<PAGE>   1
                                                                    EXHIBIT 13.1

                           RHBT FINANCIAL CORPORATION
                        (FORMERLY ROCK HILL BANK & TRUST)





                                Table of Contents


<TABLE>
<CAPTION>

                                                                            Page
                                                                            ----

<S>                                                                        <C>
Selected Financial Data                                                        2
Management's Discussion and Analysis                                        3-18
Independent Auditors' Report                                                  19
Consolidated Balance Sheets                                                   20
Consolidated Statements of Income                                             21
Consolidated Statements of Changes in Stockholders' Equity
    and Comprehensive Income                                                  22
Consolidated Statements of Cash Flows                                         23
Notes to Financial Statements                                              24-40
Corporate Data                                                                41
</TABLE>


<PAGE>   2

                           RHBT FINANCIAL CORPORATION
                        (FORMERLY ROCK HILL BANK & TRUST)

                             SELECTED FINANCIAL DATA

The following selected financial data for the years ended December 31, 1999,
1998 and 1997 and for the period May 20, 1996 to December 31, 1996 are derived
from the financial statements and other data of the Company. The financial
statements for the years ended December 31, 1999, 1998 and 1997 and for the
period May 20, 1996 to December 31, 1996, were audited by Tourville, Simpson &
Caskey, L.L.P, independent auditors. The selected financial data should be read
in conjunction with the financial statements of the Company, including the
accompanying notes, included elsewhere herein.


<TABLE>
<CAPTION>

(Dollars in thousands)                                              1999              1998             1997              1996
                                                                  --------          --------         --------          --------
<S>                                                               <C>               <C>              <C>               <C>
INCOME STATEMENT DATA:
     Interest income                                              $ 10,174          $  6,334         $  2,998          $    820
     Interest expense                                                5,057             3,398            1,556               449
                                                                  --------          --------         --------          --------
     Net interest income                                             5,117             2,936            1,442               371
     Provision for loan losses                                         430               489              209               126
                                                                  --------          --------         --------          --------
     Net interest income after provision for loan losses             4,687             2,447            1,233               245
     Net securities gains (losses)                                      --                --               (1)               --
     Noninterest income                                                561               330              146                26
     Noninterest expense                                             3,099             1,742            1,291             1,091
                                                                  --------          --------         --------          --------
     Income (loss) before income taxes                               2,149             1,035               87              (820)
     Income tax expense (benefit)                                      761               383               32              (293)
                                                                  --------          --------         --------          --------
     Net income (loss)                                            $  1,388          $    652         $     55          $   (527)
                                                                  ========          ========         ========          ========
BALANCE SHEET DATA:
     Assets                                                       $149,448          $107,062         $ 52,324          $ 28,207
     Earning assets                                                142,966           101,896           47,797            26,603
     Securities (1)                                                  7,832             7,414            7,009            10,025
     Loans (2)                                                     118,709            69,977           35,777            12,618
     Allowance for loan losses                                       1,226               812              334               127
     Deposits                                                      107,826            77,740           45,281            22,599
     Shareholders' equity                                           16,913            15,578            5,516             5,474
PER SHARE DATA:
     Earnings (losses) per share                                  $    .81          $    .38         $    .03          $   (.31)
     Diluted earnings (losses) per share                               .79               .38              .03              (.31)
     Book value (period end)                                          9.83              9.05             3.21              3.18
     Tangible book value (period end)                                 9.82              9.03             3.17              3.13
PERFORMANCE RATIOS:
     Return on average assets                                         1.06%              .81%             .15%            (4.22)%
     Return on average equity                                         8.51              6.57             1.01            (15.52)
     Net interest margin (3)                                          4.09              3.83             4.10              3.20
     Efficiency (4)                                                  54.58             53.34            81.29            274.76
CAPITAL AND LIQUIDITY RATIOS:
     Average equity to average assets                                12.50%            12.35%           14.69%            27.19%
     Leverage (4.00% required minimum)                               11.48             15.29            11.25             20.20
     Risk-based capital
         Tier 1                                                      14.37             20.89            14.47             32.56
         Total                                                       15.41             21.99            15.35             33.56
     Average loans to average deposits                               93.90             87.01            77.64             38.46
</TABLE>


----------------------
1.       All securities are available for sale and are stated at fair value.

2.       Loans are stated at gross amounts before allowance for loan losses.

3.       Net interest income divided by average earning assets.

4.       Noninterest expense divided by the sum of net interest income and
         noninterest income, net of gains and losses on sales of assets.


                                       2
<PAGE>   3


                           RHBT FINANCIAL CORPORATION
                        (FORMERLY ROCK HILL BANK & TRUST)

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

                              BASIS OF PRESENTATION

The following discussion should be read in conjunction with the preceding
"Selected Financial Data" and the Company's Financial Statements and the Notes
thereto and the other financial data included elsewhere in this Annual Report.
The financial information provided below has been rounded in order to simplify
its presentation. However, the ratios and percentages provided below are
calculated using the detailed financial information contained in the Financial
Statements, the Notes thereto and the other financial data included elsewhere in
this Annual Report.

                                     GENERAL

RHBT Financial Corporation (the Company) was organized in 1999 to serve as a
bank holding company for Rock Hill Bank & Trust (the Bank). The Bank commenced
business on May 20, 1996 as a South Carolina state-chartered bank headquartered
in Rock Hill, South Carolina. The principal business activity of the Company is
to provide banking services to domestic markets, principally in York County,
South Carolina. In addition to providing traditional banking services, the
Company has a trust department that offers a full range of trust services and a
mortgage loan division. The mortgage loan division originates loans to purchase
existing or construct new homes and to refinance existing mortgages. The Company
opened two additional offices in 1999. The Ebenezer office opened in January
1999, and the Fort Mill/Tega Cay office opened in September 1999.

On July 16, 1999, the Company's Board of Directors declared a five-for-four
stock split effected in the form of a 25% stock dividend payable on September
10, 1999 to stockholders of record on August 1, 1999. This resulted in the
issuance of 344,063 shares of common stock. On November 8, 1999, the Company's
common stock began trading on The Nasdaq Stock Market under its previous symbol
"RHBT."

The stockholders of the Company voted on April 16, 1998, to amend the Articles
of Incorporation to eliminate the two classes of common stock known as Class A
and Class B. A new class of common stock known simply as common stock was
created, and the number of authorized shares was increased to 10,000,000. Prior
to this vote, Bailey Financial Corporation (Bailey) owned all of the Class B
shares, or 51% of the total outstanding common stock. On June 19, 1998, the
change in classes of stock became effective. Bailey exchanged its Class B shares
for common shares and terminated its right of first refusal agreements and its
right to elect separate directors.

The significant growth of the Company during its first two years of operations
led to the need for additional capital. On July 28, 1998, the Company sold,
through an underwritten public offering, 675,000 shares of common stock at a
public offering price of $13.25 per share. On August 3, 1998, the Company sold
an additional 101,250 common shares, also at a public offering price of $13.25
per share, pursuant to an underwriters over-allotment provision.

                           QUARTERLY OPERATING RESULTS

The following table summarizes selected operating results and balance sheet
averages for the quarters ended in 1999 and 1998.

<TABLE>
<CAPTION>

                                              1999 Quarter ended                            1998 Quarter ended
                                 ---------------------------------------------   -----------------------------------------
(Dollars in thousands,             Fourth      Third       Second     First        Fourth     Third     Second     First
  except per share data)           Quarter    Quarter      Quarter    Quarter      Quarter   Quarter    Quarter   Quarter
                                 ---------- -----------  ---------- ----------   ---------- ---------  --------- ---------
<S>                              <C>        <C>          <C>        <C>          <C>        <C>        <C>       <C>
STATEMENT OF OPERATIONS DATA:
    Net interest income          $    1,479 $     1,374  $    1,255 $    1,009   $    1,092 $     744  $     579 $     521
    Provision for loan losses           152          91         106         81          239       130         60        60
    Noninterest income                  167         163         133         98          100       107         66        57
    Noninterest expense               1,001         772         699        626          592       451        370       329
    Net income                          355         414         367        252          228       170        135       119
    Net income per share                .17         .25         .21        .18          .13       .10        .08       .07
SELECTED AVERAGE BALANCES:
    Total assets                 $  147,552 $   134,142  $  126,523 $  112,461   $  101,634 $  87,092  $  72,282 $  59,780
    Earning assets                  134,683     129,169     120,657    107,246       93,199    83,042     69,040    57,051
    Investment securities             7,916       8,445       8,317      7,454        5,265     5,738      4,649     6,701
    Loans                           108,689      98,530      87,368     74,546       64,887    54,240     44,373    39,220
    Deposits                        111,039     103,333      96,637     83,106       67,290    60,890     53,260    46,874
</TABLE>


                                       3
<PAGE>   4


                           RHBT FINANCIAL CORPORATION
                        (FORMERLY ROCK HILL BANK & TRUST)

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


RESULTS OF OPERATIONS

Year ended December 31, 1999, compared with year ended December 31, 1998

Net interest income increased $2,181,278, or 74.3%, to $5,117,428 in 1999 from
$2,936,150 in 1998. The increase in net interest income was due primarily to an
increase in average earning assets. Average earning assets increased
$48,445,254, or 63.26%, due to continued growth by the Company. This growth was
partially attributable to the addition of two full-service offices in 1999.
The Ebenezer office opened in January and the Fort Mill/Tega Cay office in
September 1999.

The Company's net interest spread and net interest margin were 3.21% and 4.09%,
respectively, in 1999 compared to 3.04% and 3.83% in 1998. The increases in net
interest spread and net interest margin were primarily the result of a decrease
in the cost of funds. Yields on interest-bearing liabilities decreased from
5.23% in 1998 to 4.94% in 1999.

The provision for loan losses was $430,000 in 1999 compared to $489,176 in 1998.
The Company continues to maintain the allowance for loan losses at a level
sufficient to cover known and inherent losses in the loan portfolio. The
secondary stock offering in 1998 allowed an increase in the Company's legal
lending limit which resulted in the ability to make much larger loans than the
Company had been making.

Noninterest income increased $230,955, or 69.89%, to $561,423 in 1999 from
$330,468 in 1998, primarily attributable to increased service charges on deposit
accounts and increased fees from fiduciary activities. Service charges increased
$87,527, or 62.30%, to $228,017 for the year ended December 31, 1999. The
increase in service charges on deposit accounts was attributable to the increase
in the number of deposit accounts from the growth of the Company. As the Company
continued to expand its trust department, fees of $205,882 were generated from
these activities for the year ended December 31, 1999, compared to $111,604 for
the year ended December 31, 1998.

Noninterest expense increased $1,356,463, or 77.85%, to $3,098,912 in 1999 from
$1,742,449 in 1998. The primary component of noninterest expense is salaries and
benefits, which increased $516,763, or 68.74%, to $1,268,507 in 1999 from
$751,744 in 1998. The increase is attributable to the hiring of additional
employees to assist with the growth of the Company and to staff the Ebenezer and
Fort Mill/Tega Cay offices. Net occupancy expense was $456,489 in 1999 compared
to $304,174 in 1998. The additional costs to maintain the Ebenezer office for a
full year and the Fort Mill/Tega Cay office for 3.5 months contributed to this
increase. Advertising and marketing expense increased to $125,756 in 1999
compared to $28,032 in 1998. The increase was due to the Company's marketing
efforts in the new office locations. The Company's efficiency ratio was 54.58%
in 1999 compared to 53.34% in 1998.

Net income was $1,388,015 in 1999 compared to net income of $652,043 in 1998.
The increase in net income was due primarily to increases in net interest income
and noninterest income that resulted from the significant growth in assets and
deposits during 1999. In addition, the Company's operational efficiency improved
drastically in 1999 as compared to the prior year. Return on average assets
during 1999 was 1.06% compared to .81% during 1998, and return on average equity
was 8.51% during 1999 compared to 6.57% during 1998.


                                       4
<PAGE>   5

                           RHBT FINANCIAL CORPORATION
                        (FORMERLY ROCK HILL BANK & TRUST)

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


RESULTS OF OPERATIONS - CONTINUED

Year ended December 31, 1998, compared with year ended December 31, 1997

Net interest income increased $1,494,327, or 103.6%, to $2,936,150 in 1998 from
$1,441,823 in 1997. The increase in net interest income was due primarily to an
increase in average earning assets. Average earning assets increased
$43,129,915, or 115.8%, due to continued growth by the Company and as a result
of the secondary stock offering.

The Company's net interest spread and net interest margin were 3.04% and 3.83%,
respectively, in 1998 compared to 3.13% and 4.10% in 1997. The decreases in net
interest spread and net interest margin were primarily the result of the growth
in the volume of federal funds sold, typically lower yielding assets than loans,
as a percentage of average earning assets. Proceeds from the stock offering were
invested in federal funds and investment securities. A portion has remained in
federal funds as a source of funds for loan growth and for funding the
construction of branches.

The provision for loan losses was $489,176 in 1998 compared to $209,475 in 1997.
The increase in the provision was primarily the result of the growth in the loan
portfolio and the Company's efforts to maintain the allowance for loan losses at
a level sufficient to cover known and inherent losses in the loan portfolio. The
secondary stock offering allowed an increase in the Company's legal lending
limit which resulted in the ability to make much larger loans than the Company
had been making.

Noninterest income increased $184,489, or 126.38%, to $330,468 in 1998 from
$145,979 in 1997, primarily attributable to increased service charges on deposit
accounts and increased fees from fiduciary activities. The increase in service
charges on deposit accounts was attributable to the increase in the number of
deposit accounts from the growth of the Company. As the Company continued to
expand its trust department, fees of $111,604 were generated from these
activities for the year ended December 31, 1998, compared to $32,404 for the
year ended December 31, 1997.

Noninterest expense increased $451,689, or 35.0%, to $1,742,449 in 1998 from
$1,290,760 in 1997. The primary component of noninterest expense is salaries and
benefits, which increased $222,886, or 42.14%, to $751,744 in 1998 from $528,858
in 1997. The increase is attributable to the hiring of additional employees to
assist with the growth of the Company and to staff the new Ebenezer office. The
Company also started a mortgage loan origination department in 1998 and hired
several employees to staff this area. Net occupancy expense was $304,174 in 1998
compared to $279,069 in 1997. Advertising and marketing expense decreased to
$28,032 in 1998 compared to $65,829 in 1997. The decrease was due to less
emphasis on advertising in 1998 as the Company became more established. The
Company's efficiency ratio was 53.34% in 1998 compared to 81.29% in 1997.

Net income was $652,043 in 1998 compared to net income of $55,167 in 1997. The
increase in net income was due primarily to increases in net interest income and
noninterest income that resulted from the significant growth in assets and
deposits during 1998. In addition, the Company's operational efficiency improved
drastically in 1998 as compared to the prior year. Return on average assets
during 1998 was .81% compared to .15% during 1997, and return on average equity
was 6.57% during 1998 compared to 1.01% during 1997.


