DutchFork Bancshares, Inc.

2002 ANNUAL REPORT




President's Message                                                           2

Business of DutchFork Bancshares, Inc.                                        3

Selected Financial and Other Data                                             4

Management's Discussion and Analysis                                          6

Report of Independent Auditor                                                16

Consolidated Balance Sheets as of September 30, 2002 and 2001                17

Consolidated Statements of Income for the Years Ended September
30, 2002 and 2001                                                            19

Consolidated Statements of Comprehensive Operations for the
Years Ended September 30, 2002 and 2001                                      21

Consolidated Statements of Changes in Stockholders' Equity for
the Years Ended September 30, 2002 and 2001                                  22

Consolidated Statements of Cash Flows for the Years Ended
September 30, 2002 and 2001                                                  23

Notes to Consolidated Financial Statements                                   25

Directors and Officers                                                       58

Corporate Information                                                        58

Stockholder Information                                                      59

Common Stock Information                                                     60

<PAGE>

                       [LETTERHEAD-DUTCHFORK BANCSHARES]


Chairman's Message

To Our Stockholders:

On  behalf  of the Board of  Directors,  officers  and  employees  of  DutchFork
Bancshares and its wholly owned subsidiary, Newberry Federal Savings Bank, it is
my privilege to present our annual  report for the fiscal year ending  September
2002.

As 2002 draws to a close, we see undeniable evidence of a world in conflict. The
increasing  instability in the Middle East and the worldwide threat of terrorism
continue to bear heavily on the state of our national economy.  These conditions
and the revelations of corporate malfeasance in some of our largest corporations
here at home add to our concern for the future.

There is no doubt that change is in the air. Our  government  is working hard to
protect the freedoms we cherish as a nation by aggressively  pursuing a peaceful
resolution  to the  international  and  internal  threats we face.  New laws and
regulatory  changes are constantly  evolving to restore public trust in business
reporting. As the promise of the New Year approaches,  we hope the efforts of so
many  people of goodwill  produce  long-term  rewards  for the United  States of
America.

In 2002 DutchFork  Bancshares strived to provide our shareholders with stability
and value in this world of change. We have maintained a strong balance sheet and
produced  significant  earnings  while serving our community in the manner it is
accustomed.

As the company  moves  forward,  our mission of providing  the highest  level of
personal  service to our customers  also remains  unchanged.  In order for us to
achieve our goals we are constantly focusing on our customers,  preserving clear
value for them by offering competitive  products and services.  Even in times of
change, our friends can expect and will receive our absolute quality support.

We will  continue  with our primary  business of serving  the  residential  real
estate  market  and the  banking  needs of small  businesses  and the  people of
Newberry  County.  Our  management  and  Board of  Directors  are  dedicated  to
enhancing shareholder value, serving our community,  and providing a challenging
and rewarding work environment for our employees.

We would like to express our sincerest  thanks to our  customers,  friends,  and
associates who have invested in DutchFork  Bancshares.  Your Board of Directors,
the officers, and staff will endeavor to protect and reward your investment.

Sincerely,


/s/ J. Thomas Johnson
---------------------
J. Thomas Johnson
President and CEO
                                       2

<PAGE>


BUSINESS OF DUTCHFORK BANCSHARES, INC.

DutchFork  Bancshares,  Inc. (the  "Company"),  a Delaware  corporation,  is the
unitary thrift holding company of Newberry  Federal Savings Bank ("the Bank"), a
federally  chartered  stock savings bank. On July 5, 2000, the Company  acquired
all of the common stock issued by the Bank upon its conversion  from a federally
chartered  mutual savings bank to a federally  chartered stock savings bank. The
Company's activities have been limited primarily to holding the common shares of
the Bank.

