |   |      |   | 111     |  
|Amortization of stock awards under recognition and retention plan                 |  |                              | 29      |   |      |   | 34      |  
|Proceeds from sales of loans held for sale                                        |  |                              | 7,140   |   |      |   | 5,538   |  
|Originations of loans held for sale                                               |  |                              | (6,854  | ) |      |   | (5,355  | )
|Change in assets and liabilities:                                                 |  |                              |         |   |      |   |         |  
|Increase in accrued interest receivable                                           |  |                              | (176    | ) |      |   | (130    | )
|Increase in accrued interest payable                                              |  |                              | 7       |   |      |   | 44      |  
|Increase in other assets                                                          |  |                              | (169    | ) |      |   | (541    | )
|Increase in other liabilities                                                     |  |                              | 323     |   |      |   | 773     |  
|                                                                                  |  |                              |         |   |      |   |         |  
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                         |  |                              | 1,558   |   |      |   | 1,215   |  
|                                                                                  |  |                              |         |   |      |   |         |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                              |  |                              |         |   |      |   |         |  
|Purchases of available-for-sale investments                                       |  |                              | (353    | ) |      |   | (4,000  | )
|Proceeds from maturities of available-for-sale investments                        |  |                              | 1,787   |   |      |   | 4,041   |  
|Proceeds from sale of land                                                        |  |                              | 150     |   |      |   |        |  
|Net increase in loans                                                             |  |                              | (19,202 | ) |      |   | (16,504 | )
|Purchase of restricted stock                                                      |  |                              | (279    | ) |      |   | (299    | )
|Purchases of property and equipment                                               |  |                              | (1,264  | ) |      |   | (91     | )
|Proceeds from sale of foreclosed real estate                                      |  |                              | 118     |   |      |   | 587     |  
|                                                                                  |  |                              |         |   |      |   |         |  
|NET CASH USED BY INVESTING ACTIVITIES                                             |  |                              | (19,043 | ) |      |   | (16,266 | )
|                                                                                  |  |                              |         |   |      |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                              |  |                              |         |   |      |   |         |  
|Net increase in deposit accounts                                                  |  |                              | 14,174  |   |      |   | 12,011  |  
|Proceeds from short-term borrowings                                               |  |                              |        |   |      |   | 5,000   |  
|Proceeds from long-term borrowings                                                |  |                              | 11,200  |   |      |   |        |  
|Decrease in advances from borrowers                                               |  |                              | (107    | ) |      |   | (107    | )
|Repayment of long-term borrowings                                                 |  |                              |        |   |      |   | (3,000  | )
|Repayment of short-term borrowings                                                |  |                              | (5,771  | ) |      |   |        |  
|Cash dividends paid                                                               |  |                              | (546    | ) |      |   | (537    | )
|Exercise of stock options                                                         |  |                              |        |   |      |   | 33      |  
|                                                                                  |  |                              |         |   |      |   |         |  
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                         |  |                              | 18,950  |   |      |   | 13,400  |  
|                                                                                  |  |                              |         |   |      |   |         |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                              |  |                              | 1,465   |   |      |   | (1,651  | )
|                                                                                  |  |                             
|CASH AND CASH EQUIVALENTS, BEGINNING                                              |  |                              | 2,033   |   |      |   | 3,879   |  
|                                                                                  |  |                              |         |   |      |   |         |  
|CASH AND CASH EQUIVALENTS, ENDING                                                 |  | $                            | 3,498   |   |      | $ | 2,228   |  
|                                                                                  |  |                              |         |   |      |   |         |  



See accompanying notes.



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##### Table of Contents

Great Pee Dee Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements



NOTE A - BASIS OF PRESENTATION



In managements opinion, the unaudited financial information presented in this document
reflects all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the financial information as of and for the three- month and six- month periods ended December 31, 2005 and 2004, in conformity
with accounting principles generally accepted in the United States of America.



The consolidated financial statements include the accounts of Great Pee Dee Bancorp, Inc. (the Company) and its wholly-owned subsidiary, Sentry Bank & Trust (Sentry or the Bank). Operating
results for the three and six-month periods ended December 31, 2005, are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2006.