                                       5
<PAGE>   6

                           RHBT FINANCIAL CORPORATION
                        (FORMERLY ROCK HILL BANK & TRUST)

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

NET INTEREST INCOME

General. The largest component of the Company's net income is its net interest
income, which is the difference between the income earned on assets and interest
paid on deposits and borrowings used to support such assets. Net interest income
is determined by the yields earned on the Company's interest-earning assets and
the rates paid on its interest-bearing liabilities, the relative amounts of
interest-earning assets and interest-bearing liabilities, and the degree of
mismatch and the maturity and repricing characteristics of its interest-earning
assets and interest-bearing liabilities. Net interest income divided by average
interest-earning assets represents the Company's net interest margin.

Average Balances, Income and Expenses and Rates. The following table sets forth,
for the periods indicated, certain information related to the Company's average
balance sheet and its average yields on assets and average costs of liabilities.
Such yields are derived by dividing income or expense by the average balance of
the corresponding assets or liabilities. Average balances have been derived from
the daily balances throughout the periods indicated.

AVERAGE BALANCES, INCOME AND EXPENSES AND RATES

<TABLE>
<CAPTION>

                                                                                  Year ended December 31,

                                                                          1999                                   1998
                                                           -----------------------------------      -----------------------------
                                                            Average       Income/       Yield/      Average     Income/    Yield/
(Dollars in thousands)                                      Balance       Expense        Rate       Balance     Expense     Rate
                                                           ---------      --------     -------      -------     -------   -------

<S>                                                        <C>            <C>          <C>          <C>         <C>       <C>
ASSETS:
Earning Assets
     Loans (1)                                             $  92,597      $  8,559        9.24%     $51,173      $4,976     9.72%
     Securities, taxable (2)                                   8,035           443        5.51        6,124         371     6.06
     Federal funds sold and securities
       purchased under agreements to resell                   24,393         1,172        4.80       19,283         987     5.12
                                                           ---------      --------                  -------      ------
              Total earning assets                           125,025        10,174        8.14       76,580       6,334     8.27
                                                           ---------      --------                  -------      ------
Cash and due from banks                                        3,624                                  2,740
Premises and equipment                                         1,431                                    610
Other assets                                                   1,467                                    928
Allowance for loan losses                                       (981)                                  (477)
                                                           ---------                                -------
              Total assets                                 $ 130,566                                $80,381
                                                           =========                                =======

LIABILITIES:
Interest-Bearing Liabilities
     Interest-bearing transaction  accounts                $  26,128      $    998        3.82%     $16,995      $  716     4.21%
     Savings deposits                                          4,054           197        4.86        2,767         144     5.20
     Time deposits                                            57,255         3,197        5.58       33,819       1,987     5.88
     Federal funds purchased and
       securities sold under
       agreements to repurchase                               13,223           576        4.36       11,362         551     4.85
     Advances from Federal Home Loan Bank                      1,808            89        4.92           --          --       --
                                                           ---------      --------                  -------      ------
              Total interest-bearing liabilities             102,468         5,057        4.94       64,943       3,398     5.23
                                                           ---------      --------                  -------      ------
Demand deposits                                               11,180                                  5,221
Accrued interest and other liabilities                           580                                    287
Stockholders' equity                                          16,338                                  9,930
                                                           ---------                                -------
              Total liabilities and stockholders' equity   $ 130,566                                $80,381
                                                           =========                                =======

Net interest spread                                                                       3.20%                             3.04%
Net interest income                                                       $  5,117                               $2,936
                                                                          ========                               ======
Net interest margin                                                                       4.09%                             3.83%
</TABLE>

(1)      There were no loans in nonaccrual status and the effect of fees
         collected on loans is not significant to the computations. All loans
         and deposits are domestic.

(2)      Average investment securities exclude the valuation allowance on
         securities available for sale.


                                       6
<PAGE>   7

                           RHBT FINANCIAL CORPORATION
                        (FORMERLY ROCK HILL BANK & TRUST)

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


NET INTEREST INCOME - CONTINUED

Analysis of Changes in Net Interest Income. The following tables set forth the
effect which the varying levels of earning assets and interest-bearing
liabilities and the applicable rates have had on changes in net interest income
from 1998 to 1999 and 1997 to 1998.

ANALYSIS OF CHANGES IN NET INTEREST INCOME

<TABLE>
<CAPTION>

                                                                  1999 Compared With 1998
                                                                      Variance Due to
(Dollars in thousands)                                  Volume (1)       Rate (1)         Total
                                                        ----------       --------         ------
<S>                                                     <C>              <C>              <C>
Earning Assets
     Loans                                                $3,840          $(257)          $3,583
     Securities, taxable                                     108            (36)              72
     Federal funds sold and securities
       purchased under agreements to resell                  249            (64)             185
                                                          ------          -----           ------
              Total interest income                        4,197           (357)           3,840
                                                          ------          -----           ------

Interest-Bearing Liabilities
     Interest-bearing deposits:
         Interest-bearing transaction accounts               354            (72)             282
         Savings deposits                                     63            (10)              53
         Time deposits                                     1,313           (103)           1,210
                                                          ------          -----           ------
              Total interest-bearing deposits              1,730           (185)           1,545
     Federal funds purchased and securities sold
       under agreements to repurchase                         85            (60)              25
     Advances from the Federal Home Loan Bank                 89             --               89
                                                          ------          -----           ------
              Total interest expense                       1,904           (245)           1,659
                                                          ------          -----           ------

              Net interest income                         $2,293          $(112)          $2,181
                                                          ======          =====           ======
</TABLE>

(1)      Volume-rate changes have been allocated to each category based on the
         percentage of the total change.


<TABLE>
<CAPTION>

                                                                      1998 Compared With 1997
                                                                          Variance Due to
(Dollars in thousands)                                      Volume (1)        Rate (1)         Total
                                                           -----------        --------        -------

<S>                                                        <C>                <C>             <C>
EARNING ASSETS
     Loans                                                   $ 2,631           $ (2)          $ 2,629
     Securities, taxable                                         (56)           (11)              (67)
     Federal funds sold and securities
       purchased under agreements to resell                      779             (5)              774
                                                             -------           ----           -------
              Total interest income                            3,354            (18)            3,336
                                                             -------           ----           -------

INTEREST-BEARING LIABILITIES
     Interest-bearing deposits:
         Interest-bearing transaction accounts                   229            (27)              202
         Savings deposits                                         56             (8)               48
         Time deposits                                         1,093            (33)            1,060
                                                             -------           ----           -------
              Total interest-bearing deposits                  1,378            (68)            1,310
     Securities sold under agreements to repurchase              533             (1)              532
                                                             -------           ----           -------
              Total interest expense                           1,911            (69)            1,842
                                                             -------           ----           -------

              Net interest income                            $ 1,443           $ 51           $ 1,494
                                                             =======           ====           =======

(1)      Volume-rate changes have been allocated to each category based on the
         percentage of the total change.
</TABLE>


                                       7
<PAGE>   8


                           RHBT FINANCIAL CORPORATION
                        (FORMERLY ROCK HILL BANK & TRUST)

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


NET INTEREST INCOME - CONTINUED

Interest Sensitivity. The Company monitors and manages the pricing and maturity
of its assets and liabilities in order to diminish the potential adverse impact
that changes in interest rates could have on its net interest income. The
principal monitoring technique employed by the Company is the measurement of the
Company's interest sensitivity "gap", which is the positive or negative dollar
difference between assets and liabilities that are subject to interest rate
repricing within a given period of time. Interest rate sensitivity can be
managed by repricing assets or liabilities, selling securities available for
sale, replacing an asset or liability at maturity, or adjusting the interest
rate during the life of an asset or liability. Managing the amount of assets and
liabilities repricing in this same time interval helps to hedge the risk and
minimize the impact on net interest income of rising or falling interest rates.

The following table sets forth the Company's interest rate sensitivity at
December 31, 1999.

INTEREST SENSITIVITY ANALYSIS

<TABLE>
<CAPTION>

                                                                 After One     After Three                 Greater Than
                                                     Within       Through        Through                     One Year
                                                      One          Three          Twelve        Within       or Non-
(Dollars in thousands)                               Month         Months         Months       One Year      sensitive       Total
                                                    ---------    -----------     --------      ---------   ------------    --------
<S>                                                 <C>          <C>             <C>           <C>         <C>             <C>
ASSETS
     Earning Assets
         Loans (1)                                  $ 43,840       $ 1,472       $ 14,843      $  60,155       $58,554     $118,709
         Securities                                       --         2,146          1,759          3,905         3,928        7,833
         Federal funds sold and securities
           purchased under agreements
           to resell                                  16,425            --             --         16,425            --       16,425
                                                    --------       -------       --------      ---------       -------     --------
              Total earning assets                    60,265         3,618         16,602         80,485        62,482      142,967
                                                    --------       -------       --------      ---------       -------     --------
LIABILITIES
     Interest-bearing liabilities
         Interest-bearing deposits
              Demand deposits                         34,659            --             --         34,659            --       34,659
              Savings deposits                         4,427            --             --          4,427            --        4,427
              Time deposits                           10,773           450         47,830         59,053         3,132       62,185
                                                    --------       -------       --------      ---------       -------     --------
              Total interest-bearing
                  deposits                            49,859           450         47,830         98,139         3,132      101,271
         Advances from the Federal
                      Home Loan Bank                   3,000            --             --          3,000         7,000       10,000
         Federal funds purchased                       5,000            --             --          5,000            --        5,000
         Securities sold under agreements
           to repurchase                               9,105            --             --          9,105            --        9,105
              Total interest-bearing
                  liabilities                         66,964           450         47,830        115,244        10,132      125,376
                                                    --------       -------       --------      ---------       -------     --------
Period gap                                          $ (6,699)      $ 3,168       $(31,228)     $ (34,759)      $52,350
                                                    ========       =======       ========      =========      ========
Cumulative gap                                      $ (6,699)      $(3,531)      $(34,759)     $ (34,759)      $17,591
                                                    ========       =======       ========      =========      ========
Ratio of cumulative gap to total earning
     assets                                            (4.69)%       (2.47)%       (24.31)%       (24.31)%       12.30%
</TABLE>

(1) Excludes nonaccrual loans.


                                       8
<PAGE>   9

                           RHBT FINANCIAL CORPORATION
                        (FORMERLY ROCK HILL BANK & TRUST)

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


NET INTEREST INCOME - CONTINUED

The above table reflects the balances of interest-earning assets and
interest-bearing liabilities at the earlier of their repricing or maturity
dates. Overnight federal funds are reflected at the earliest pricing interval
due to the immediately available nature of the instruments. Securities purchased
under agreements to resell are reflected at the maturity date of each agreement
which ranges from seven to thirty days. Debt securities are reflected at each
instrument's ultimate maturity date. Scheduled payment amounts of fixed rate
amortizing loans are reflected at each scheduled payment date. Scheduled payment
amounts of variable rate amortizing loans are reflected at each scheduled
payment date until the loan may be repriced contractually; the unamortized
balance is reflected at that point. Interest-bearing liabilities with no
contractual maturity, such as savings deposits and interest-bearing transaction
accounts, are reflected in the earliest repricing period due to contractual
arrangements which give the Company the opportunity to vary the rates paid on
those deposits within a thirty-day or shorter period. Fixed rate time deposits,
principally certificates of deposit, are reflected at their contractual maturity
date. Securities sold under agreements to repurchase are reflected at the
maturity date of each repurchase agreement which ranges from one to thirty days.
Advances from the Federal Home Loan Bank are reflected at their contractual
maturity dates.

The Company generally would benefit from increasing market rates of interest
when it has an asset-sensitive gap position and generally would benefit from
decreasing market rates of interest when it is liability-sensitive. The Company
is cumulative liability-sensitive over the one month to twelve month time frame.
However, the Company's gap analysis is not a precise indicator of its interest
sensitivity position. The analysis presents only a static view of the timing of
maturities and repricing opportunities, without taking into consideration that
changes in interest rates do not affect all assets and liabilities equally. For
example, rates paid on a substantial portion of core deposits may change
contractually within a relatively short time frame, but those rates are viewed
by management as significantly less interest-sensitive than market-based rates
such as those paid on non-core deposits. Accordingly, management believes a
liability-sensitive gap position is not as indicative of the Company's true
interest sensitivity as it would be for an organization which depends to a
greater extent on purchased funds to support earning assets. Net interest income
may be impacted by other significant factors in a given interest rate
environment, including changes in the volume and mix of earning assets and
interest-bearing liabilities.

PROVISION AND ALLOWANCE FOR LOAN LOSSES

General. The Company has developed policies and procedures for evaluating the
overall quality of its credit portfolio and the timely identification of
potential problem credits. On a quarterly basis, the Company's Board of
Directors reviews and approves the appropriate level for the Company's allowance
for loan losses based upon management's recommendations, the results of the
internal monitoring and reporting system, and an analysis of economic conditions
in its market. The objective of management has been to fund the allowance for
loan losses at approximately 1% of total loans outstanding until a history is
established.

Additions to the allowance for loan losses, which are expensed as the provision
for loan losses on the Company's income statement, are made periodically to
maintain the allowance at an appropriate level based on management's analysis of
the potential risk in the loan portfolio. Loan losses and recoveries are charged
or credited directly to the allowance. The amount of the provision is a function
of the level of loans outstanding, the level of nonperforming loans, historical
loan loss experience, the amount of loan losses actually charged against the
reserve during a given period, and current and anticipated economic conditions.

The Company's allowance for loan losses is based upon judgments and assumptions
of risk elements in the portfolio, future economic conditions, and other factors
affecting borrowers. The process includes identification and analysis of loss
potential in various portfolio segments utilizing a credit risk grading process
and specific reviews and evaluations of significant problem credits. In
addition, management monitors the overall portfolio quality through observable
trends in delinquency, charge-offs, and general and economic conditions in the
service area. The adequacy of the allowance for loan losses and the
effectiveness of the Company's monitoring and analysis system are also reviewed
periodically by the banking regulators and the Company's independent auditors.


                                       9
<PAGE>   10

                           RHBT FINANCIAL CORPORATION
                        (FORMERLY ROCK HILL BANK & TRUST)

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


PROVISION AND ALLOWANCE FOR LOAN LOSSES - CONTINUED

Based on present information and an ongoing evaluation, management considers the
allowance for loan losses to be adequate to meet presently known and inherent
risks in the loan portfolio. Management's judgment about the adequacy of the
allowance is based upon a number of assumptions about future events which it
believes to be reasonable but which may or may not be accurate. Thus, there can
be no assurance that charge-offs in future periods will not exceed the allowance
for loan losses or that additional increases in the allowance for loan losses
will not be required. The Company does not allocate the allowance for loan
losses to specific categories of loans but evaluates the adequacy on an overall
portfolio basis utilizing a risk grading system.

The following table sets forth certain information with respect to the Company's
allowance for loan losses and the composition of charge-offs and recoveries for
the years ended December 31, 1999, 1998 and 1997.