The Bank is a traditional savings bank, specializing in the acceptance of retail
deposits from the general public in the areas surrounding its three full-service
offices  and using  those  funds,  together  with  funds  from  operations,  the
conversion and borrowings,  to originate residential mortgage loans and consumer
loans and, to a lesser extent, construction, land and commercial business loans.
In addition,  the Bank invests significant funds in mortgage-backed  securities,
including  collateralized  mortgage  obligations.   The  Bank  could  experience
interest rate risk because of its significant  investment  securities portfolio.
The Bank's  revenues  are derived  principally  from  interest and fees on loans
originated  and  interest  and  dividends  on  investments  and  mortgage-backed
securities.

The Company, as a savings and loan holding company,  and the Bank are subject to
regulation,  examination and oversight by the Office of Thrift Supervision. As a
federally  chartered  stock  savings  bank,  the Bank is also subject to general
oversight by the Federal  Deposit  Insurance  Corporation and is a member of the
Federal Home Loan Bank of Atlanta.

                                       3
<PAGE>


SELECTED FINANCIAL AND OTHER DATA

The  following  tables  contain  certain  information  concerning  the financial
position  and  results  of  operations  of the  Company.  You  should  read this
information in conjunction with the consolidated  financial  statements included
in this report.
<TABLE>
<CAPTION>



                                                       At September 30,
                                        -----------------------------------------------
                                          2002         2001         2000         1999
                                        --------     --------     --------     --------
                                                       (In thousands)
<S>                                     <C>          <C>          <C>          <C>
Selected Consolidated Financial Data:
 Total assets                            $219,092     $249,832     $224,068     $211,151
 Cash and cash equivalents                 21,131        5,065        2,835        3,256
 Loans, net                                61,706       73,088       78,308       75,324
 Securities held-to-maturity:
    Mortgage-backed securities, net         2,835        3,374        3,874        4,466
    Investment securities, net                 50           50        1,141        1,141
 Securities available-for-sale:
    Mortgage-backed securities, net        64,628      111,688      105,965       96,885
    Investment securities, net             62,210       49,561       24,772       22,068
 Deposit accounts                         149,290      147,258      147,731      137,537
 Federal Home Loan Bank advances           35,000       60,000       35,000       39,240
 Other borrowings                            --           --          2,755        7,370
 Total equity                              33,477       34,066       31,296       16,701
 Repossessed assets                          --           --             22           14
 Nonperforming assets and
  troubled debt restructurings              1,135          459          185          243

</TABLE>

<TABLE>
<CAPTION>
                                                  Year Ended September 30,
                                          ------------------------------------------
                                           2002       2001        2000        1999
                                          -------    -------     -------     -------
                                            (In thousands, except per share amounts)
Selected Consolidated Operating Data:
<S>                                       <C>        <C>         <C>         <C>
     Total interest income                $12,888    $16,092     $15,529     $12,490
     Total interest expense                 6,876      9,078       9,093       7,490
                                          --------   --------    --------    --------
         Net interest income                6,012      7,014       6,436       5,000
     Provision for loan losses                 --        241         340         142
                                          --------   --------    --------    --------
         Net interest income after
            provision for loan losses       6,012      6,773       6,096       4,858
     Noninterest income                     2,666      4,283       1,118       1,155
     Noninterest expense                    5,523      5,592       4,695       4,228
                                          --------   --------    --------    --------
     Income before income taxes             3,155      5,464       2,519       1,785
     Provision for income taxes               692      2,042         890         771
                                          --------   --------    --------    --------
         Net income                       $ 2,463    $ 3,422     $ 1,629     $ 1,014
                                          ========   ========    ========    ========
     Income per share (basic)             $  2.17    $  2.46     $  1.13     $   N/A
                                          ========   ========    ========    ========
     Income per share (diluted)           $  2.09    $  2.44     $  1.13     $   N/A
                                          ========   ========    ========    ========