The organization and business of the Company, accounting policies followed by the Company and other information are contained in the notes
to the consolidated financial statements filed as part of the Companys Annual Report on Form 10-KSB for the year ended June 30, 2005. This quarterly report should be read in conjunction with such annual report.



NOTE B - STOCK- BASED COMPENSATION



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



|                                                                                                                                      |  |                                               |      |                              |   |      |  |   |      |   |  |   |     
|------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------- | ---- | ---------------------------- | - | ---- |  | - | ---- | - |  | - | ----
|                                                                                                                                      |  | Three Months EndedDecember 31,                |      | Six Months EndedDecember 31,
|                                                                                                                                      |  | 2005                                          |      | 2004                         |   | 2005 |  |   | 2004
|                                                                                                                                      |  | (Amounts in thousands, except per share data)
|Net income:                                                                                                                           |  |                                               |      |                              |   |      |  |   |      |   |  |   |     
|As reported                                                                                                                           |  | $                                             | 378  |                              | $ | 304  |  | $ | 724  |   |  | $ | 614 
|Deduct: Total stock-based employee compensation expense determined under fair value method for all awards, net of related tax
effects |  |                                               |     |                              |   |     |  |   | (10  | ) |  |   |    
|                                                                                                                                      |  |                                               |      |                              |   |      |  |   |      |   |  |   |     
|Pro forma                                                                                                                             |  | $                                             | 378  |                              | $ | 304  |  | $ | 714  |   |  | $ | 614 
|                                                                                                                                      |  |                                               |      |                              |   |      |  |   |      |   |  |   |     
|Basic net income per share:                                                                                                           |  |                                               |      |                              |   |      |  |   |      |   |  |   |     
|As reported                                                                                                                           |  | $                                             | 0.22 |                              | $ | 0.18 |  | $ | 0.42 |   |  | $ | 0.36
|Pro forma                                                                                                                             |  |                                               | 0.22 |                              |   | 0.18 |  |   | 0.42 |   |  |   | 0.36
|                                                                                                                                      |  |                                               |      |                             
|Diluted net income per share:                                                                                                         |  |                                               |      |                              |   |      |  |   |      |   |  |   |     
|As reported                                                                                                                           |  | $                                             | 0.22 |                              | $ | 0.18 |  | $ | 0.42 |   |  | $ | 0.36
|Pro forma                                                                                                                             |  |                                               | 0.22 |                              |   | 0.18 |  |   | 0.42 |   |  |   | 0.36



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##### Table of Contents

Great Pee Dee Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements



NOTE C - NET INCOME PER SHARE



Basic income per share has been computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. In accordance with
accounting principles generally accepted in the United States of America, Employee Stock Ownership Plan (ESOP) shares are only considered outstanding for earnings per share calculations when they are earned or committed to be released.
Diluted net income per share reflects the dilutive effects of outstanding common stock options.



NOTE D - COMPREHENSIVE INCOME



A summary of comprehensive income is as follows:



|                                                                                                  |  |                                |      |   |                              |   |     |      |  |   |      |   |  |   |      
|------------------------------------------------------------------------------------------------- |  | ------------------------------ | ---- | - | ---------------------------- | - | --- | ---- |  | - | ---- | - |  | - | -----
|                                                                                                  |  | Three Months EndedDecember 31, |      |   | Six Months EndedDecember 31,
|                                                                                                  |  | 2005                           |      |   | 2004                         |   |     | 2005 |  |   | 2004
|                                                                                                  |  | (In thousands)                
|Net income                                                                                        |  | $                              | 378  |   |                              | $ | 304 |      |  | $ | 724  |   |  | $ | 614  
|                                                                                                  |  |                                |      |  
|Other comprehensive income:                                                                       |  |                                |      |   |                              |   |     |      |  |   |      |   |  |   |      
|Reclassification adjustment, net of tax                                                           |  |                                |     |   |                              |   |    |      |  |   |     |   |  |   |     
|Net (decrease) increase in the fair value of investment securities available for sale, net of tax |  |                                | (200 | ) |                              |   | (51 | )    |  |   | (232 | ) |  |   | 489  
|                                                                                                  |  |                                |      |   |                              |   |     |      |  |   |      |   |  |   |      
|Total comprehensive income                                                                        |  | $                              | 178  |   |                              | $ | 253 |      |  | $ | 492  |   |  | $ | 1,103
|                                                                                                  |  |                                |      |   |                              |   |     |      |  |   |      |   |  |   |      