ALLOWANCE FOR LOAN LOSSES

<TABLE>
<CAPTION>
(Dollars in thousands)                                                 1999             1998             1997
                                                                     --------          -------          -------
<S>                                                                  <C>               <C>              <C>
Total loans outstanding at end of period                             $118,709          $69,977          $35,777
                                                                     ========          =======          =======

Average loans outstanding                                            $ 92,597          $51,173          $24,116
                                                                     ========          =======          =======

Balance of allowance for loan losses at beginning of period          $    812          $   334          $   127
                                                                     --------          -------          -------

Loan losses:
         Real estate - construction                                        --               --               --
         Real estate - mortgage                                            --               --               --
         Commercial and industrial                                         --               --               --
         Consumer                                                          16               11                6
                                                                     --------          -------          -------
              Total loan losses                                            16               11                6
                                                                     --------          -------          -------
Recoveries of previous loan losses:
         Real estate - construction                                        --               --               --
         Real estate - mortgage                                            --               --               --
         Commercial and industrial                                         --               --               --
         Consumer                                                          --               --                4
                                                                     --------          -------          -------
              Total recoveries                                             --               --                4
                                                                     --------          -------          -------
Net loan losses                                                            16               11                2
Provision for loan losses                                                 430              489              209
                                                                     --------          -------          -------
Balance of allowance for loan losses at end of period                $  1,226          $   812          $   334
                                                                     ========          =======          =======

Allowance for loan losses to period end loans                            1.03%            1.16%             .93%
Net charge-offs to average loans                                          .02              .02              .01
</TABLE>

NONPERFORMING ASSETS

Nonperforming Assets. The following table sets forth the Company's nonperforming
assets for the dates indicated.

<TABLE>
<CAPTION>

                                                                                                December 31,
(Dollars in thousands)                                                        1999                  1998                 1997
                                                                          ------------          -----------          -----------
<S>                                                                       <C>                   <C>                  <C>
Nonaccrual loans                                                          $         --          $        --          $        --
Restructured or impaired loans                                                      --                   --                   --
                                                                          ------------          -----------          -----------
         Total nonperforming loans                                                  --                   --                   --
Other real estate owned                                                             --                   --                   --
                                                                          ------------          -----------          -----------
         Total nonperforming assets                                       $         --          $        --          $        --
                                                                          ============          ===========          ===========
Loans 90 days or more past due and still accruing interest                $         --          $         2          $        --
Nonperforming assets to period end loans and foreclosed property                    --%                  --%                  -- %
</TABLE>


                                       10
<PAGE>   11

                           RHBT FINANCIAL CORPORATION
                        (FORMERLY ROCK HILL BANK & TRUST)

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


NONPERFORMING ASSETS - CONTINUED

Accrual of interest is discontinued on a loan when management believes, after
considering economic and business conditions and collection efforts, that the
borrower's financial condition is such that the collection of interest is
doubtful. A delinquent loan is generally placed in nonaccrual status when it
becomes 90 days or more past due. When a loan is placed in nonaccrual status,
all interest which has been accrued on the loan but remains unpaid is reversed
and deducted from current earnings as a reduction of reported interest income.
No additional interest is accrued on the loan balance until the collection of
both principal and interest becomes reasonably certain. When a problem loan is
finally resolved, there may ultimately be an actual writedown or charge-off of
the principal balance of the loan which would necessitate additional charges to
earnings. For all periods presented, the additional interest income which would
have been recognized into earnings if the Company's nonaccrual loans had been
current in accordance with their original terms is immaterial.

There were no nonperforming assets at December 31, 1999, 1998, or 1997.

Potential Problem Loans. At December 31, 1999, the Company reviewed its loan
portfolio to identify any criticized or classified loans through its internal
review mechanisms. The results of this internal review process are considered in
determining management's assessment of the adequacy of the allowance for loan
losses. Loans to one borrower totaling $1,687,985 were identified in a recent
regulatory examination as criticized assets. Loans to this borrower are well
secured but certain risks involving repayment do exist. Management is carefully
monitoring the status of this credit. The overall objective of the Company has
been to maintain the allowance for loan losses at approximately 1% of total
loans to provide for potential problem loans.

Noninterest Income and Expense

Noninterest Income. The largest component of noninterest income is service
charges on deposit accounts, which totaled $228,017 in 1999, a 62.3% increase
over the 1998 amount of $140,490. The increase in service charges and other
noninterest income was primarily attributable to an increase in the customer
base as a result of the opening of the Ebenezer office in January 1999 and the
Fort Mill/Tega Cay office in September 1999.

Service charges on deposit accounts totaled $140,490 in 1998, a 69.7% increase
over the 1997 amount of $82,774. The increase in service charges and other
noninterest income was primarily attributable to an increase in the customer
base as a result of the growth allowed from the secondary stock offering in
July, 1998.


The following table sets forth the principal components of noninterest income
for the years ended December 31, 1999, 1998 and 1997.


<TABLE>
<CAPTION>

(Dollars in thousands)                        1999          1998          1997
                                             ------        ------        ------
<S>                                          <C>           <C>           <C>
Service charges on deposit accounts          $  228        $  140        $   83
Securities gains (losses)                        --            --            (1)
Income from fiduciary activities                206           112            32
Other                                           127            78            32
                                             ------        ------        ------
     Total noninterest income                $  561        $  330        $  146
                                             ======        ======        ======
</TABLE>

Noninterest Expense. Salaries and employee benefits increased $516,763, or
68.74%, to $1,268,507 in 1999 from $751,744 in 1998, primarily as a result of
the hiring of employees to staff the two new offices (which opened in January
and September 1999) and to assist personnel at the main office with the
continuing growth of the Company. The cost of operating two additional offices
also resulted in increases in net occupancy expense and other operating
expenses. One of the primary factors for the increase in other operating
expenses was due to an increase in data processing charges of approximately
$120,226 from 1998 to 1999. This increase was due to several factors. One was
the increase in charges as a result of the volume of transactions processed and
also charges relating to the conversion of the data processing to a new service
provider. The Company's efficiency ratio, which is noninterest expense as a
percentage of the total of net interest income plus noninterest income, net of
gains and losses on the sale of assets, was 54.57% in 1999 compared to 53.34% in
1998.


                                       11
<PAGE>   12


                           RHBT FINANCIAL CORPORATION
                        (FORMERLY ROCK HILL BANK & TRUST)

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


NONINTEREST INCOME AND EXPENSE - CONTINUED

Salaries and employee benefits increased $222,886, or 42.1%, to $751,744 in 1998
from $528,858 in 1997, primarily as a result of the hiring of employees to staff
the new office (which opened in January 1999) and to assist personnel at the
main office with the continuing growth of the Company. In addition, several
employees were hired in 1998 to staff the mortgage loan department. The
continued growth of the Company also resulted in increases in net occupancy
expense and other operating expenses. One of the primary factors for the
increase in other operating expenses was due to an increase in data processing
charges of approximately $78,000 from 1997 to 1998 that resulted from a new data
processing agreement that became effective in May 1998. The Company's efficiency
ratio, which is noninterest expense as a percentage of the total of net interest
income plus noninterest income, net of gains and losses on the sale of assets,
was 53.34% in 1998 compared to 81.29% in 1997.

The following table sets forth the primary components of noninterest expense for
the years ended December 31, 1999, 1998 and 1997.

<TABLE>
<CAPTION>

(Dollars in thousands)                          1999            1998            1997
                                               ------          ------          ------
<S>                                            <C>             <C>             <C>
Salaries and employee benefits                 $1,269          $  752          $  529
Net occupancy expense                             456             304             279
Advertising and marketing expense                 126              28              66
Office supplies, forms and stationery             139              89              58
Data processing                                   256             135              58
Professional fees                                  69              27              39
Telephone                                         104              61              39
Other                                             680             346             223
                                               ------          ------          ------
     Total noninterest expense                 $3,099          $1,742          $1,291
                                               ======          ======          ======

Efficiency ratio                                54.57%          53.34%          81.29%
</TABLE>


EARNING ASSETS

Loans. Loans are the largest category of earning assets and typically provide
higher yields than the other types of earning assets. Associated with the higher
loan yields are the inherent credit and liquidity risks which management
attempts to control and counterbalance. Loans averaged $92,597,518 in 1999
compared to $51,173,369 in 1998, an increase of $41,424,149, or 80.9%. At
December 31, 1999, total loans were $118,709,167 compared to $69,977,496 at
December 31, 1998.

The increase in loans during 1999 was primarily due to the growth of the Company
during its fourth year of operations and the additional branches opened during
1999. The following table sets forth the composition of the loan portfolio by
category at the dates indicated and highlights the Company's general emphasis on
commercial and mortgage lending.

COMPOSITION OF LOAN PORTFOLIO

<TABLE>
<CAPTION>

                                                              December 31,
                                                  1999                           1998
                                      ----------------------------    --------------------------
                                                         Percent                       Percent
(Dollars in thousands)                  Amount           of Total       Amount         of Total
                                      ----------         --------     ----------       --------
<S>                                   <C>                <C>          <C>              <C>
Commercial and industrial             $   49,569           41.76%     $  26,768         38.25%
Real estate
     Construction                          5,420            4.57          1,298          1.86
     Mortgage-residential                 24,142           20.34         13,919         19.89
     Mortgage-nonresidential              33,855           28.52         25,187         36.00
Consumer                                   5,245            4.41          2,795          3.99
Other                                        478             .40             10           .01
                                      ----------          ------      ---------        ------
     Total loans                         118,709          100.00%        69,977        100.00%
                                                          ======                       ======
Allowance for loan losses                  1,226                            812
                                      ----------                      ---------
     Net loans                        $  117,483                      $  69,165
                                      ==========                      =========
</TABLE>


                                       12
<PAGE>   13

                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

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


EARNING ASSETS - CONTINUED

The Company's loan portfolio is largely comprised of real estate mortgage
loans. At December 31, 1999, real estate mortgage loans totaled $57,996,758 and
represented 48.9% of the total loan portfolio, compared to $39,106,586, or
55.89%, at December 31, 1998.

In the context of this discussion, a "real estate mortgage loan"is defined as
any loan, other than loans for construction purposes, secured by real estate,
regardless of the purpose of the loan. It is common practice for financial
institutions in the Company's market area to obtain a security interest in real
estate whenever possible, in addition to any other available collateral. This
collateral is taken to reinforce the likelihood of the ultimate repayment of
the loan and tends to increase the magnitude of the real estate loan portfolio
component.

Residential mortgage loans increased $10,222,348, or 73.44%, to $24,141,774 at
December 31, 1999, from $13,919,426 at December 31, 1998. Residential real
estate loans consist of first and second mortgages on single or multi-family
residential dwellings. Nonresidential mortgage loans, which include commercial
loans and other loans secured by multi-family properties and farmland,
increased $9,868,837, or 41.14%, to $33,854,984 at December 31, 1999, from
$23,986,147 at December 31, 1998. This increase in real estate lending was
attributable to the continued demand for residential and commercial real estate
loans in the Rock Hill market and continued loan growth at the Company. The
Company has been able to compete favorably for residential mortgage loans with
other financial institutions by offering fixed rate products having three and
five year call provisions.

Commercial and industrial loans increased $22,801,634, or 85.2%, to $49,569,153
at December 31, 1999, from $26,767,519 at December 31, 1998. This category of
loans also includes discounted accounts receivable loans that totaled
$10,092,894 at December 31, 1999, an increase of $3,972,010, or 64.9%, from
December 31, 1998.

Consumer loans decreased $614,214, or 16.6%, to $3,094,697 at December 31,
1999, from $3,708,911 at December 31, 1998. The Company continues to focus on
real estate and commercial lending rather than consumer lending.

The Company's loan portfolio reflects the diversity of its market. The
Company's three office locations are in York County, South Carolina. The
economy of Rock Hill contains elements of medium and light manufacturing,
higher education, regional health care, and distribution facilities. Due to its
proximity to a major interstate highway and Winthrop University, a
state-supported university, management expects the area to remain stable with
continued growth. The diversity of the economy creates opportunities for all
types of lending. The Company does not engage in foreign lending.

The repayment of loans in the loan portfolio as they mature is also a source of
liquidity for the Company. The following table sets forth the Company's loans
maturing within specified intervals at December 31, 1999.

LOAN MATURITY SCHEDULE AND SENSITIVITY TO CHANGES IN INTEREST RATES

<TABLE>
<CAPTION>
                                                    Over One Year
                                         One Year      Through     Over Five
(Dollars in thousands)                   or Less     Five Years      Years        Total
                                         --------    ----------    --------      --------
<S>                                      <C>          <C>          <C>           <C>
Commercial and industrial                $ 31,966     $ 4,723      $ 15,031      $ 51,720
Real estate                                26,970      16,982        19,464        63,416
Consumer and other                            906       1,532         1,135         3,573
                                         --------     -------      --------      --------
                                           59,842      23,237        35,630       118,709
                                         --------     -------      --------      --------

Loans maturing after one year with:                                               $58,867
         Fixed interest rates                                                          --
                                                                                 --------
         Floating interest rates                                                  $58,867
                                                                                 ========
</TABLE>

The information presented in the above table is based on the contractual
maturities of the individual loans, including loans which may be subject to
renewal at their contractual maturity. Renewal of such loans is subject to
review and credit approval as well as modification of terms upon their
maturity. Consequently, management believes this treatment presents fairly the
maturity and repricing structure of the loan portfolio shown in the above
table.


                                      13
<PAGE>   14

                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

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

EARNING ASSETS - CONTINUED

Investment Securities. The investment securities portfolio is also a component
of the Company's total earning assets. Total securities averaged $8,035,691 in
1999, compared to $6,123,501 in 1998. At December 31, 1999, the total
securities portfolio was $7,832,559. All securities were designated as
available for sale and were recorded at their estimated fair market value. A
number of U.S. Treasury securities matured in 1999 and those funds were
invested in slightly higher-yielding securities of U.S. Government agencies.

The following table sets forth the book value of the securities held by the
Company at the dates indicated.

BOOK VALUE OF SECURITIES
<TABLE>
<CAPTION>
                                                      December 31,
                                                  1999         1998
                                               ---------    ---------
<S>                                            <C>          <C>
(Dollars in thousands)
U.S. Treasury                                  $      --    $   1,504
U.S. Government agencies                           7,833        5,910
                                               ---------    ---------
    Total securities                           $   7,833    $   7,414
                                               =========    =========
</TABLE>

The following table sets forth the scheduled maturities and average yields of
securities held at December 31, 1999.

INVESTMENT SECURITIES MATURITY DISTRIBUTION AND YIELDS

<TABLE>
<CAPTION>
                                                              After One But        After Five But
                                          Within One           Within Five           Within Ten
                                             Year                 Years                 Years                Total
                                    --------------------  --------------------  -------------------- -------------------
                                      Amount     Yield      Amount    Yield       Amount     Yield     Amount     Yield
                                    --------------------  --------------------  -------------------- -------------------
<S>                                 <C>          <C>      <C>         <C>       <C>          <C>     <C>          <C>
(Dollars in thousands)
U.S. Government agencies            $   3,905    5.32%    $   3,436   5.69%     $    492     7.50%   $   7,833    5.63%
                                    =========             =========             ========             =========
</TABLE>

Other attributes of the securities portfolio, including yields and maturities,
are discussed above in "---Net Interest Income--- Interest Sensitivity."