</TABLE>
                                       4
<PAGE>

<TABLE>
<CAPTION>

                                                               At or For the Year Ended September 30,
                                                       ---------------------------------------------------------
                                                        2002             2001             2000             1999
                                                       ------           ------           ------           ------
Selected Consolidated Operating
   Ratios and Other Data (1):
Performance Ratios:
<S>                                                      <C>              <C>              <C>              <C>
     Average yield on interest-earning assets            5.61%            7.22%            7.38%            6.94%
     Average rate paid on interest-bearing
        liabilities                                      3.33             4.78             4.64             4.50
     Average interest rate spread (2)                    2.28             2.44             2.74             2.44
     Net interest margin (3)                             2.62             3.15             3.06             2.78
     Ratio of interest-earning assets to
        interest-bearing liabilities                   111.09           117.35           107.45           108.16
     Net interest income after provision for
        loan losses to noninterest expense             108.84           121.13           129.84           114.91
     Noninterest expense as a percent of
        average assets                                   2.26             2.44             2.12             2.26
     Return on average assets                            1.00             1.49             0.74             0.54
     Return on average equity                            7.59            10.06             8.13             5.43
     Ratio of average equity to average
        assets                                          13.29            14.84             9.04             9.97
Regulatory Capital Ratios (4):
     Tangible capital ratio                             14.76            13.38            15.27             9.24
     Core capital ratio                                 14.76            13.38            15.27             9.24
     Risk-based capital ratio                           28.80            25.21            32.34            17.39
Asset Quality Ratios:
     Nonperforming loans and troubled
        debt restructurings as a percent
        of total loans (5)                               1.81             0.63             0.20             0.30
     Nonperforming assets and troubled
        debt restructurings as a percent
        of total assets (6)                              0.52             0.18             0.08             0.12
     Allowance for loan losses as a
        percent of total loans                           0.67             0.87             0.56             0.24
     Allowance for loan losses as a
        percent of nonperforming loans
        and troubled debt restructurings (5)            37.38           138.34           251.48            80.79
     Net loans charged-off to average
        interest-earning loans                           0.34             0.13             0.19             0.18
Number at end of period:
     Full service offices                                   3                3                4                4
     Mortgage loans                                     1,116            1,328            3,866            3,807
     Deposit accounts                                  13,571           14,275           16,906           16,266
---------------------------------------
</TABLE>



(1)  Asset  quality  ratios  and  regulatory  capital  ratios  are end of period
     ratios.  All  ratios  are based on  average  monthly  balances  during  the
     indicated periods.
(2)  The average  interest rate spread  represents  the  difference  between the
     weighted average yield on average  interest-earning assets and the weighted
     average cost of average interest-bearing liabilities.
(3)  The net interest  margin  represents  net  interest  income as a percent of
     average interest-earning assets.
(4)  The capital retios are the ratios for the Bank only.
(5)  Nonperforming loans consist solely of all nonaccrual loans.
(6)  Nonperforming  assets  consist  of  nonperforming   loans,   troubled  debt
     restructurings, other repossessed assets and real estate owned.

                                       5
<PAGE>


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

General

The following is management's analysis of the Company's  consolidated  financial
condition and  consolidated  results of operations as of and for the years ended
September  30,  2002 and 2001.  This  discussion  is  designed to provide a more
comprehensive  review of the operating results and financial position than could
be obtained from an examination of the consolidated  financial statements alone.
This analysis  should be read in  conjunction  with the  consolidated  financial
statements  and related  footnotes  and the  selected  financial  data  included
elsewhere in this report.