NOTE E - NEW ACCOUNTING
PRONOUNCEMENTS



In December 2004, the Financial Accounting Standards Board
issued SFAS No. 123(R), Accounting for Stock-Based Compensation (SFAS No. 123(R)). SFAS No. 123(R) establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or
services. This Statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS No. 123(R) requires that the fair value of such equity instruments be recognized as
an expense in the historical financial statements as services are performed. Prior to SFAS No. 123(R), only certain pro forma disclosures of fair value were required. The provisions of the Statement are effective for the Company for fiscal
years beginning after December 15, 2005. Accordingly, we will adopt SFAS No. 123 (R) commencing with the fiscal year beginning July 1, 2006. At this time we expect the adoption of SFAS No. 123(R) is not expected to have a
material effect on our consolidated financial statements.



NOTE F -
RECLASSIFICATIONS



Certain amounts in the December 2004 financial
statements have been reclassified to conform to the December 2005 presentation. The reclassifications had no effect on net income or stockholders equity, as previously reported.



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##### Table of Contents

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations



This Quarterly Report on Form 10-QSB may contain certain forward-looking statements consisting of estimates with respect to the financial condition, results of operations
and business of the Company that are subject to various factors which could cause actual results to differ materially from these estimates. These factors include, but are not limited to, general economic conditions, changes in interest rates,
deposit flows, loan demand, real estate values, and competition; changes in accounting principles, policies, or guidelines; changes in legislation or regulation; and other economic, competitive, governmental, regulatory, and technological factors
affecting the Companys operations, pricing, products and services.



Comparison of Financial Condition at

December 31, 2005 and June 30, 2005



Total assets increased by $20.0 million during the six months ended December 31, 2005,
from $195.7 million at June 30, 2005, to $215.7 million at December 31, 2005. The Companys increase in assets was largely attributable to loan growth.



The Companys interest-earning liquid assets, including interest-earning balances in other banks, federal funds sold and investment
securities decreased by $1.5 million, to $27.7 million at December 31, 2005, representing 12.8% of total assets at that date as compared with $29.2 million or 14.9% of total assets at June 30, 2005.



Loans receivable increased by $19.0 million from $155.7 million at June 30, 2005, to
$174.7 million at December 31, 2005, primarily due to the growth in commercial real estate loans. Of this growth in loans, $6.1 million was the result of entering into participation agreements with other financial institutions. Funding for this
loan growth was provided by a combination of long-term FHLB advances and brokered certificate of deposit transactions.



Total stockholders equity remained at $26.3 million at both December 31, 2005 and June 30, 2005. Net income was offset by cash dividends paid and
decreases in the fair market value of available for sale securities.



Comparison of Results of Operations for the

Three Months Ended December 31, 2005 and 2004



Net Income. Net income for the quarter ended December 31,
2005 was $378,000, an increase of $74,000 from net income of $304,000 for the quarter ended December 31, 2004. On a per share basis, net income for the current quarter was $0.22 per diluted share as compared with $0.18 per diluted share for the
second quarter of the last fiscal year. The increase in net income was a result of an increase in interest income on loans and investments and was partially offset by increases in interest expense and the provision for loan losses.



Net Interest Income.Net interest income for the quarter ended
December 31, 2005 was $1.7 million as compared with $1.3 million during the quarter ended December 31, 2004. Both interest income and interest expense increased primarily due to increases in average loans of $46 million, average deposits
of $28 million, and average long-term borrowings of $16 million over the same period last year.