Short-Term Investments. Short-term investments, which consist primarily of
federal funds sold and securities purchased under agreements to resell,
averaged $24,393,182 in 1999, compared to $19,282,856 in 1998. At December 31,
1999, short-term investments totaled $16,425,000. These funds are an important
source of the Company's liquidity. Federal funds are generally invested in an
earning capacity on an overnight basis. Securities purchased under agreements
to resell are invested on a one to thirty day period, depending on the terms of
each agreement.

DEPOSITS AND OTHER INTEREST-BEARING LIABILITIES

Average interest-bearing liabilities increased $35,843,620, or 57.8%, to
$102,468,236 in 1999, from $64,942,616 in 1998. Average interest-bearing
deposits increased $33,872,408, or 63.2%, to $87,437,455 in 1999, from
$53,581,047 in 1998. These increases resulted from increases in most categories
of interest-bearing liabilities, primarily as a result of the continued growth
of the Company.

Deposits. Average total deposits increased $39,814,804, or 67.7%, to
$98,617,427 during 1999, from $58,802,623 during 1998. At December 31, 1999,
total deposits were $107,826,073 compared to $77,739,725 a year earlier, an
increase of 38.7%.


                                      14
<PAGE>   15

                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

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

DEPOSITS AND OTHER INTEREST-BEARING LIABILITIES - CONTINUED

The following table sets forth the deposits of the Company by category at the
dates indicated.

DEPOSITS
<TABLE>
<CAPTION>
                                                              December 31,
                                                      1999                    1998
                                             ---------------------    -------------------
                                                          Percent                Percent
(Dollars in thousands)                                       of                    of
                                                Amount    Deposits     Amount    Deposits
                                             ----------  ---------    --------   --------
<S>                                          <C>         <C>          <C>        <C>
Demand deposit accounts                      $    6,555     6.08%     $  6,158      7.92%
NOW accounts                                      7,420     6.88         8,410     10.82
Money market accounts                            27,240    25.26        14,810     19.05
Savings accounts                                  4,427     4.11         3,176      4.08
Time deposits less than $100,000                 32,749    30.37        27,062     34.81
Time deposits of $100,000 or over                29,435    27.30        18,124     23.32
                                             ----------  -------      --------    ------
     Total deposits                          $  107,826   100.00%     $ 77,740    100.00%
                                             ==========  =======      ========    ======
</TABLE>

Core deposits, which exclude certificates of deposit of $100,000 or more,
provide a relatively stable funding source for the Company's loan portfolio and
other earning assets. The Company's core deposits increased $18,775,092 in 1999
due to the continued growth of the Company.

Deposits, and particularly core deposits, have been the Company's primary
source of funding and have enabled the Company to meet successfully both its
short-term and long-term liquidity needs. Management anticipates that such
deposits will continue to be the Company's primary source of funding in the
future. The Company also purchases brokered deposits from time to time. At
December 31, 1999, certificates of deposit included brokered deposits totaling
$12,094,139. Ten of these accounts had current balances of $100,000 or more and
totaled $1,900,049 at December 31, 1999. All remaining accounts had balances of
$99,000. The Company's loan-to-deposit ratio was 110.1% at December 31, 1999,
and 90.0% at the end of 1998; and the ratio averaged 93.9% during 1999. The
maturity distribution of the Company's time deposits over $100,000 at December
31, 1999, is set forth in the following table:

Maturities of Certificates of Deposit of $100,000 or More

<TABLE>
<CAPTION>
                                                                 After Three     After Six
                                                     Within        Through        Through        After
                                                      Three          Six          Twelve        Twelve
(Dollars in thousands)                               Months         Months        Months         Months        Total
                                                   ---------     -----------    ----------     ---------     ----------
<S>                                                <C>            <C>           <C>            <C>           <C>
Certificates of deposit of $100,000 or more        $   5,071      $   8,848     $   15,046     $     470     $   29,435
</TABLE>

Approximately 17.23% of the Company's time deposits over $100,000 had scheduled
maturities within three months, and 47.3% had maturities within six months.
Large certificate of deposit customers tend to be extremely sensitive to
interest rate levels, making these deposits less reliable sources of funding
for liquidity planning purposes than core deposits.

Borrowed Funds. Borrowed funds consist of short-term borrowings in the form of
federal funds purchased and securities sold under agreements to repurchase. The
Company also has advances from the Federal Home Loan Bank.

Average short-term borrowings were $13,223,781 in 1999, compared to $11,361,569
in 1998. At December 31, 1999, federal funds purchased totaled $5,000,000 and
securities sold under agreements to repurchase totaled $9,105,000. The average
balance in 1999 related mostly to securities sold under agreements to
repurchase with several customers. These agreements typically range from one to
thirty days. Federal funds purchased were obtained in December for liquidity
purposes relating to Year 2000 issues. Although management may from time to
time use short-term borrowings as a secondary funding source, core deposits
will continue to be the Company's primary funding source. Advances from the
Federal Home Loan Bank averaged $1,808,219 in 1999. At December 31, 1999,
advances from the Federal Home Loan Bank totaled $10,000,000. Of these
advances, $7,000,000 mature in 2009 and $3,000,000 mature in 2000. These
advances are used as a secondary funding source.


                                      15
<PAGE>   16

                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

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

CAPITAL

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

Quantitative measures established by regulation to ensure capital adequacy
require the Company and the Bank to maintain minimum ratios of Tier 1 and total
capital as a percentage of assets and off-balance-sheet exposures, adjusted for
risk weights ranging from 0% to 100%. Tier 1 capital of the Company and the
Bank consists of common stockholders' equity, excluding the unrealized gain or
loss on securities available-for-sale, minus certain intangible assets. The
Company's and the Bank's Tier 2 capital consists of the allowance for loan
losses subject to certain limitations. Total capital for purposes of computing
the capital ratios consists of the sum of Tier 1 and Tier 2 capital. The
regulatory minimum requirements are 4% for Tier 1 and 8% for total risk-based
capital.

The Company is also required to maintain capital at a minimum level based on
quarterly average assets, which is known as the leverage ratio. Only the
strongest banks are allowed to maintain capital at the minimum requirement of
3%. All others are subject to maintaining ratios 1% to 2% above the minimum.

The Company is required to maintain certain risk-based and leverage ratios. The
Company exceeded these regulatory capital ratios at December 31, 1999 and 1998
as set forth in the following table.

<TABLE>
<CAPTION>
ANALYSIS OF CAPITAL AND CAPITAL RATIOS                                      The Company           The Bank
(Dollars in thousands)                                                         1999           1999         1998
                                                                             ---------     ---------     ---------
<S>  <C>                                                                     <C>           <C>           <C>
Tier 1 capital                                                               $  16,939     $  16,888     $  15,532
Tier 2 capital                                                                   1,226         1,226           812
                                                                             ---------     ---------     ---------
         Total qualifying capital                                            $  18,165     $  18,114     $  16,344
                                                                             =========     =========     =========

Risk-adjusted total assets (including off-balance sheet exposures)           $ 117,882     $ 117,872     $  74,388
                                                                             =========     =========     =========

Tier 1 risk-based capital ratio                                                  14.37%        14.33%        20.89%
Total risk-based capital ratio                                                   15.41         15.37         21.99
Tier 1 leverage ratio                                                            11.48         11.45         15.29
</TABLE>

LIQUIDITY MANAGEMENT AND CAPITAL RESOURCES

Liquidity management involves monitoring the Company's sources and uses of
funds in order to meet its day-to-day cash flow requirements while maximizing
profits. Liquidity represents the ability of the Company to convert assets into
cash or cash equivalents without significant loss and to raise additional funds
by increasing liabilities. Without proper liquidity management, the Company
would not be able to perform the primary function of a financial intermediary
and would, therefore, not be able to meet the needs of the communities it
serves.

Liquidity management is made more complex because different balance sheet
components are subject to varying degrees of management control. For example,
the timing of maturities of the investment portfolio is very predictable and
subject to a high degree of control at the time investment decisions are made.
However, net deposit inflows and outflows are far less predictable and are not
subject to nearly the same degree of control.


                                      16
<PAGE>   17

                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

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

ACCOUNTING AND FINANCIAL REPORTING ISSUES

In February 1998, the Financial Accounting Standards Board released Statement
of Financial Accounting Standards (SFAS) 132, "Employers' Disclosures about
Pensions and Other Post-retirement Benefits." SFAS 132 amends SFAS 87, 88, and
106 and revises employer's disclosures about pensions and other post-retirement
benefit plans. It does not change the measurement or recognition of those
plans. At December 31, 1999, the Company was not affected by this Statement.

In June 1998, the Financial Accounting Standards Board released Statement of
Financial Accounting Standards (SFAS) 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS 133 requires that an entity recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure these instruments at fair values. The accounting for
changes in the fair value of a derivative depends on the intended use of the
derivative and the resulting designation. The Company generally does not
purchase derivative instruments or enter into hedging activities. This
Statement was effective for fiscal years beginning after June 15, 1999, but was
amended by SFAS 137.

The Company was not affected by Financial Accounting Standards Board Statements
134, 135 or 136.

In 1999, the Financial Accounting Standards Board released Statement of
Financial Accounting Standards (SFAS) 137, "Accounting for Derivative
Instruments and Hedging Activities-Deferral of the Effective Date of FASB
Statement No. 133." As stated, this Statement delays the effective date for the
implementation of SFAS 133. This Statement is effective for fiscal years
beginning after June 15, 2000.

IMPACT OF INFLATION

Unlike most industrial companies, the assets and liabilities of financial
institutions such as the Company are primarily monetary in nature. Therefore,
interest rates have a more significant effect on the Company's performance than
do the effects of changes in the general rate of inflation and change in
prices. In addition, interest rates do not necessarily move in the same
direction or in the same magnitude as the prices of goods and services. As
discussed previously, management seeks to manage the relationships between
interest sensitive assets and liabilities in order to protect against wide
interest rate fluctuations, including those resulting from inflation.

INDUSTRY DEVELOPMENTS

On November 4, 1999, the U.S. Senate and House of Representatives each passed
the Gramm-Leach-Bliley Act, previously known as the Financial Services
Modernization Act of 1999. The Act was signed into law by President Clinton in
November 1999. Among other things, the Act repeals the restrictions on banks
affiliating with securities firms contained in sections 20 and 32 of the
Glass-Steagall Act. The Act also creates a new "financial holding company"
under the Bank Holding Company Act, which will permit holding companies to
engage in a statutorily provided list of financial activities, including
insurance and securities underwriting and agency activities, merchant banking,
and insurance company portfolio investment activities. The Act also authorizes
activities that are "complementary" to financial activities. The Act is
intended to grant to community banks certain powers as a matter of right that
larger institutions have accumulated on an ad hoc basis. Nevertheless, the Act
may have the result of increasing the amount of competition that the Company
faces from larger institutions and other types of companies. In fact, it is not
possible to predict the full effect that the Act will have on the Company.

From time to time, various bills are introduced in the United States Congress
with respect to the regulation of financial institutions. Certain of these
proposals, if adopted, could significantly change the regulation of banks and
the financial services industry. The Company cannot predict whether any of
these proposals will be adopted or, if adopted, how these proposals would
affect the Company.

THE MERGERS OF BAILEY AND ANCHOR AND ANCHOR AND CAROLINA FIRST

As of December 31, 1998, Bailey owned 22.2% of the Company. In March 1999,
Bailey was acquired by Anchor Financial Corporation (Anchor). Upon the
acquisition, Anchor made a number of commitments to the Company, which include
not exercising or attempting to exercise influence over the Company and not to
acquire additional stock. In January 2000, Anchor executed a definitive
agreement to merge with Carolina First Corporation (Carolina First). The
commitments made by Anchor will transfer to Carolina First once this merger is
consummated.


                                      17
<PAGE>   18

                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

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

THE YEAR 2000

Like many financial institutions, we rely on computers to conduct our business
and information systems processing. Industry experts were concerned that on
January 1, 2000, some computers would not be able to interpret the new year
properly, causing computer malfunctions. Although this did not happen, some
experts remain concerned that computer malfunctions may occur on other key
dates during 2000, such as October 10, 2000.

In accordance with bank regulatory guidelines, we developed and executed a plan
to ensure that our computer and telecommunication systems do not have these
Year 2000 problems. We rely on third party vendors to supply our computer and
telecommunication systems and other office equipment, and to process our data
and account information. Because we commenced operations in 1996, we had the
ability to choose vendors which we believed to be ready for the Year 2000. Our
Year 2000 plan extends to all of our vendors, including our vendors for core
data processing system, ATM hardware, account origination software, telephone
systems, and suppliers of office equipment, such as copy and fax machines.
Under our plan, we reviewed the test results, assurances, and warranties of all
of these vendors, and we believe that all these systems are Year 2000
compliant. Our technology and processing vendors work with many other financial
institutions, all of which, like us, are required by their bank regulators to
be Year 2000 compliant. Because our systems are substantially similar to those
used in many other banks, we believe that the scrutiny imposed by our
regulators and the banking industry in general have significantly reduced the
Year 2000 related risks we might otherwise have faced.

We incurred approximately $200,000 in costs through December 31, 1999 to
implement our Year 2000 plan. The majority of these costs were associated with
purchasing upgrades for computer hardware and software. Under our plan, we will
continue to monitor the situation throughout 2000. We are executing this plan
under the supervision of our chief financial officer, with oversight from our
board of directors.

Our agreements with each of our primary vendors include contractual assurances
and warranties regarding Year 2000 compliance. Some of these warranties are
limited by disclaimers of liability which specifically exclude special,
incidental, indirect, and consequential damages. These limitations could limit
our ability to obtain recourse against a vendor who is not Year 2000 compliant
by excluding damages for things such as lost profits and customer lawsuits.

We have also evaluated our worst case scenario and developed contingency plans
in case Year 2000 issues do arise. In the worst case, our systems would be down
for a period of time and we would be required to complete all transactions and
keep all records manually. We will have all required forms and procedures in
place for manual processing, and believe we can do this for at least a week
without serious disruption of our business. We do not believe we will encounter
any issues that cannot be resolved within this period. Any affected systems
which cannot be fixed will be replaced with alternatives, although this is
unlikely to be necessary.

The Year 2000 issue may also negatively affect the business of our customers,
but to date we are not aware of any material Year 2000 issues affecting them.
We include Year 2000 readiness in our lending criteria to minimize risk.
However, this will not eliminate the issue, and any financial difficulties our
customers' experience caused by Year 2000 issues could impair their ability to
repay loans to the bank.

We did not have any significant Year 2000 problems on January 1, 2000, and we
do not expect to experience any significant Year 2000 problems. We also believe
that we will be able to continue to operate the business if one or more of our
vendors experience unanticipated Year 2000 problems.