The Bank  provides  financial  services  from its  three  banking  locations  in
Newberry County,  South Carolina.  The Bank's  principal  business is attracting
deposits  from the general  public and using these funds to originate  loans and
invest in  mortgage-backed  and other  securities.  The Bank  also  maintains  a
significant  investment  securities  portfolio primarily because of the low loan
demand in its primary  market  area.  The Bank's  results of  operations  depend
primarily on net interest income,  which is the difference  between the interest
income earned on interest-earning assets, such as loans and securities,  and the
interest  expense  on  interest-bearing   liabilities,   such  as  deposits  and
borrowings.  The Bank also earns  non-interest  income  primarily  from gains on
sales of  securities  and  service  charges  and other  fees  earned on  deposit
accounts  and  loans.  The Bank's  non-interest  expenses  primarily  consist of
employee  compensation and benefits,  occupancy  expense,  advertising and other
operating expenses.  Results of operations are also affected by general economic
and  competitive  conditions,  particularly  changes in market  interest  rates,
government  policies and  regulations.  The Bank exceeded all of its  regulatory
capital requirements at September 30, 2002.

In addition to serving  the  financial  service  needs of  consumers  within its
primary  market area,  the Bank has  demonstrated  its  commitment  to its local
communities  through  philanthropy.  Since 1990, it has made monetary  gifts and
donations totaling  approximately $2.1 million to various cultural,  educational
and civic  organizations  operating  within its primary  market area. The Bank's
targeted  gifts have been  investments  in the  community  primarily  to promote
economic growth and stability.  The relative economic health of the community is
directly  related  to the future  growth of the  business.  The Bank  intends to
continue its tradition of local community support.

The Company is not aware of any trends,  events or uncertainties  that will have
or are reasonably  likely to have a material  effect on its  liquidity,  capital
resources or operations  except as discussed in this report.  The Company is not
aware of any current  recommendations by regulatory  authorities that would have
such an effect, if implemented.
                                       6
<PAGE>



Forward-Looking Statements

When used in this report or future  filings by the Company  with the  Securities
and Exchange Commission,  or other public or shareholder  communications,  or in
oral statements made with the approval of an authorized executive officer of the
Company,  the words or phrases  "will likely  result,"  "are expected to," "will
continue,"  "is  anticipated,"   "estimate,"  "project,"  "believe"  or  similar
expressions  are intended to identify  "forward-looking  statements"  within the
meaning of the Private  Securities  Litigation  Reform Act of 1995.  The Company
cautions  readers  not to  place  undue  reliance  on any  such  forward-looking
statements,  which speak only as of the date made,  and to advise  readers  that
various  factors,  including  but not limited to regional and national  economic
conditions,  changes in levels of market interest rates, credit risks of lending
activities and  competitive and regulatory  factors,  could affect the Company's
financial  performance  and could cause the Company's  actual results for future
periods to differ materially from those anticipated or projected.

The Company does not undertake,  and specifically  disclaims,  any obligation to
publicly  release  the  result  of  any  revisions  which  may  be  made  to any
forward-looking statements to reflect occurrence of anticipated or unanticipated
events or circumstances after the date of such statements.

Comparison of Financial Condition at September 30, 2002 and September 30, 2001

Total assets  decreased by $30.7  million from $249.8  million at September  30,
2001 to $219.1  million at September  30, 2002.  Loans  receivable  decreased by
$11.4 million, primarily due to repayments and payoffs due to refinancing. Loans
that were  refinanced at  historically  low fixed  interest rates have been sold
into the secondary  market at part of the Bank's  interest  rate risk  strategy.
Investment  securities  available-for-sale  increased  $12.6  million due to the
purchase of preferred  stocks of $6.1 million and the purchase of $16.3  million
in corporate bonds along with the sale of U.S. government and agency securities.
Mortgage-backed  securities   held-for-investment   decreased  $538,000  due  to
repayments  and  prepayments.   Mortgage-backed  securities   available-for-sale
decreased  $47.1  million as a result of sales and  purchases  of other types of
securities.  Management  invests  funds in  private  issues  of  mortgage-backed
securities to achieve  higher  yields and an overall  shorter  weighted  average
maturity  than may be obtained  solely  through  investment  in U.S.  government
guaranteed  mortgage-backed  securities.  The lack of a government  guarantee is
partially  offset by the sinking funds  attributable to most private  issues.  A
sinking fund is a  contractual  obligation  that requires the issuer to retire a
specified  portion of the  mortgage-backed  securities  debt each year.  Deposit
accounts  increased  $2.0 million from September 30, 2001 to September 30, 2002,
comprised mainly of shorter term certificates of deposit and checking  accounts.
The  decrease of $25  million in Federal  Home Loan Bank  advances  was due to a
payoff of an advance and is reflected in the overall decline in  mortgage-backed
securities.