Provision for Loan Losses.The provision for loan losses totaled $97,000 in the current quarter, compared to $24,000 in the quarter ended December 31, 2004.



The growth in loans receivable during the quarter ended December 31, 2005 of $8.8
million and our ongoing evaluation of the allowance for loan losses resulted in the loan loss reserve provision of $97,000. Our loan loss methodology allowance model takes into consideration the different levels of risk for all outstanding loans.
(see  Analysis of Allowance for Loan Losses).



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##### Table of Contents

The following table provides an analysis for loan losses for the quarters ended December 31, 2005 and 2004,
respectively.



|                                                                                          |  |                                        |       |   |      |   |       |  
|----------------------------------------------------------------------------------------- |  | -------------------------------------- | ----- | - | ---- | - | ----- | -
|                                                                                          |  | For the Three Months EndedDecember 31, |      
|                                                                                          |  | 2005                                   |       |   | 2004 |  
|Balance at the beginning of the period                                                    |  | $                                      | 1,666 |   |      | $ | 1,505 |  
|                                                                                          |  |                                       
|Charge-offs:                                                                              |  |                                        |       |   |      |   |       |  
|Real estate mortgage                                                                      |  |                                        | 6     |   |      |   | 53    |  
|Installment loans to individuals                                                          |  |                                        |      |   |      |   | 51    |  
|                                                                                          |  |                                        |       |   |      |   |       |  
|                                                                                          |  |                                        | 6     |   |      |   | 104   |  
|                                                                                          |  |                                        |       |   |      |   |       |  
|Recoveries:                                                                               |  |                                        |       |   |      |   |       |  
|Real estate mortgage                                                                      |  |                                        |      |   |      |   |      |  
|Installment loans to individuals                                                          |  |                                        | 3     |   |      |   | 5     |  
|                                                                                          |  |                                        |       |   |      |   |       |  
|                                                                                          |  |                                        | 3     |   |      |   | 5     |  
|                                                                                          |  |                                        |       |   |      |   |       |  
|Net charge-offs                                                                           |  |                                        | 3     |   |      |   | 99    |  
|                                                                                          |  |                                        |       |   |      |   |       |  
|Provision for loan losses                                                                 |  |                                        | 97    |   |      |   | 24    |  
|                                                                                          |  |                                        |       |   |      |   |       |  
|Balance at end of period                                                                  |  | $                                      | 1,760 |   |      | $ | 1,430 |  
|                                                                                          |  |                                        |       |   |      |   |       |  
|Ratio of net charge-offs during the period to average loans outstanding during the period |  |                                        | .0002 | % |      |   | .08   | %



Non-Interest Income.
Non-interest income decreased by $141,000, from $351,000 for the three months ended December 31, 2004 to $210,000 for the three months ended December 31, 2005. This decrease is primarily due to the gain on sale of real estate acquired in
settlement of loans in the December 2004 quarter, which totaled $77,000.



Non-Interest Expenses. Non-interest expenses increased $21,000 from the three months ending December 31, 2005 to the same period in 2004. This increase was largely attributable to increases in personnel costs. Other expenses
remained stable compared to the December 2004 quarter.



Provision for Income
Taxes. The provision for income taxes, as a percentage of income before income taxes, was 39.4% and 35.7% for the quarters ended December 31, 2005 and 2004, respectively. For the period ended December 31, 2004, income tax expense was
lower due to the impact of reducing income taxes payable.



Comparison of Results of Operations for the

Six Months Ended December 31, 2005 and 2004



Net Income. Net income for the six months ended
December 31, 2005 was $724,000, an increase of $110,000 over net income of $614,000 for the six months ended December 31, 2004. On a per share basis, net income for the current period was $0.42 per diluted share as compared with $0.36 per
diluted share for the first six months of the last fiscal year. The increase in net income was a result of an increase in interest income on loans and investments and was partially offset by increases in interest expense and the provision for loan
losses.