                                      18
<PAGE>   19

                                 [LETTERHEAD]
                              POST OFFICE BOX 1769
                         COLUMBIA, SOUTH CAROLINA 29202

                            TELEPHONE (803) 252-3000
                               FAX (803)252-2226

WILLIAM E. TOURVILLE, CPA                                  MEMBER AICPA SEC AND
HARRIET S. SIMPSON, CPA, CISA, CCP                            PRIVATE COMPANIES
R. JASON CASKEY, CPA                                          PRACTICE SECTIONS



                          INDEPENDENT AUDITORS' REPORT





The Board of Directors
RHBT Financial Corporation
Rock Hill, South Carolina


We have audited the accompanying consolidated balance sheets of RHBT Financial
Corporation (formerly Rock Hill Bank & Trust) as of December 31, 1999 and 1998
and the related consolidated statements of income, changes in stockholders'
equity and comprehensive income and cash flows for the years ended December 31,
1999, 1998 and 1997. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of RHBT Financial Corporation
(formerly Rock Hill Bank & Trust) as of December 31, 1999 and 1998 and the
results of their operations and cash flows for the years ended December 31,
1999, 1998 and 1997 in conformity with generally accepted accounting
principles.



/s/ Tourville, Simpson & Casky, L.L.P.

Tourville, Simpson, & Caskey, L.L.P.
Columbia, South Carolina
January 21, 2000


                                      19
<PAGE>   20

                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)
                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1999 AND 1998


<TABLE>
<CAPTION>
ASSETS                                                           1999                1998
                                                            -------------       -------------
<S>                                                         <C>                 <C>
Cash and cash equivalents:
 Cash and due from banks                                    $   3,680,173       $   3,491,891
 Federal funds sold and securities purchased
  under agreements to resell                                   16,425,000          24,505,000
                                                            -------------       -------------
                                                               20,105,173          27,996,891

Securities available-for-sale                                   7,832,559           7,414,072

Loans receivable                                              118,709,167          69,977,496
 Less allowance for loan losses                                (1,226,442)           (812,174)
                                                            -------------       -------------
  Loans, net                                                  117,482,725          69,165,322

Premises and equipment, net                                     1,672,998           1,252,001
Accrued interest receivable                                       825,111             607,753
Other assets                                                    1,529,614             625,682
                                                            -------------       -------------

       Total assets                                         $ 149,448,180       $ 107,061,721
                                                            =============       =============

LIABILITIES
Deposits:
 Non-interest bearing transaction accounts                  $   6,555,078       $   6,157,776
 Interest bearing transaction accounts                         34,659,500          23,220,435
 Savings                                                        4,426,598           3,175,902
 Time deposits $100,000 and over                               29,434,939          18,123,683
 Other time deposits                                           32,749,958          27,061,929
                                                            -------------       -------------
                                                              107,826,073          77,739,725

Securities sold under agreements to repurchase                  9,105,000          13,250,000
Federal funds purchased                                         5,000,000                  --
Advances from the Federal Home Loan Bank                       10,000,000                  --
Accrued interest payable                                          483,114             316,981
Other liabilities                                                 120,539             177,069
                                                            -------------       -------------
        Total liabilities                                     132,534,726          91,483,775
                                                            -------------       -------------

Commitments and contingencies (Notes 5 and 15)

STOCKHOLDERS' EQUITY
Common stock, $.01 par value at December 31, 1999
 and 1998; 10,000,000 shares authorized,
 1,720,813 and 1,720,313 shares issued and outstanding
 at December 31, 1999 and 1998, respectively                       17,208              13,763
Capital surplus                                                15,383,930          15,376,185
Retained earnings                                               1,564,652             180,077
Accumulated other comprehensive income (loss)                     (52,336)              7,921
                                                            -------------       -------------
      Total stockholders' equity                               16,913,454          15,577,946
                                                            -------------       -------------

      Total liabilities and stockholders' equity            $ 149,448,180       $ 107,061,721
                                                            =============       =============
</TABLE>


              The accompanying notes are an integral part of the
                      consolidated financial statements.


                                      20
<PAGE>   21

                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)
                       CONSOLIDATED STATEMENTS OF INCOME
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997


<TABLE>
<CAPTION>
INTEREST INCOME                                                  1999             1998            1997
                                                             -----------      -----------     -----------
<S>                                                          <C>              <C>             <C>
  Loans, including fees                                      $ 8,559,099      $ 4,975,776     $ 2,347,311
  Investment securities, taxable                                 443,593          371,516         438,192
  Federal funds sold and securities purchased
   under agreements to resell                                  1,171,709          986,611         212,885
                                                             -----------      -----------     -----------
                                                              10,174,401        6,333,903       2,998,388
                                                             -----------      -----------     -----------
INTEREST EXPENSE
  Time deposits $100,000 and over                              1,215,869          709,218         304,180
  Other deposits                                               3,175,623        2,137,947       1,233,173
  Securities sold under agreements to repurchase                 572,756          550,588          19,212
  Federal funds purchased                                          3,014               --              --
  Advances from the Federal Home Loan Bank                        89,711               --              --
                                                             -----------      -----------     -----------
                                                               5,056,973        3,397,753       1,556,565
                                                             -----------      -----------     -----------

NET INTEREST INCOME                                            5,117,428        2,936,150       1,441,823

Provision for loan losses                                        430,000          489,176         209,475
                                                             -----------      -----------     -----------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES            4,687,428        2,446,974       1,232,348
                                                             -----------      -----------     -----------

OTHER INCOME
  Service charges on deposit accounts                            228,017          140,490          82,774
  Other service charges, commissions and fees                    127,524           78,374          31,275
  Income from fiduciary activities                               205,882          111,604          32,404
  Gain (loss) on sales of securities available-for-sale               --               --            (474)
                                                             -----------      -----------     -----------
                                                                 561,423          330,468         145,979
                                                             -----------      -----------     -----------
OTHER EXPENSE
  Salaries and employee benefits                               1,268,507          751,744         528,858
  Occupancy expense                                              456,489          304,174         279,069
  Advertising and marketing expense                              125,756           28,032          65,829
  Other operating expense                                      1,248,160          658,499         417,004
                                                             -----------      -----------     -----------
                                                               3,098,912        1,742,449       1,290,760
                                                             -----------      -----------     -----------

INCOME BEFORE INCOME TAXES                                     2,149,939        1,034,993          87,567

Income tax expense                                               761,924          382,950          32,400
                                                             -----------      -----------     -----------

NET INCOME                                                   $ 1,388,015      $   652,043     $    55,167
                                                             ===========      ===========     ===========


BASIC EARNINGS PER SHARE                                     $       .81      $       .38     $       .03

DILUTED EARNINGS PER SHARE                                   $       .79      $       .38     $       .03
</TABLE>


              The accompanying notes are an integral part of the
                       consolidated financial statements.


                                      21
<PAGE>   22

                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                           AND COMPREHENSIVE INCOME
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997


<TABLE>
<CAPTION>
                                                            Common                                        Accumulated
                                                         Stock Amount                         Retained      Other
                                          Common   -------------------------    Capital       Earnings   Comprehensive
                                          Stock       Class A      Class B      Surplus       (Deficit)   Income (loss)    Total
                                       ----------  ------------ ------------ -------------  ------------  ------------- ------------
<S>                                    <C>         <C>          <C>          <C>            <C>           <C>          <C>
BALANCE,
 DECEMBER 31, 1996                     $           $      2,940 $      3,060 $   5,968,025  $   (527,133) $    26,757  $  5,473,649

Net income                                                                                        55,167                     55,167

Other comprehensive
 income, net of tax of $7,669                                                                                 (13,059)     (13,059)
                                                                                                                          ---------

Comprehensive income                                                                                                         42,108
                                       ----------  ------------ ------------ -------------  ------------  -----------  ------------

BALANCE,
 DECEMBER 31, 1997                                        2,940        3,060     5,968,025      (471,966)      13,698     5,515,757

Net income                                                                                       652,043                    652,043

Other comprehensive
 income, net of tax of $3,393                                                                                  (5,777)       (5,777)
                                                                                                                          ---------

Comprehensive income                                                                                                        646,266
                                                                                                                          ---------

Conversion of stock                         6,000        (2,940)      (3,060)

Proceeds from issuance of
 stock, net of direct costs                 7,763                                9,408,160                                9,415,923
                                       ----------  ------------ ------------ -------------  ------------  -----------  ------------

BALANCE,
 DECEMBER 31, 1998                         13,763                               15,376,185       180,077        7,921    15,577,946

Net income                                                                                     1,388,015                  1,388,015

Other comprehensive income,
 net of tax of $35,390                                                                                        (60,257)      (60,257)
                                                                                                                          ---------

Comprehensive income                                                                                                      1,327,758
                                                                                                                          ---------

Five-for-four stock split
 effected in the form of a
 25% stock dividend
 declared July 16, 1999                     3,440                                                 (3,440)

Exercise of stock options                       5                                    7,745                                    7,750
                                     ------------  ------------ ------------ -------------  ------------  -----------  ------------

BALANCE,
 DECEMBER 31, 1999                   $     17,208  $         -- $         -- $  15,383,930  $  1,564,652  $   (52,336) $ 16,913,454
                                     ============  ============ ============ =============  ============  ===========  ============
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.


                                      22
<PAGE>   23

                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997


<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES:                            1999               1998               1997
                                                             ------------       ------------       ------------
<S>                                                          <C>                <C>                <C>
   Net income                                                $  1,388,015       $    652,043       $     55,167
   Adjustments to reconcile net income to net
      cash provided by operating activities
         Provision for loan losses                                430,000            489,176            209,475
         Depreciation and amortization                            179,260             90,968             73,411
         Accretion and premium amortization                        24,510            (10,623)           (15,325)
         Amortization of net loan fees and costs                   52,654             36,925             19,858
         Amortization of organizational costs                      19,033             19,033             19,033
         Deferred income tax provision (benefit)                 (122,731)           (14,074)            29,385
         Loss on securities available-for-sale                         --                 --                474
         Gain on disposal of premises and equipment                    --             (6,983)                --
         Increase in interest receivable                         (217,358)          (345,374)           (55,019)
         Increase in interest payable                             166,133             99,413            119,547
         (Increase) decrease in other assets                     (174,612)           120,472             22,150
         Increase (decrease) in other liabilities                 (51,878)             9,574              6,816
                                                             ------------       ------------       ------------
            Net cash provided by operating activities           1,693,026          1,140,550            484,972
                                                             ------------       ------------       ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of securities available-for-sale                   (6,083,643)       (10,403,158)        (3,984,375)
  Maturities and calls of securities available-for-sale         5,545,000         10,000,000          4,500,000
  Proceeds from sales of securities available-for-sale                 --                 --          2,493,750
  Net increase in loans made to customers                     (48,800,057)       (34,248,121)       (23,180,894)
  Purchases of premises and equipment                            (600,257)          (962,482)           (12,687)
  Proceeds from disposal of premises and equipment                     --             11,500                 --
  Purchase of Community Financial Services, Inc. stock           (251,885)                --            (99,910)
  Purchase of Federal Home Loan Bank stock                       (343,000)          (157,000)                --
                                                             ------------       ------------       ------------
            Net cash used by investing activities             (50,533,842)       (35,759,261)       (20,284,116)
                                                             ------------       ------------       ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Net increase in demand deposits, interest
      bearing transaction accounts and savings accounts        13,087,063         12,804,452          6,118,150
   Net increase in certificates of deposit
      and other time deposits                                  16,999,285         19,654,403         16,563,505
   Net increase in securities sold under agreements
      to repurchase                                               855,000         11,975,000          1,275,000
   Advances from Federal Home Loan Bank                        10,000,000                 --                 --
   Issuance of common stock, net of direct costs                       --          9,415,923                 --
   Exercise of stock options                                        7,750                 --                 --
                                                             ------------       ------------       ------------
            Net cash provided by financing activities          40,949,098         53,849,778         23,956,655
                                                             ------------       ------------       ------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS           (7,891,718)        19,231,067          4,157,511

CASH AND CASH EQUIVALENTS, BEGINNING                           27,996,891          8,765,824          4,608,313
                                                             ------------       ------------       ------------

CASH AND CASH EQUIVALENTS, ENDING                            $ 20,105,173       $ 27,996,891       $  8,765,824
                                                             ============       ============       ============
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.


                                      23

<PAGE>   24

                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND CONSOLIDATION - RHBT Financial Corporation (the
Company), a bank holding company, and its subsidiary, Rock Hill Bank & Trust
(the Bank), provide banking services to domestic markets, principally in York
County, South Carolina. The consolidated financial statements include the
accounts of the parent company and its wholly-owned subsidiary after
elimination of all significant intercompany balances and transactions.

MANAGEMENT'S ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change
relate to the determination of the allowance for losses on loans, including
valuation allowances for impaired loans and the valuation of real estate
acquired in connection with foreclosures or in satisfaction of loans. In
connection with the determination of the allowances for losses on loans and
foreclosed real estate, management obtains independent appraisals for
significant properties. Management must also make estimates in determining the
estimated useful lives and methods for depreciating premises and equipment.

While management uses available information to recognize losses on loans and
foreclosed real estate, future additions to the allowances may be necessary
based on changes in local economic conditions. In addition, regulatory
agencies, as an integral part of their examination process, periodically review
the Company's allowances for losses on loans and foreclosed real estate. Such
agencies may require the Company to recognize additions to the allowances based
on their judgments about information available to them at the time of their
examination. Because of these factors, it is reasonably possible that the
allowances for losses on loans and foreclosed real estate may change materially
in the near term.

SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK - Most of the Company's
activities are with customers located within York County in South Carolina. The
types of securities in which the Company invests are discussed in Note 3. The
types of lending that the Company engages in are discussed in Note 4. The
Company does not have any significant concentrations to any one industry or
customer.

SECURITIES AVAILABLE-FOR-SALE - Securities available-for-sale are carried at
amortized cost and adjusted to estimated fair value by recognizing the
aggregate unrealized gains or losses in a valuation account. Aggregate market
valuation adjustments are recorded in stockholders' equity net of deferred
income taxes. Reductions in market value considered by management to be other
than temporary are reported as a realized loss and a reduction in the cost
basis of the security. The adjusted cost basis of investments
available-for-sale is determined by specific identification and is used in
computing the gain or loss upon sale.

LOANS - Loans are stated at their unpaid principal balance. Interest income is
computed using the simple interest method and is recorded in the period earned.

When serious doubt exists as to the collectibility of a loan or when a loan
becomes 90 days past due as to principal or interest, interest income is
generally discontinued unless the estimated net realizable value of collateral
exceeds the principal balance and accrued interest. When interest accruals are
discontinued, income earned but not collected is reversed.

Impaired loans are measured based on the present value of discounted expected
cash flows. When it is determined that a loan is impaired, a direct charge to
bad debt expense is made for the difference between the net present value of
expected future cash flows based on the contractual rate and discount rate and
the Company's recorded investment in the related loan. The corresponding entry
is to a related valuation account. Interest is discontinued on impaired loans
when management determines that a borrower may be unable to meet payments as
they become due.

LOAN FEES AND COSTS - Loan origination and commitment fees and certain direct
loan origination costs (principally salaries and employee benefits) are
deferred and amortized to income over the contractual life of the related loans
or commitments, adjusted for prepayments, using the level yield method. Net
deferred fees and costs associated with the origination of home equity lines of
credit are amortized to income over the contractual life of the lending
agreement using the straight-line method.