                                       7

<PAGE>


At September 30, 2001, total equity was $34.1 million, which included retained
earnings of $25.6 million and an $87,000 unrealized gain. At September 30, 2002,
total equity was $33.5 million, a decrease of $589,000. Retained earnings at
September 30, 2002 were $28.1 million and the Company had $193,000 in unrealized
gains, net of taxes, on the investment securities and mortgage-backed securities
portfolios classified as available-for-sale. Because the Company has a
substantial portfolio of investment securities and mortgage-backed securities
available-for-sale, the market values of these securities fluctuate
significantly as a result of changes in market interest rates. Treasury stock
increased by $3.6 million due to the purchase of 162,180 shares of the Company's
common stock during fiscal 2002 at an average cost of $23.38 per share. On March
20, 2001, the Company approved a plan to repurchase up to $5,000,000 of its
common stock and, on September 20, 2001, the Company approved a plan to
repurchase up to 140,000 shares of common stock.

The decision to repurchase shares was made due to the low interest rate
environment and the belief that the repurchase of shares was the best use of
capital based upon the overall interest rate environment and current economic
conditions. Shares of treasury stock were used for options exercised for 7,803
shares of common stock in 2002 and may be used for options exercised in the
future. Currently, there are no other specific plans for the use of treasury
stock.


Comparison of Operating Results for the Years Ended September 30, 2002 and 2001

Net income.  Net income  decreased  from $3.4 million in 2001 to $2.5 million in
2002  primarily  as a result of a $1.8  million  gain on the sale of the  Chapin
branch in 2001.

Net interest income.  Net interest income decreased from $6.7 million in 2001 to
$6.0 million in 2002  primarily as a result of a decline of 1.61% in the average
yield on interest  earning assets.  This was partially offset by a 1.45% decline
in the average cost of funds. In addition, since average interest earning assets
exceeded average interest bearing  liabilities by $22.9 million,  the decline in
the yield on  average  interest  earning  assets had a greater  impact  than the
offset in the decline in the cost of funds.  The  decrease in the average  yield
was  significantly  impacted by preferred  stocks with a lower yield, but due to
the partial dividend exclusion for tax purposes,  it provided for a reduction in
income tax expense.

The Bank uses interest rate floors and interest rate caps from time to time to
limit and/or reduce exposure to fluctuations in interest rates on its assets and
liabilities (i.e., to assist in the management of interest rate risk on a
short-term basis). The Bank maintains significant investments subject to
interest rate adjustment and has liabilities such as certificates of deposit
that may have maturities of six months or longer. The Bank's risk with respect
to the floors and caps is the purchase price. The utilization of derivatives
resulted in the following impacts on net income for the periods presented:

                                                Year Ended September 30,
                                                -----------------------
                                                  2002            2001
                                                  ----            ----
Increase (decrease) in net income before tax    $263,828        $105,080

Provision for Loan Losses. The provision for loan losses decreased from $241,000
in 2001 to $-0- in 2002. The provision was determined by the level of the
allowance needed for loan losses based upon management's analysis of the current
quality of the loan portfolio including historical trends, significant problem
loans, current market value of real estate or other collateral and certain
economic and other factors affecting loans and real estate or collateral
securing these loans.

Residential mortgage loans declined from $44,600,000 at September 30, 2001 to
$28,400,000 at September 30, 2002, while changes in other loan categories
remained relatively constant. This decline in residential mortgage loans, along
with the fact that several significant loans were included in the allowance at
September 30, 2001 and charged-off in fiscal 2002 were important considerations
in the evaluation of the allowance needed at September 30, 2002.