Net Interest Income.Net interest income for the six
months ended December 31, 2005, was $3.3 million as compared with $2.9 million during the six months ended December 31, 2004. Both interest income and interest expense increased primarily due to increases in average loans of $43 million,
average deposits of $29 million, and average long-term borrowings of $13 million over the same period last year.



Provision for Loan Losses.The provision for loan losses totaled $217,000 in the current six month period, compared to $24,000 for the same period ended
December 31, 2004.



The growth in loans receivable during the current six
month period of $19.0 million and our ongoing evaluation of the allowance for loan losses resulted in the loan loss reserve provision of $217,000. Our loan loss allowance model takes into consideration the different levels of risk for all
outstanding loans. (see  Analysis of Allowance for Loan Losses).



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##### Table of Contents

The following table provides an analysis for loan losses for the six months ended December 31, 2005 and 2004,
respectively.



|                                                                                          |  |                                      |       |   |      |   |       |  
|----------------------------------------------------------------------------------------- |  | ------------------------------------ | ----- | - | ---- | - | ----- | -
|                                                                                          |  | For the Six Months EndedDecember 31, |      
|                                                                                          |  | 2005                                 |       |   | 2004 |  
|Balance at the beginning of the period                                                    |  | $                                    | 1,593 |   |      | $ | 1,532 |  
|                                                                                          |  |                                     
|Charge-offs:                                                                              |  |                                      |       |   |      |   |       |  
|Real estate mortgage                                                                      |  |                                      | 6     |   |      |   | 53    |  
|Installment loans to individuals                                                          |  |                                      | 64    |   |      |   | 83    |  
|                                                                                          |  |                                      |       |   |      |   |       |  
|                                                                                          |  |                                      | 70    |   |      |   | 136   |  
|                                                                                          |  |                                      |       |   |      |   |       |  
|Recoveries:                                                                               |  |                                      |       |   |      |   |       |  
|Real estate mortgage                                                                      |  |                                      | 1     |   |      |   |      |  
|Installment loans to individuals                                                          |  |                                      | 19    |   |      |   | 10    |  
|                                                                                          |  |                                      |       |   |      |   |       |  
|                                                                                          |  |                                      | 20    |   |      |   | 10    |  
|                                                                                          |  |                                      |       |   |      |   |       |  
|Net charge-offs                                                                           |  |                                      | 50    |   |      |   | 126   |  
|                                                                                          |  |                                      |       |   |      |   |       |  
|Provision for loan losses                                                                 |  |                                      | 217   |   |      |   | 24    |  
|                                                                                          |  |                                      |       |   |      |   |       |  
|Balance at end of period                                                                  |  | $                                    | 1,760 |   |      | $ | 1,430 |  
|                                                                                          |  |                                      |       |   |      |   |       |  
|Ratio of net charge-offs during the period to average loans outstanding during the period |  |                                      | 0.03  | % |      |   | 0.10  | %



Non-Interest Income.
Non-interest income increased by $43,000, from $427,000 for the six months ended December 31, 2004 to $470,000 for the six months ended December 31, 2005. This increase is primarily due to an increase in fee income earned from providing
investment services.



Non-Interest Expenses. Non-interest expenses
increased $72,000 from $2.3 million for the six months ending December 31, 2004 to $2.4 million for the same period in 2005. Advertising, data processing, and equipment expenses all increased while personnel costs decreased $11,000 from the
2004 to the 2005 period.



Provision for Income Taxes. The provision for
income taxes, as a percentage of income before income taxes, was 39.4% and 36.7% for the six months ended December 31, 2005 and 2004 respectively. For the period ended December 31, 2004, income tax expense was lower due to the impact of
reducing income taxes payable.



Asset Quality



The Company considers asset quality to be of primary importance, and employs a formal
internal loan review process to ensure adherence to the Lending Policy as approved by the Board of Directors. An ongoing systematic evaluation process serves as the basis for determining, on a monthly basis, the allowance for loan losses and any
resulting provision to be charged against earnings. Consideration is given to historical loan loss experience, nature and volume of the loan portfolio, adverse situations that may affect the borrowers ability to repay, the value and adequacy
of collateral, and prevailing economic conditions in the Companys market area. For loans determined to be impaired, the allowance is based on discounted cash flows using the loans initial effective interest rate or the fair value of the
collateral if the loan is collateral dependent. This evaluation 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 revision. The allowance for loan losses represents Managements estimate of the appropriate level of reserve to provide for probable losses inherent in the loan portfolio.