                                      24
<PAGE>   25

                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

ALLOWANCE FOR LOAN LOSSES - An allowance for possible loan losses is maintained
at a level deemed appropriate by management to provide adequately for known and
inherent risks in the loan portfolio. The allowance is based upon a continuing
review of past loan loss experience, current and future economic conditions
which may affect the borrowers' ability to pay and the underlying collateral
value of the loans. Loans which are deemed to be uncollectible are charged off
and deducted from the allowance. The provision for possible loan losses and
recoveries of loans previously charged off are added to the allowance.

PREMISES AND EQUIPMENT - Premises and equipment are stated at cost, less
accumulated depreciation. The provision for depreciation is computed by the
straight-line method, based on the estimated useful lives for buildings of 40
years and furniture and equipment of 5 to 10 years. Leasehold improvements are
being amortized over 20 years. The cost of assets sold or otherwise disposed
of, and the related allowance for depreciation is eliminated from the accounts
and the resulting gains or losses are reflected in the income statement when
incurred. Maintenance and repairs are charged to current expense. The costs of
major renewals and improvements are capitalized.

COMMUNITY FINANCIAL SERVICES, INC. STOCK AND FEDERAL HOME LOAN BANK STOCK -
Other assets include the Company's investment in the stock of Community
Financial Services, Inc. and the Federal Home Loan Bank. These stocks are
carried at cost because no quoted market value and no ready market exist. At
December 31, 1999 and 1998, the investment in Community Financial Services,
Inc. stock was $351,794 and $99,910, respectively. At December 31, 1999 and
1998, the investment in Federal Home Loan Bank stock was $500,000 and $157,000,
respectively.

INCOME TAXES - Income taxes are the sum of amounts currently payable to taxing
authorities and the net changes in income taxes payable or refundable in future
years. Income taxes deferred to future years are determined utilizing a
liability approach. This method gives consideration to the future tax
consequences associated with differences between financial accounting and tax
bases of certain assets and liabilities which are principally the allowance for
loan losses and depreciable premises and equipment.

RETIREMENT PLAN - The Company has a contributory 401(K) plan covering
substantially all employees. Under the plan, participants are permitted to make
discretionary contributions up to 15% of annual compensation. The Company
contributed $.50 per one dollar up to 6% of the employee's annual compensation
in 1999. Expenses charged to earnings for this plan for the year ended December
31, 1999 were $13,874. The Company waived its option of matching employee
contributions in 1998 and 1997.

STATEMENTS OF CASH FLOWS - For purposes of reporting cash flows in the
financial statements, the Company considers certain highly liquid debt
instruments purchased with a maturity of three months or less to be cash
equivalents. Cash equivalents include amounts due from banks, federal funds
sold, and securities purchased under agreements to resell. Generally, federal
funds are sold for one day periods. Securities purchased under agreements to
resell mature from one to thirty days.

During 1999, 1998 and 1997, interest paid on deposits and other borrowings
totaled $4,890,840, $3,298,340 and $1,437,018, respectively.

During 1999 and 1998, income taxes paid totaled $1,090,420 and $261,200,
respectively. There were no income tax payments in 1997.

Changes in the valuation account of securities available-for-sale, including
the deferred tax effects, are considered noncash transactions for purposes of
the statement of cash flows and are presented in detail in the notes to the
financial statements.

In June 1998, the Company converted its Class A and Class B shares of common
stock into one class of stock known as common stock. This was considered a
noncash transaction for purposes of the statement of cash flows.

OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS - In the ordinary course of business,
the Company enters into off-balance-sheet financial instruments consisting of
commitments to extend credit and letters of credit. These financial instruments
are recorded in the financial statements when they become payable by the
customer.


                                      25
<PAGE>   26

                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

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

EARNINGS PER COMMON SHARE - Basic earnings per share represents income
available to common stockholders divided by the weighted-average number of
common shares outstanding during the period. Diluted earnings per share
reflects additional common shares that would have been outstanding if dilutive
potential common shares had been issued, as well as any adjustment to income
that would result from the assumed issuance. Potential common shares that may
be issued by the Company relate solely to outstanding stock options and are
determined using the treasury stock method.

COMPREHENSIVE INCOME - The Company adopted SFAS 130, Reporting Comprehensive
Income, as of January 1, 1998. Accounting principles generally require that
recognized revenue, expenses, gains and losses be included in net income.
Although certain changes in assets and liabilities, such as unrealized gains
and losses on available-for-sale securities, are reported as a separate
component of the equity section of the balance sheet, such items, along with
net income, are components of comprehensive income. The adoption of SFAS 130
had no effect on the Company's net income or stockholders' equity.

The components of other comprehensive income and related tax effects are as
follows:

<TABLE>
<CAPTION>
                                                              Years Ended December 31,
                                                      ---------------------------------------
                                                         1999            1998         1997
                                                      ----------     ----------    ----------
<S>                                                   <C>            <C>           <C>
Unrealized holding gains on
 available-for-sale securities                        $ (95,647)     $  (9,170)    $ (20,254)
Reclassification adjustment for losses
 (gains) realized in income                                  --             --          (474)
                                                      ---------      ---------     ---------

Net unrealized gains                                    (95,647)        (9,170)      (20,728)

Tax effect                                               35,390          3,393         7,669
                                                      ---------      ---------     ---------

Net-of-tax amount                                     $ (60,257)     $  (5,777)    $ (13,059)
                                                      =========      =========     =========
</TABLE>

NOTE 2 - CORPORATE REORGANIZATION

On April 15, 1999, the stockholders of Rock Hill Bank & Trust approved a plan
of corporate reorganization under which Rock Hill Bank & Trust became a wholly
owned subsidiary of RHBT Financial Corporation, which was organized at the
direction of the Company's management. The original authorized common stock of
RHBT Financial Corporation is 10,000,000 shares with a par value of $.01 per
share. Pursuant to the reorganization, the Company issued 1,376,250 shares of
its common stock in exchange for all of the 1,376,250 outstanding common shares
of the Bank. The effective date of the reorganization was June 4, 1999 and was
accounted for as if it were a pooling of interests. As a result, the financial
statements for the year ended December 31, 1999 are presented as if the
reorganization had occurred on January 1, 1999. The accompanying financial
statements for the years ended December 31, 1998 are unchanged from the amounts
previously reported by Rock Hill Bank & Trust, except for amounts affected by
the stock split.


                                      26
<PAGE>   27

                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - CORPORATE REORGANIZATION - CONTINUED

The following is a summary of Rock Hill Bank & Trust's operations and
stockholders' equity for the period January 1, 1999 through June 3, 1999.

<TABLE>
<S>                                                                  <C>
  Interest income                                                    $    3,742,734
  Interest expense                                                        1,842,282
                                                                     --------------
  Net interest income                                                     1,900,452
  Provision for loan losses                                                 156,000
                                                                     --------------
  Net interest income after provision for loan losses                     1,744,452
  Other income                                                              183,067
  Other expense                                                           1,396,604
                                                                     --------------

  Net income                                                         $      530,915
                                                                     ==============

  Stockholders' equity, January 1, 1999                              $   15,577,946
  Net income for the period                                                 530,915
  Change in fair value during the period                                    (30,008)
                                                                     --------------

  Stockholders' equity, June 3, 1999                                 $   16,078,853
                                                                     ==============
</TABLE>

NOTE 3 - CASH AND DUE FROM BANKS

The Company is required by regulation to maintain average reserve balances with
the Federal Reserve Bank computed as a percentage of deposits. At December 31,
1999 and 1998, the required cash reserve balances were approximately $310,000
and $50,000, respectively. These requirements were satisfied by vault cash.

NOTE 4 - INVESTMENT SECURITIES

The amortized cost and estimated fair values of securities available-for-sale
at December 31, 1999 and 1998 were:

<TABLE>
<CAPTION>
                                                                                     1999
                                                         ------------------------------------------------------------
                                                                             Gross           Gross        Estimated
                                                           Amortized      Unrealized       Unrealized        Fair
                                                             Cost            Gains           Losses          Value
                                                         ------------    ------------     ------------   ------------
<S>                                                      <C>             <C>              <C>            <C>
U.S. Government agencies and corporations                $  7,915,633    $         --     $    (83,074)  $  7,832,559
                                                         ============    ============     ============   ============
</TABLE>


<TABLE>
<CAPTION>
                                                                                      1998
                                                         ----------------------------------------------------------------
                                                                             Gross               Gross        Estimated
                                                          Amortized       Unrealized           Unrealized        Fair
                                                             Cost            Gains               Losses          Value
                                                         ------------    ------------         ------------   ------------
<S>                                                      <C>             <C>                  <C>            <C>
U.S. Treasuries                                          $  1,498,568    $      5,807         $         --   $  1,504,375

U.S. Government agencies and corporations                   5,902,931           6,766                   --      5,909,697
                                                         ------------    ------------         ------------   ------------

                                                         $  7,401,499    $     12,573         $         --   $  7,414,072
                                                         ============    ============         ============   ============
</TABLE>

There were no sales of securities in 1999 or 1998.


                                      27
<PAGE>   28

                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - INVESTMENT SECURITIES - CONTINUED

The following is a summary of maturities of securities available-for-sale as of
December 31, 1999. The amortized cost and estimated fair values are based on
the contractual maturity dates. Actual maturities may differ from contractual
maturities because borrowers may have the right to call or prepay obligations
with or without penalty.

<TABLE>
<CAPTION>
                                                                                      Estimated
                                                                      Amortized          Fair
                                                                         Cost           Value
                                                                    ------------     ------------
<S>                                                                 <C>              <C>
Due within one year or less                                         $  3,915,633     $  3,904,752
Due after one year but within five years                               3,500,000        3,435,348
Due after five years but within ten years                                500,000          492,459
                                                                    ------------     ------------

                                                                    $  7,915,633     $  7,832,559
                                                                    ============     ============
</TABLE>

At December 31, 1999 and 1998, securities having an amortized cost of
$1,125,000 and $3,848,546 and an estimated market value of $1,108,085 and
$3,907,743, respectively, were pledged as collateral for securities sold under
agreements to repurchase and for other purposes as required and permitted by
law.

NOTE 5 - LOANS

Major classifications of loans receivable at December 31, 1999 and 1998 are
summarized as follows:

<TABLE>
<CAPTION>
                                                                                                1999              1998
                                                                                          --------------     --------------
<S>                                                                                       <C>                <C>
Real estate - construction                                                                $    5,419,664     $    1,297,979
Real estate - mortgage                                                                        57,996,758         39,106,586
Commercial and industrial                                                                     49,569,153         26,767,519
Consumer and other                                                                             5,723,592          2,805,412
                                                                                          --------------     --------------

   Total gross loans                                                                      $  118,709,167     $   69,977,496
                                                                                          ==============     ==============
</TABLE>

Included in commercial and industrial loans are $10,092,894 and $6,120,884 in
accounts receivable loans at December 31, 1999 and 1998, respectively. These
loans are secured by the accounts receivable of the loan customers of the
Company.

There were no loans in nonaccrual status and no loans ninety days or more past
due at December 31, 1999.

The Company identifies impaired loans through its normal internal loan review
process. Loans on the Company's problem loan watch list are considered
potentially impaired loans. These loans are evaluated in determining whether
all outstanding principal and interest are expected to be collected. Loans are
not considered impaired if a minimal delay occurs and all amounts due including
accrued interest at the contractual interest rate for the period of delay are
expected to be collected. At December 31, 1999, management has determined that
no impairment of loans existed that would have a material effect on the
Company's financial statements.

While management has determined that no impaired loans existed at December 31,
1999, it has identified loans to one borrower totaling $1,687,985 as
potentially impaired. Management plans to carefully monitor the collectibility
of these credits.


                                      28
<PAGE>   29

                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - LOANS - CONTINUED

Transactions in the allowance for loan losses for the years ended December 31,
1999, 1998 and 1997 are summarized below:

<TABLE>
<CAPTION>
                                                                        1999            1998            1997
                                                                    -----------     -----------     -----------

<S>                                                                 <C>             <C>             <C>
Balance, beginning of year                                          $   812,174     $   333,984     $   126,500
Provision charged to operations                                         430,000         489,176         209,475
Recoveries on loans previously charged off                                   --              66           3,722
Loans charged off                                                       (15,732)        (11,052)         (5,713)
                                                                    -----------     -----------     -----------

Balance, end of year                                                $ 1,226,442     $   812,174     $   333,984
                                                                    ===========     ===========     ===========

</TABLE>

The Company is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments consist of commitments to extend credit and standby
letters of credit. Commitments to extend credit are agreements to lend to a
customer as long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. A commitment involves, to
varying degrees, elements of credit and interest rate risk in excess of the
amount recognized in the balance sheets. The Company's exposure to credit loss
in the event of non-performance by the other party to the instrument is
represented by the contractual notional amount of the instrument. Since certain
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements. The
Company uses the same credit policies in making commitments to extend credit as
it does for on-balance-sheet instruments. Letters of credit are conditional
commitments issued to guarantee a customer's performance to a third party and
have essentially the same credit risk as other lending facilities.

Collateral held for commitments to extend credit and standby letters of credit
varies but may include accounts receivable, inventory, property, plant,
equipment and income-producing commercial properties.

The following table summarizes the Company's off-balance-sheet financial
instruments whose contract amounts represent credit risk as of December 31,
1999 and 1998:

<TABLE>
<CAPTION>
                                                                                               1999               1998
                                                                                          --------------     --------------
<S>                                                                                       <C>                <C>
Commitments to extend credit                                                              $   30,001,091     $   15,148,465
Letters of credit                                                                                240,679                 --
</TABLE>

Management is not aware of any significant concentrations of loans to classes
of borrowers or industries that would be affected similarly by economic
conditions. Although the Company's loan portfolio is diversified, a substantial
portion of its borrowers' ability to honor the terms of their loans is
dependent on the economic conditions in York County and surrounding areas.

NOTE 6 - PREMISES AND EQUIPMENT

Premises and equipment consisted of the following at December 31, 1999 and
1998:

<TABLE>
<CAPTION>
                                                                     1999                1998
                                                                  -----------         -----------
<S>                                                               <C>                 <C>
Buildings                                                         $   633,533         $        --
Leasehold improvements                                                 35,268              11,138
Furniture and equipment                                             1,369,281             725,250
Construction in progress                                                   --             701,437
                                                                  -----------         -----------
                                                                    2,038,082           1,437,825
Less, accumulated depreciation                                       (365,084)           (185,824)
                                                                  -----------         -----------

Premises and equipment, net                                       $ 1,672,998         $ 1,252,001
                                                                  ===========         ===========
</TABLE>

No material commitments existed at December 31, 1999 to construct or purchase
additional premises and equipment.