The analysis of individual credit relationships is the first factor evaluation
process. Individual credit relationships in excess of $500,000 with specific
credit characteristics are evaluated for collectibility and potential impairment
by our independent loan review staff. Impaired loans are measured using the
approach specified by SFAS No. 114.

Commercial, residential, construction, small business and consumer loans
reviewed for impairment under SFAS 114, that are not considered impaired after
SFAS 114 review are considered on a portfolio basis as the second factor of the
evaluation process. These loans are evaluated as pools of loans based on payment
status for the consumer portfolio and an internal credit risk assessment system
for commercial and small business loans. An allowance is calculated for each
consumer loan pool using loss factors based on a monthly analysis of delinquency
trends and historical loss experience. Loss factors for the commercial and small
business loan pools are based on average historical loss experience. Various
credit quality trends, delinquencies, charge-offs, non-accruals, and
criticized/classified assets which may impact portfolio performance, are also
considered in determining loss factors for each loan pool.

The third factor in the evaluation process is the unallocated allowance which
considers factors including industry, borrower or collateral concentrations;
changes in lending policies and underwriting; current loan volumes; experience
of our lending staff; current general economic conditions; fraud risk; and risk
inherent in the loss estimation process of loan pools. While the allowance for
loan losses decreased as a percentage of total loans for the year ended
September 30, 2002, it was Management's best judgment as to the level needed at
that date based upon all relevant factors, including current economic
conditions.

At September 30, 2001, there were two significant loans with balances totaling
$117,000 that were determined to be impaired and were considered in the
allowance at that date, even though these loans were also evaluated as part of
the homogenous group of loans. These loans were charged off in fiscal 2002 and
represented approximately 50% of the charge offs for the fiscal year.




                                       8

<PAGE>


Noninterest  income.  Noninterest  income decreased by $1.6 million for the year
ended September 30, 2002,  primarily due to the $1.8 million gain on the sale of
the Chapin  branch and a $150,000  gain on the sale of loan  servicing in fiscal
2001.  These items were partially  offset by a $456,000  increase in the gain on
the sale of securities  and an $80,000 gain on the sale of loans in fiscal 2002.
The Bank manages its unrealized gains and losses through a continuing attempt to
match  maturities of assets and  liabilities  while seeking to maintain a profit
margin.  On a  quarterly  basis,  the Bank  conducts  a  detailed  review of its
interest rate risk exposure and the effects on capital of any  restructuring  of
the portfolio  that might be deemed  appropriate.  As part of this process,  the
Bank takes advantage of  opportunities to shorten asset maturities and has taken
steps to increase the percent of adjustable-rate  mortgage-backed securities. In
addition, the Bank attempts to extend the maturity of liabilities when borrowing
money and  occasionally  uses interest rate swaps to limit the effects of market
interest rate  fluctuations.  See Notes 1 and 14 to the  consolidated  financial
statements.

Noninterest expense. Noninterest expense totaled $5.5 million for the year ended
September 30, 2002 compared to $5.6 million for the same period in 2001. Changes
in  noninterest   expense  resulted   primarily  from  a  $273,000  increase  in
compensation  and  benefits  due to normal  salary  increases,  along with costs
associated with certain stock benefits to officers and employees for a full year
in  fiscal  2002,  partially  offset by a decline  in data  processing  costs of
$126,000, and a decline in contributions of $138,000.

Provision for Income Taxes.  The  provision for income taxes  decreased  between
2001 and 2002 as a result of lower income before  income  taxes,  and an overall
lower  effective  rate due to the dividend  exclusion  on preferred  stocks held
throughout the entire year ended September 30, 2002.