The Companys policy regarding past due loans normally requires a prompt charge-off to
the allowance for loan losses when uncollectibility of the loan balance is confirmed. Further collection efforts are then pursued through various means available. Subsequent recoveries, if any, are credited to the allowance. Loans carried in a
non-accrual status are generally collateralized, and probable future losses are considered in the determination of the allowance for loan losses.



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##### Table of Contents

Nonperforming Assets



The following table sets forth, at the dates indicated, information with respect to the Companys nonaccrual loans, restructured loans,
total nonperforming loans (nonaccrual loans plus restructured loans), and total nonperforming assets.



|                                                 |  |                        |        |   |              |   |        |                  |  |   |       |  
|------------------------------------------------ |  | ---------------------- | ------ | - | ------------ | - | ------ | ---------------- |  | - | ----- | -
|                                                 |  | December 31,2005       |        |   | June 30,2005 |   |        | December 31,2004 | 
|                                                 |  | (Dollars in thousands) |       
|Nonaccrual loans                                 |  | $                      | 1,036  |   |              | $ | 1,106  |                  |  | $ | 1,590 |  
|Restructured loans                               |  |                        |       |   |              |   |       |                  |  |   |      |  
|                                                 |  |                        |        |   |              |   |        |                  |  |   |       |  
|Total nonperforming loans                        |  |                        | 1,036  |   |              |   | 1,106  |                  |  |   | 1,590 |  
|                                                 |  |                        |       
|Real estate and other assets owned               |  |                        | 282    |   |              |   | 183    |                  |  |   | 220   |  
|                                                 |  |                        |        |   |              |   |        |                  |  |   |       |  
|Total nonperforming assets                       |  | $                      | 1,318  |   |              | $ | 1,289  |                  |  | $ | 1,810 |  
|                                                 |  |                        |        |   |              |   |        |                  |  |   |       |  
|Accruing loans past due 90 days or more          |  | $                      |       |   |              | $ |       |                  |  | $ |      |  
|Allowance for loan losses                        |  |                        | 1,760  |   |              |   | 1,593  |                  |  |   | 1,430 |  
|Nonperforming loans to period-end loans          |  |                        | 0.59   | % |              |   | 0.71   | %                |  |   | 1.20  | %
|Allowance for loan losses to period-end loans    |  |                        | 1.01   | % |              |   | 1.03   | %                |  |   | 1.08  | %
|Allowance for loan losses to nonperforming loans |  |                        | 169.88 | % |              |   | 144.03 | %                |  |   | 89.94 | %
|Nonperforming assets to total assets             |  |                        | 0.61   | % |              |   | 0.66   | %                |  |   | 1.05  | %



The accrual of interest on loans is
discontinued at the time the loan is 90 days past due or impaired unless the credit is well-secured and in process of collection. Past due status is based on contractual terms of the loan. In all cases, loans are placed on non-accrual status at an
earlier date if collection of principal or interest is considered doubtful according to internal evaluation policies.



All interest accrued but not collected for loans that are placed on non-accrual or charged off is reversed against interest income. The interest on these loans is
accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are
reasonably assured.



Loans are also placed on non-accrual status in cases where
it is uncertain as to whether the borrower can satisfy the contractual terms of the loan agreement. Amounts received on non-accrual loans generally are applied first to interest and then to principal only after all past due interest has been
collected. Restructured loans are those for which concessions, including the reduction of interest rates below a rate otherwise available to that borrower or the deferral of interest or principal have been granted due to the borrowers weakened
financial condition. Interest is accrued on restructured loans at the restructured rates when it is anticipated that no loss of original principal will occur.



Analysis of Allowance for Loan Losses



The provision for loan losses charged to operations is an amount sufficient to bring the allowance for loan losses to an estimated balance considered adequate to absorb
probable losses inherent in the portfolio.