                                      29
<PAGE>   30

                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - DEPOSITS

At December 31, 1999, the scheduled maturities of certificates of deposit were
as follows:

<TABLE>
                  <S>                                     <C>
                  2000                                    $ 59,112,782
                  2001                                       2,820,438
                  2002                                         251,677
                                                          ------------
                                                          $ 62,184,897
                                                          ============
</TABLE>

At December 31, 1999 certificates of deposit included brokered deposits
totaling $12,094,139. Ten of these accounts had current balances of $100,000 or
more and totaled $1,900,049 at December 31, 1999. All remaining accounts have
balances of $99,000. The scheduled maturities of these deposits are as follows:
2000 - $11,205,120, and 2001 - $889,019.

NOTE 8 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase at December 31, 1999 mature on a
one to thirty day basis. Information concerning securities sold under
agreements to repurchase at December 31, 1999 is summarized as follows:

<TABLE>
<S>                                                              <C>
Average balance during the year                                  $ 13,223,192
Average interest rate during the year                                    4.33%
Maximum month-end balance during the year                        $ 14,000,000
</TABLE>

Under the terms of the agreements, the Company sells an interest in securities
issued by the United States Treasury and Government Agencies, and the Company
agrees to repurchase the same securities the following business day. The
securities sold under these agreements are the identical securities on the
Company's balance sheet captioned as securities purchased under agreements to
resell. As of December 31, 1999, the amortized cost and market value of the
securities held by the third-party for the underlying agreements were
$9,105,000 and $9,293,642, respectively.

NOTE 9 - ADVANCES FROM THE FEDERAL HOME LOAN BANK

Advances from the Federal Home Loan Bank were $10,000,000 at December 31, 1999.
Of these advances, $7,000,000 is scheduled to mature on September 30, 2009 and
bears a fixed rate of interest at 5.07%, and $3,000,000 is a daily rate credit
scheduled to mature on December 29, 2000 and bears a variable rate of interest
of 4.55%.

As collateral, the Company has pledged certain one to four family residential
loans. One to four family residential mortgage loans totaled $23,720,030 at
December 31, 1999. In addition, the Company's Federal Home Loan Bank Stock is
pledged to secure the borrowings.

NOTE 10 - STOCKHOLDERS' EQUITY

As discussed in Note 2, the Company acquired all of the common stock of the
Bank on June 4, 1999. The par value of the Company's common stock is $.01,
compared to $1.00 for that of the Bank.

On July 16, 1999, the Company's Board of Directors declared a five-for-four
stock split effected in the form of a 25% stock dividend payable on September
10, 1999 to stockholders of record on August 1, 1999. This resulted in the
issuance of 344,063 additional shares of common stock.

All per share and weighted average share amounts in the accompanying financial
statements have been restated to reflect this stock split.

The stockholders of the Company voted on April 16, 1998, to amend the Articles
of Incorporation to eliminate the two classes of common stock known as Class A
and Class B. A new class of common stock known simply as common stock was
created, and the number of authorized shares was increased to 10,000,000. Prior
to this vote, Bailey Financial Corporation (Bailey) owned all of the Class B
shares or 51% of the total outstanding common stock. On June 19, 1998, the
change in classes of stock became effective. Bailey exchanged its Class B
shares for common shares and terminated its right of first refusal agreements
and its right to elect separate directors.


                                      30

<PAGE>   31
                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - STOCKHOLDERS' EQUITY - CONTINUED

On July 28, 1998, the Company sold, through an underwritten public offering,
675,000 shares of its common stock at a public offering price of $13.25 per
share. On August 3, 1998, an additional 101,250 common shares were sold, also
at a public offering price of $13.25 per share, pursuant to an underwriter's
over-allotment provision. The Company temporarily invested the $9,415,923 net
proceeds from the offering in federal funds sold to other institutions and
investment securities. The Company has also used the net proceeds to fund loan
growth and to purchase and construct additional branch locations.

As a result of the secondary stock offering, Bailey's investment in the Company
decreased to 22.2% effective August 3, 1998. In September 1998, Bailey entered
into a definitive agreement with Anchor Financial Corporation (Anchor) to merge
and this merger was completed in March 1999. Anchor owned 22.2% of the
Company's common stock but agreed not to exercise or attempt to exercise
influence over the Company and not to acquire additional stock. In January
2000, Anchor entered into a definitive agreement with Carolina First
Corporation (Carolina First) to merge. This proposed merger is expected to be
voted on by the shareholders of Anchor and Carolina First during the second
quarter of 2000. The percentage and terms of ownership will remain the same for
Carolina First.

NOTE 11 - OTHER OPERATING EXPENSE

Other operating expense for the year ended December 31, 1999, 1998 and 1997,
are summarized below:

<TABLE>
<CAPTION>
                                                             1999             1998             1997
                                                          ----------        --------        --------
<S>                                                       <C>               <C>             <C>
Professional fees                                         $   69,258        $ 27,481        $ 39,364
Telephone                                                    104,001          60,594          39,117
Office supplies, forms and stationery                        138,765          89,476          57,613
Data processing                                              255,670         135,443          57,501
Credit card expenses                                          60,393          42,490          19,203
Postage and freight                                           52,505          34,107          18,395
Other                                                        567,568         268,908         185,811
                                                          ----------        --------        --------

                                                          $1,248,160        $658,499        $417,004
                                                          ==========        ========        ========
</TABLE>

NOTE 12 - INCOME TAXES

Income tax expense for the years ended December 31, 1999, 1998 and 1997 is
summarized as follows:

<TABLE>
<CAPTION>
                                                             1999             1998             1997
                                                          ----------        --------        --------
<S>                                                       <C>               <C>             <C>
Currently payable
  Federal                                                 $  825,394        $370,405        $     --
  State                                                       73,999          29,581              --
                                                          ----------        --------        --------
                                                             899,393         399,986              --
                                                          ----------        --------        --------

Deferred income taxes
  Federal                                                   (153,865)        (20,984)         20,594
  State                                                      (18,994)            555           4,100
                                                          ----------        --------        --------
                                                            (172,859)        (20,429)         24,694
                                                          ----------        --------        --------

Income tax expense                                        $  726,534        $379,557        $ 24,694
                                                          ==========        ========        ========

Income tax expense is allocated as follows:

  To continuing operations                                $  761,924        $382,950        $ 32,400
  To stockholders' equity                                    (35,390)         (3,393)         (7,706)
                                                          ----------        --------        --------

                                                          $  726,534        $379,557        $ 24,694
                                                          ==========        ========        ========
</TABLE>


                                       31

<PAGE>   32


                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - INCOME TAXES - CONTINUED

The gross amounts of deferred tax assets and deferred tax liabilities as of
December 31, 1999, 1998 and 1997 are as follows:


<TABLE>
<CAPTION>
                                                             1999             1998             1997
                                                          ----------        --------        --------
<S>                                                       <C>               <C>             <C>
Deferred tax assets:
  Allowance for loan losses                               $  407,677        $263,886        $ 69,722
  Net operating loss carryforward                                 --              --         165,008
  Organization costs                                          34,331          38,826          50,614
  Loans fees and costs                                        43,904          19,429              --
  Available-for-sale securities                               30,737              --              --
  Other                                                           --              --           2,074
                                                          ----------        --------        --------
    Total deferred tax assets                                516,649         322,141         287,418
                                                          ----------        --------        --------

Deferred tax liabilities:
  Accumulated depreciation                                    76,886          47,417          24,414
  Available-for-sale securities                                   --           4,652           8,045
  Loan fees and costs                                             --              --           2,345
                                                          ----------        --------        --------
    Total deferred tax liabilities                            76,886          52,069          34,813
                                                          ----------        --------        --------

    Net deferred tax asset                                $  439,763        $270,072        $252,605
                                                          ==========        ========        ========
</TABLE>

Deferred tax assets represent the future tax benefit of deductible differences
and, if it is more likely than not that a tax asset will not be realized, a
valuation allowance is required to reduce the recorded deferred tax assets to
net realizable value. Management has determined that it is more likely than not
that the entire deferred tax asset at December 31, 1999 will be realized, and
accordingly, has not established a valuation allowance.

A reconciliation between the income tax expense and the amount computed by
applying the federal statutory rate of 34% to income before income taxes for
the years ended December 31, 1999, 1998 and 1997 follows:


<TABLE>
<CAPTION>
                                                             1999             1998             1997
                                                          ----------        --------        --------
<S>                                                       <C>               <C>             <C>
Tax expense at statutory rate                             $  730,980        $351,898        $ 29,773
State income tax, net of federal
  income tax benefit                                          29,846          10,246           4,100
Other, net                                                     1,098          20,806          (1,473)
                                                          ----------        --------        --------
                                                          $  761,924        $382,950        $ 32,400
                                                          ==========        ========        ========
</TABLE>

NOTE 13 - RESTRICTIONS ON SUBSIDIARY DIVIDENDS, LOANS OR ADVANCES

South Carolina banking regulations restrict the amount of dividends that can be
paid to shareholders. All of the Bank's dividends to RHBT Financial Corporation
are payable only from the undivided profits of the Bank. At December 31, 1999,
the Bank's undivided profits were $1,525,218. The Bank is authorized to pay
cash dividends up to 100% of net income in any calender year without obtaining
the prior approval of the Commissioner of Banking provided that the Bank
received a composite rating of one or two at the last Federal or State
regulatory examination. Under Federal Reserve Board regulations, the amounts of
loans or advances from the Bank to the parent company are also restricted.


                                       32

<PAGE>   33

                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - LEASES

The Company leases its main office building under an operating lease from the
Rock Hill Telephone Company. (See also Note 14). Rental expense for the years
ended December 31, 1999, 1998 and 1997 was $136,200, $136,200, and $136,200,
respectively. The initial lease term expires on May 12, 2001. The Company has
three successive options to renew the lease for a period of five years each, at
the then fair rental value of the property. There is no option to purchase the
building at the end of the lease. Currently, the monthly rental payment is
approximately $11,350. Future rental commitments for the years 2001 through
2004 are based on the assumption that at the end of the initial lease term, the
lease will be renewed under the same terms as the initial lease.

The Company leases the land for the Ebenezer office from a director. This
lease, which commenced on March 1, 1998, is for a term of twenty-five years and
expires on February 28, 2023. The Company has two successive options to renew
the lease for a period of five years each, at a rental rate to be determined by
both parties at that time. There is no option to purchase the land at the end
of the lease. Currently, the monthly rental payment is $1,628. Rental expense
for the years ended December 31, 1999, 1998 and 1997 was $19,536, $18,276 and
$5,000, respectively.

The Company also leases its Fort Mill/Tega Cay office building under an
operating lease from a third party. The February 8, 1999 lease has a
commencement date of July 1, 1999 and a term of fifteen years, expiring on
July 1, 2014. The Company has two successive options to renew the lease for a
period of five years each at the then fair rental value of the property. The
Company has the right of first refusal on the building. Currently, the monthly
rental payment is $8,094. Rental expense for the year ended December 31, 1999
was $40,470.

The estimated future minimum rental commitments under these noncancelable
leases for the next five years as of December 31, 1999 are:

<TABLE>

                      <S>                             <C>
                      2000                            $    252,864
                      2001                                 252,864
                      2002                                 252,864
                      2003                                 252,864
                      2004                                 252,864
                                                      ------------

                                                      $  1,264,320
                                                      ============
</TABLE>

NOTE 15 - RELATED PARTY TRANSACTIONS

Certain parties (principally certain directors and executive officers of the
Company, their immediate families and business interests) were loan customers
of and had other transactions in the normal course of business with the
Company. Related party loans are made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with unrelated persons and do not involve more than the
normal risk of collectibility. As of December 31, 1999 and 1998 the Company had
related party loans totaling $90,776 and $95,341, respectively. During 1999,
$58,000 of new loans were made to related parties and repayments totaled
$62,565.

As discussed in Note 13, the Company is leasing its main office building from
Rock Hill Telephone Company (the Telephone Company). In addition, the Telephone
Company sold communications equipment and provided telephone services to the
Company. Certain directors of the Company are also principal officers and
controlling shareholders of the Telephone Company. The amounts paid to the
Telephone Company for equipment and services for the years ended December 31,
1999, 1998 and 1997 were $190,122, $184,002, and $171,855, respectively.


                                       33

<PAGE>   34


                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 15 - RELATED PARTY TRANSACTIONS - CONTINUED

As discussed in Note 13, the Company is leasing the land on which the Ebenezer
office is located from a director. The amount paid to this director under the
operating lease was $19,536, $18,276, and $5,000 for the years ended December
31, 1999, 1998 and 1997, respectively.

Data processing, trust data processing, and other various services for the
Company were being provided by Anchor (who acquired Bailey in March 1999).
Anchor Financial Corporation owned 22.2% of the Company's common stock at
December 31, 1999. As discussed in Note 10, Bailey owned 22.2% of the Company's
common stock at December 31, 1998 and 51% of the common stock of the Company at
December 31, 1997. In September 1999, the Company contracted with an
independent third party to provide data processing. Trust data processing was
still provided by Anchor throughout 1999. The amount paid to Bailey, and its
successor Anchor, for the years ended December 31, 1999, 1998 and 1997 for all
services was $137,682, $134,295 and $52,016, respectively.

The Company has repurchase agreements with several customers affiliated with
Rock Hill Telephone Company totaling $3,825,000 and $3,820,000 at December 31,
1999 and 1998, respectively. As stated, certain directors of the Company are
also principal officers and controlling shareholders of the Telephone Company.

NOTE 16 - COMMITMENTS AND CONTINGENCIES

In the ordinary course of business, the Company may, from time to time, become
a party to legal claims and disputes. At December 31, 1999, management and
legal counsel are not aware of any pending or threatened litigation or
unasserted claims or assessments that could result in losses, if any, that
would be material to the financial statements.

NOTE 17 - REGULATORY MATTERS

The Company (on a consolidated basis) and the Bank are subject to various
regulatory capital requirements administered by the federal banking agencies.
Failure to meet minimum capital 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 and Bank's
financial statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Company and the Bank must meet
specific capital guidelines that involve quantitative measures of the Company's
assets, liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Company's capital amounts and
classification are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors. Prompt corrective action
provisions are not applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy
require the Company and the Bank to maintain minimum ratios of Tier 1 and total
capital as a percentage of assets and off-balance-sheet exposures, adjusted for
risk weights ranging from 0% to 100%. Tier 1 capital consists of common
stockholders' equity, excluding the unrealized gain or loss on securities
available-for-sale, minus certain intangible assets. Tier 2 capital consists of
the allowance for loan losses subject to certain limitations. Total regulatory
minimum requirements are 4% for Tier 1 and 8% for total risk-based capital.

The Company and the Bank are also required to maintain capital at a minimum
level based on quarterly average assets, which is known as the leverage ratio.
Only the strongest Banks are allowed to maintain capital at the minimum
requirement of 3%. All others are subject to maintaining ratios 1% to 2% above
the minimum.

As of December 31, 1999, the most recent notification from the Bank's primary
regulator categorized it as well-capitalized under the regulatory framework for
prompt corrective action. There are no conditions or events that management
believes have changed the Company's or Bank's category.


                                       34

<PAGE>   35

                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17 - REGULATORY MATTERS - CONTINUED

The following table summarizes the capital amounts and ratios and the
regulatory minimum requirements for the Company and the Bank at December 31,
1999 and for the Bank at December 31, 1998.