Managements determination of
the adequacy of the allowance is based primarily on a mathematical model that estimates the appropriate allowance for loan losses. This model has two components. The first component involves the estimation of losses on loans defined as
impaired loans. A loan is considered to be impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The
estimated valuation allowance is the difference, if any, between the loan balance outstanding and the value of the impaired loan as determined by either 1) an estimate of the cash flows that the Company expects to receive from the borrower
discounted at the loans effective rate, or 2) in the case of a collateral-dependent loan, the fair value of the collateral.



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##### Table of Contents

The second component of the allowance model is to estimate losses for all loans not considered to be impaired loans.
First, loans that have been risk graded by the Company as having more than standard risk but are not considered being impaired are assigned estimated loss percentages generally accepted in the banking industry. Loans that are classified
by the Company as having normal credit risk are segregated by loan type, and estimated loss percentages are assigned to each loan type, based on the historical losses, current economic conditions, and operational conditions specific to each loan
type. Non-performing loans typically have a higher risk grade and therefore are assigned a higher loss percentage.



The reserve estimated for impaired loans is then added to the reserve estimated for all other loans. This becomes the Companys allocated allowance. In
addition to the allocated allowance derived from the model, management also evaluates other data such as the ratio of the allowance for loan losses to total loans, net loan growth information, nonperforming asset levels and trends in such data.
Based on this additional analysis, the Company may determine that an additional amount of allowance for loan losses is necessary to reserve for probable loan losses. This additional amount, if any, is the Companys unallocated
allowance. The sum of the allocated allowance and the unallocated allowance is compared to the actual allowance for loan losses recorded on the books of the Company and any adjustment necessary for the recorded allowance to equal the computed
allowance is recorded as a provision for loan losses. The provision for loan losses is a direct charge to earnings in the period recorded.



Although management uses the best information available to make evaluations, future adjustments may be necessary if economic, operational, or other conditions change. In
addition, various regulatory agencies, as an integral part of their examination process, periodically review the Companys allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance based on the
examiners judgment about information available to them at the time of their examinations.



The following table outlines the allocation of the allowance for loan losses for each reported period and reflects the result of the change in the allowance for loan loss model as discussed above.



Allocation of the Allowance for Loan Losses (dollars in thousands)



|                                     |  |                         |       |                                                |                     |   |        |   |                                                |  |        |  
|------------------------------------ |  | ----------------------- | ----- | ---------------------------------------------- | ------------------- | - | ------ | - | ---------------------------------------------- |  | ------ | -
|                                     |  | As of December 31, 2005 |       |                                                | As of June 30, 2005 |  
|                                     |  | Amount                  |       | Percent of loansin each categoryto total loans |                     |   | Amount |   | Percent of loansin each categoryto total loans | 
|Commercial, Financial & Agricultural |  | $                       | 90    |                                                | 3.62                | % |        | $ | 125                                            |  | 6.46   | %
|Real Estate - construction           |  |                         | 58    |                                                | 4.49                | % |        |   | 59                                             |  | 5.03   | %
|Real Estate - mortgage               |  |                         | 1,213 |                                                | 89.29               | % |        |   | 1,019                                          |  | 85.61  | %
|Installment loans to individuals     |  |                         | 68    |                                                | 1.73                | % |        |   | 154                                            |  | 2.86   | %
|Other                                |  |                         | 120   |                                                | 0.87                | % |        |   | 33                                             |  | 0.04   | %
|Unallocated                          |  |                         | 211   |                                                | N/A                 |   |        |   | 203                                            |  | N/A    |  
|                                     |  |                         |       |                                                |                     |   |        |   |                                                |  |        |  
|                                     |  | $                       | 1,760 |                                                | 100.00              | % |        | $ | 1,593                                          |  | 100.00 | %
|                                     |  |                         |       |                                                |                     |   |        |   |                                                |  |        |  



Liquidity and Capital Resources



During the six months ended December 31, 2005 the Company paid
cash dividends of $0.32 per share. Although the Company anticipates that it will continue to declare cash dividends on a regular basis, the Board of Directors will review its policy on the payment of dividends on an ongoing basis, and such payment
will be subject to future earnings, cash flows, capital needs, and regulatory restrictions.



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



As of December 31, 2005, liquid assets (cash, interest-earning deposits, and investment securities) were approximately $30.4 million, which represents 20.2% of deposits. At that date, outstanding loan commitments
were



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$6.1 million. The undisbursed portion of construction loans was $7.4 million and undrawn lines of credit totaled $4.5
million. The brokered CDs scheduled to mature within the next year total $7.5 million. Funding for these commitments is expected to be provided from deposits, loan principal repayments, maturing investments, income generated from operations
and, to the extent necessary, from borrowings.



Under federal capital
regulations, Sentry must satisfy certain minimum leverage ratio requirements and risk-based capital requirements. Failure to meet such requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if
undertaken, could have a direct material effect on the Companys consolidated financial statements. At December 31, 2005, Sentry exceeded all such requirements and is considered well capitalized under current regulatory capital
guidelines.



The Bank is restricted in its ability to pay dividends and to make
distributions. A significant source of Great Pee Dees funds is dividends received from the Bank. In fiscal 2005, no dividends were paid by the Bank to Great Pee Dee. At December 31, 2005, prior approval is required by Office of Thrift
Supervision for any payment of dividends from Sentry Bank & Trust to Great Pee Dee.



Item 3. CONTROLS AND PROCEDURES



As of the
end of the period covered by this report, the Company carried out an evaluation under the supervision and with the participation of the Companys management, including the Companys Chief Executive Officer and Chief Financial Officer, of
the effectiveness of the design and operation of the Companys disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15(e). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that the Companys disclosure controls and procedures are effective in alerting management, in a timely manner, to material information relating to the Company required to be included in the Companys periodic SEC Filings. There have been
no significant changes in internal control over financial reporting during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial
reporting.



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Part II. OTHER INFORMATION



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



The Annual Meeting of Shareholders was held on October 12, 2005. Of the 1,801,510 shares entitled to vote at the meeting, 1,547,313 voted. The following matters were voted on at the meeting:



|            |  |                                                                                                                                                              
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|Proposal 1: |  | To elect two members of the Board of Directors for three-year terms until the Annual Meeting of Shareholders in 2008. Votes for each nominee were as follows:



|                       |  |           |  |         
|---------------------- |  | --------- |  | --------
|Name                   |  | For       |  | Withheld
|James C. Crawford, III |  | 1,471,428 |  | 75,885  
|Herbert W. Watts       |  | 1,474,627 |  | 72,686  



|            |  |                                                                                                                        
|----------- |  | -----------------------------------------------------------------------------------------------------------------------
|            |  | The following directors continued in office after the meeting:                                                         
|            | 
|Proposal 2: |  | To ratify the appointment of Dixon Hughes PLLC as the Banks independent accountants for the year ending June 30, 2006.



|          |  |         |  |        
|--------- |  | ------- |  | -------
|For       |  | Against |  | Abstain
|1,481,171 |  | 400     |  | 65,742 



Item 6. Exhibits



|          |  |                                                                        
|--------- |  | -----------------------------------------------------------------------
|Exhibit # |  | Description                                                            
|31.1      |  | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)
|          | 
|31.2      |  | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)
|          | 
|32        |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



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SIGNATURES



In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                        |  |                             |  |                        
|----------------------- |  | --------------------------- |  | -----------------------
|                        |  | GREAT PEE DEE BANCORP, INC.
|                        |  |                            
|Date: February 13, 2006 |  | By:                         |  | /s/ John S. Long       
|                        |  |                             |  | John S. Long           
|                        |  |                             |  | Chief Executive Officer
|                        |  |                            
|Date: February 13, 2006 |  | By:                         |  | /s/ John M. Digby      
|                        |  |                             |  | John M. Digby          
|                        |  |                             |  | Chief Financial Officer



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