<TABLE>
<CAPTION>
                                                                                                           To Be Well
                                                                                                        Capitalized Under
                                                                              For Capital               Prompt Corrective
                                                  Actual                    Adequacy Purposes           Action Provisions
                                        ------------------------       ------------------------      ----------------------
                                          Amount          Ratio          Amount          Ratio         Amount        Ratio
                                        -----------      -------       ----------       -------      ----------     -------
<S>                                     <C>              <C>           <C>              <C>          <C>            <C>
DECEMBER 31, 1999

  THE COMPANY
    Total capital
      (to risk weighted assets)         $18,165,267       15.41%       $9,430,571         8.0%               N/A         --
    Tier 1 capital
      (to risk weighted assets)          16,938,825       14.37         4,715,286         4.0                N/A         --
    Tier 1 capital
      (to average assets)                16,938,825       11.48         5,901,418         4.0                N/A         --

  THE BANK
    Total capital
      (to risk weighted assets)         $18,114,643       15.37%       $9,427,632         8.0%       $11,784,540       10.0%
    Tier 1 capital
      (to risk weighted assets)          16,888,201       14.33         4,713,816         4.0          7,070,724        6.0
    Tier 1 capital
      (to average assets)                16,888,201       11.45         5,901,018         4.0          7,376,272        5.0

DECEMBER 31, 1998

  THE BANK
    Total capital
      (to risk weighted assets)         $16,344,122       21.99%       $5,947,324         8.0%       $ 7,434,155        10.0%
    Tier 1 capital
      (to risk weighted assets)          15,531,948       20.89         2,973,662         4.0          4,460,493         6.0
    Tier 1 capital
      (to average assets)                15,531,948       15.29         4,063,534         4.0          5,079,418         5.0
</TABLE>


                                       35

<PAGE>   36


                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18 - STOCK COMPENSATION PLAN

At the annual stockholders' meeting on April 15, 1999, the shareholders
approved the Company's 1999 Stock Incentive Plan which provides for the
granting of stock options and restricted stock of up to 247,725 shares,
adjusted for stock dividends of the Company's common stock, to officers,
employees, directors, advisers and consultants of the Company. The Company may
grant awards for a term of up to ten years from the effective date of grant.
The per-share exercise price will be determined by the Board of Directors, but
for incentive stock options the price will not be less than 100% of the fair
market value of a share of common stock on the date the option is granted. The
per-share exercise price of non-incentive stock options will not be less than
85% of the fair market value of a share on the effective date of grant. These
options each have a seven year vesting term, vesting 20% upon the date of grant
and 80% ratably over the remainder of the term.

As discussed in Note 1, the Company will continue to apply APB Opinion 25 and
related Interpretations in accounting for its stock compensation plan.
Accordingly, no compensation cost has been recognized for any options issued by
the Company. Had compensation cost for the Company's Stock Incentive Plan been
determined based on the fair value at the grant dates for awards under that
plan consistent with the method of FASB Statement 123, the Company's net income
and earnings per share would have been reduced to the pro forma amounts
indicated below:

<TABLE>
<CAPTION>
                                                                   1999
                                                               ------------
<S>                                                            <C>
Net Income:
    As reported                                                $  1,388,015
    Pro forma                                                     1,019,036

Basic earnings per share:
    As reported                                                $        .81
    Pro forma                                                           .59

Diluted earnings per share:
    As reported                                                $        .79
    Pro forma                                                           .58
</TABLE>

In calculating the pro forma disclosures, the fair value of options granted is
estimated as of the date granted using the Black- Scholes option pricing model
with the following weighted-average assumptions used for grants in 1999:
dividend yield of 0 percent for the year; expected volatility of 21 percent;
risk-free interest rates of 5.23 percent; and expected life of 10 years.

The weighted-average fair value of options, calculated using the Black-Scholes
option pricing model, granted during 1999 is $5.98.

A summary of the status of the Company's stock option plan as of December 31,
1999 dates is presented below:

<TABLE>
<CAPTION>
                                                                         1999
                                                         --------------------------------
                                                                         Weighted-Average
                                                            Shares        Exercise Price
                                                         ------------    ----------------
<S>                                                      <C>             <C>
Outstanding, at beginning of year                                  --       $
Granted                                                       207,658           12.80
Exercised                                                         500           12.40
Canceled                                                           --
                                                          -----------
Outstanding, at end of year                                   207,158           12.80
                                                          ===========
</TABLE>

Options exercisable at December 31, 1999 were 41,432.

At December 31, 1999 the outstanding stock options that were exercisable had a
weighted average remaining life of 9.20 years. All stock options that have been
issued by the Company have an average exercisable price of $12.80.


                                       36

<PAGE>   37


                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19 - UNUSED LINES OF CREDIT

As of December 31, 1999, the Company had unused lines of credit to purchase
federal funds from unrelated banks totaling $22,600,000. These lines of credit
are available on a one to fourteen day basis for general corporate purposes.

NOTE 20 - EARNINGS PER SHARE

Net income per share - basic is computed by dividing net income by the weighted
average number of common shares outstanding. Net income per share - diluted is
computed by dividing net income by the weighted average number of common shares
outstanding and dilutive common share equivalents using the treasury stock
method. Dilutive common share equivalents include common shares issuable upon
exercise of outstanding stock options.

<TABLE>
<CAPTION>

                                                                       1999
                                                                   ------------
<S>                                                                <C>
NET INCOME PER SHARE - BASIC COMPUTATION:

Net income available to common shareholders                        $  1,388,015
                                                                   ============

Average common shares outstanding - basic                             1,720,527
                                                                   ============

Net income per share - basic                                       $        .81
                                                                   ============


NET INCOME PER SHARE - DILUTED COMPUTATION:

Net income available to common shareholders                        $  1,388,015
                                                                   ============

Average common shares outstanding - basic                             1,720,527

Incremental shares from assumed conversions:
  Stock options                                                          26,780
                                                                   ------------

Average common shares outstanding - diluted                           1,747,307
                                                                   ------------

Net income per share - diluted                                     $        .79
                                                                   ============
</TABLE>

NOTE 21 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of a financial instrument is the amount at which the asset or
obligation could be exchanged in a current transaction between willing parties,
other than in a forced or liquidation sale. Fair value estimates are made at a
specific point in time based on relevant market information and information
about the financial instruments. Because no market value exists for a
significant portion of the financial instruments, fair value estimates are
based on judgments regarding future expected loss experience, current economic
conditions, risk characteristics of various financial instruments, and other
factors.

The following methods and assumptions were used to estimate the fair value of
significant financial instruments:

Cash and Due from Banks - The carrying amount is a reasonable estimate of fair
value.

Federal Funds Sold and Securities Purchased Under Agreements to Resell -
Federal funds sold and securities purchased under agreements to resell are for
a term of one day and the carrying amount approximates the fair value.

Securities Available-for-Sale - The fair values equal the carrying amount which
is the quoted market price. If quoted market prices are not available, fair
values are based on quoted market prices of comparable securities.


                                       37

<PAGE>   38



                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 21 - FAIR VALUE OF FINANCIAL INSTRUMENTS - CONTINUED

Loans - For certain categories of loans, such as variable rate loans which are
repriced frequently and have no significant change in credit risk and credit
card receivables, fair values are based on the carrying amounts. The fair value
of other types of loans is estimated by discounting the future cash flows using
the current rates at which similar loans would be made to borrowers with
similar credit ratings and for the same remaining maturities.

Deposits - The fair value of demand deposits, savings, and money market
accounts is the amount payable on demand at the reporting date. The fair values
of certificates of deposit are estimated using a discounted cash flow
calculation that applies current interest rates to a schedule of aggregated
expected maturities.

Securities Sold Under Agreements to Repurchase and Federal Funds Purchased -
The carrying amount is a reasonable estimate of fair value because these
instruments typically have terms of one to fourteen days.

Advances from the Federal Home Loan Bank - The carrying amounts of variable
rate borrowings are reasonable estimates of fair value because they can be
repriced frequently. The fair values of fixed rate borrowings are estimated
using a discounted cash flow calculation that applies the Company's current
borrowing rate from the FHLB.

Accrued Interest Receivable and Payable - The carrying value of these
instruments is a reasonable estimate of fair value.

Off-Balance Sheet Financial Instruments - The carrying amount for loan
commitments which are off-balance sheet financial instruments approximates the
fair value since the obligations are typically based on current market rates.

The carrying values and estimated fair values of the Company's financial
instruments as of December 31, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                                                   1999                                  1998
                                                   ----------------------------------     ---------------------------------
                                                      Carrying           Estimated            Carrying         Estimated
                                                       Amount            Fair Value          Amount            Fair Value
                                                   --------------      --------------     --------------     --------------
<S>                                                <C>                 <C>                <C>                <C>
FINANCIAL ASSETS:
  Cash and due from banks                          $    3,680,173      $    3,680,173     $    3,491,891     $    3,491,891
  Federal funds sold and securities
    purchased under agreements to resell               16,425,000          16,425,000         24,505,000         24,505,000
  Securities available-for-sale                         7,832,559           7,832,559          7,414,072          7,414,072
  Loans                                               118,709,167         118,492,712         69,977,496         70,081,454
  Allowance for loan losses                            (1,226,442)         (1,226,442)          (812,174)          (812,174)
  Accrued interest receivable                             825,111             825,111            607,753            607,753

FINANCIAL LIABILITIES:
  Demand deposit, interest-bearing
    transaction, and savings accounts                  45,641,176          45,641,176     $   32,554,113     $   32,554,113
  Certificates of deposit and other time deposits      62,184,897          62,586,217         45,185,612         45,475,428
  Accrued interest payable                                483,114             483,114            316,981            316,981
  Securities sold under agreements to repurchase        9,105,000           9,105,000         13,250,000         13,250,000
  Federal funds purchased                               5,000,000           5,000,000                 --                 --
  Advances from the Federal Home Loan Bank             10,000,000           9,313,818                 --                 --

OFF-BALANCE SHEET FINANCIAL INSTRUMENTS:
  Commitments to extend credit                     $   30,001,091      $   30,001,091     $   15,148,465     $   15,148,465
  Letters of credit                                       240,679             240,679                 --                 --
</TABLE>


                                       38

<PAGE>   39


                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 22 - RHBT FINANCIAL CORPORATION (PARENT COMPANY ONLY)

Presented below are the condensed financial statements for RHBT Financial
Corporation (Parent Company Only).

                                 BALANCE SHEET
                               DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                                                                   1999
                                                                               -------------
<S>                                                                            <C>
ASSETS
  Cash                                                                         $     107,750
  Investment in banking subsidiary                                                16,862,829
  Other assets                                                                        36,472
                                                                               -------------

        Total assets                                                           $  17,007,051
                                                                               =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Due to banking subsidiary                                                      $      93,598
Stockholders' equity                                                              16,913,453
                                                                               -------------

        Total liabilities and stockholders' equity                             $  17,007,051
                                                                               =============
</TABLE>



                              STATEMENT OF INCOME
             FOR THE PERIOD JUNE 4, 1999 THROUGH DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                                                                    1999
                                                                                -------------
<S>                                                                             <C>
INCOME
  Dividends from banking subsidiary                                             $     100,000

EXPENSES
  Other expenses                                                                       93,598
                                                                                -------------
INCOME BEFORE INCOME TAXES AND EQUITY IN
  UNDISTRIBUTED EARNINGS OF BANKING SUBSIDIARY                                          6,402

Income tax benefit                                                                     36,472

Equity in undistributed earnings
  of banking subsidiary                                                             1,345,141
                                                                                -------------

NET INCOME                                                                      $   1,388,015
                                                                                =============
</TABLE>


                                       39

<PAGE>   40


                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 22 - RHBT FINANCIAL CORPORATION (PARENT COMPANY ONLY) - CONTINUED


                            STATEMENT OF CASH FLOWS
             FOR THE PERIOD JUNE 4, 1999 THROUGH DECEMBER 31, 1999


<TABLE>
<CAPTION>
                                                                             1999
                                                                        ------------
<S>                                                                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                                            $  1,388,015
   Adjustments to reconcile net income to net
    cash provided by operating activities
     Equity in undistributed earnings of
       banking subsidiary                                                 (1,345,141)
     Increase in other assets                                                (36,472)
     Increase in other liabilities                                            93,598
                                                                        ------------
            Net cash provided by operating activities                        100,000
                                                                        ------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Exercise of stock options                                                    7,750
                                                                        ------------
            Net cash provided by financing activities                          7,750
                                                                        ------------

INCREASE IN CASH                                                             107,750

CASH, BEGINNING                                                                   --
                                                                        ------------

CASH, ENDING                                                            $    107,750
                                                                        ============
</TABLE>


                                       40

<PAGE>   41


                           RHBT FINANCIAL CORPORATION
                       (FORMERLY ROCK HILL BANK & TRUST)


                                 CORPORATE DATA

ANNUAL MEETING:

The Annual Meeting of Stockholders of RHBT Financial Corporation will be held
at 5:30 p.m. on Thursday, April 27, 2000 at the Rock Hill Country Club, 600
Country Club Drive, Rock Hill, South Carolina.

<TABLE>
<CAPTION>

CORPORATE OFFICE:                                               GENERAL COUNSEL:
<S>                                                             <C>
315 East Main Street                                            Nelson Mullins Riley & Scarborough, L.L.P.
Rock Hill, South Carolina 29730                                 First Union Plaza, Suite 1400
Phone (803) 324-2500                                            999 Peachtree Street, NE
Fax (803) 324-2599                                              Atlanta, Georgia, 30309

STOCK TRANSFER DEPARTMENT:                                      INDEPENDENT AUDITORS:

First Citizens Bank & Trust Company of SC                       Tourville, Simpson & Caskey, L.L.P.
P.O. Box 29                                                     500 Taylor Street, Suite 101
Columbia, South Carolina 29202                                  P.O. Box 1769
                                                                Columbia, S.C. 29202
</TABLE>


STOCK INFORMATION:

The Common Stock of RHBT Financial Corporation is listed on The Nasdaq Stock
Market and is traded under the symbol "RHBT." The stock was traded on the
Over-The Counter Bulletin Board under the same symbol from July 22, 1998
through November 5, 1999. Market makers of the Company's stock include: Edgar
M. Norris & Co. Inc.; Trident Securities; Hill, Thompson, and Magid & Co. There
were approximately 1,100 shareholders as of December 31, 1999.


FORM 10-K

The Company will furnish upon request, free of charge, copies of the Annual
Report and the Company's Report to the Securities & Exchange Commission (Form
10-K) by contacting Patricia M. Stone, Chief Financial Officer, RHBT Financial
Corporation, P.O. Box 12037, Rock Hill, South Carolina 29731.

This Annual Report serves as the ANNUAL FINANCIAL DISCLOSURE STATEMENT
furnished pursuant to Part 350 of the Federal Deposit Insurance Corporations
Rules and Regulations. THIS STATEMENT HAS NOT BEEN REVIEWED, OR CONFIRMED FOR
ACCURACY OR RELEVANCE BY THE FEDERAL DEPOSIT INSURANCE CORPORATION.


                                       41