                                       9

<PAGE>


Average Balances, Interest and Average Yields/Costs

The following  table  presents  certain  information  for the periods  indicated
regarding  average  balances  of assets  and  liabilities,  as well as the total
dollar  amounts of interest  income  from  average  interest-earning  assets and
interest  expense  on average  interest-bearing  liabilities  and the  resulting
average  yields and costs.  The yields and costs for the periods  indicated  are
derived  by  dividing  income or expense by the  average  balances  of assets or
liabilities,  respectively,  for the periods  presented.  Average  balances were
derived from monthly balances.


<TABLE>
<CAPTION>

                                                                                     Year Ended September 30,
                                                                    ------------------------------------------------------------
                                           At September 30, 2002             2002                                2001
                                           ---------------------    ---------------------------     ----------------------------
                                                                                          Average                         Average
                                                         Yield/     Average               Yield/    Average                Yield/
                                             Balance      Rate      Balance    Interest    Rate     Balance    Interest     Rate
                                             -------      ----      -------    --------    ----     -------    --------     ----
<S>                                         <C>           <C>       <C>        <C>         <C>      <C>         <C>         <C>

Interest-earning assets:
     Loans receivable (1)                   $ 61,706      7.11%     $ 67,138   $ 4,953     7.38%    $ 72,347    $ 6,217     8.59%
     Mortgage-backed securities (2)           67,463      4.30       114,666     5,617     4.90      110,401      4,772     4.32
     Investment securities (3)                60,659      6.89        40,659     2,106     5.18       32,898      4,585    13.94
     Interest-bearing deposits                   590      1.87           816        23     2.82          767         51     6.65
     Federal funds sold                           --        --         5,389       135     2.51        3,020        180     5.96
     Other                                     1,011      3.86         1,011        54     5.34        3,441        287     8.34
                                            --------                --------    ------              --------    -------     ----
         Total interest-earning
            assets                           191,429      5.69       229,679    12,888     5.61      222,874     16,092     7.22
     Noninterest-earning assets               27,663                  14,431                         6,479
                                            --------                --------                        --------
         Total assets                       $219,092                $244,110                        $229,353
                                            ========                ========                        ========
Interest-bearing liabilities:
     Deposit accounts                       $149,290      2.43      $147,879     4,225     2.86     $140,532      6,629     4.72
     Federal Home Loan Bank
        advances                              35,000      5.73        57,917     2,630     4.54       47,500      2,385     5.02
     Other borrowings                           --          --           952        21     1.97        1,891         64     3.38
                                            --------                --------    ------              --------    -------     ----
         Total interest-bearing
            liabilities                      184,290      3.06%      206,748     6,876     3.33%     189,923      9,078     4.78%
     Noninterest-bearing
        liabilities                            1,325                   4,924                           5,402
                                            --------                --------                        --------
         Total liabilities                   185,615                 211,672                         195,325
     Total retained earnings                  33,477                  32,438                          34,028
                                            --------                --------                        --------
         Total liabilities and
            retained earnings               $219,092                $244,110                        $229,353
                                            ========                ========                        ========
Net interest-earning assets                 $  7,139                $ 22,931                        $ 32,951
Net interest income/interest
   rate spread (4)                              2.63%                          $ 6,012     2.28%                $ 7,014     2.44%
Net interest margin as a
   percentage of interest-
   earning assets                               3.14%                                      2.62%                            3.15%
Ratio of interest-earning
   assets to interest-bearing
   liabilities                                103.87%                                    111.09%                          117.35%
-------------------------------
</TABLE>


     (1)  Balances  are net of  deferred  loan  origination  costs,  undisbursed
          proceeds  of  construction  loans in process,  and include  nonaccrual
          loans.
     (2)  Includes mortgage-backed  securities  available-for-sale  and held-to
          -maturity.
     (3)  Includes investment securities available-for-sale and held-to-maturity
          on a tax-equivalent basis at September 30, 2002.
     (4)  Net  interest  rate  spread  represents  the  difference  between  the
          weighted  average  yield on  interest-earning  assets and the weighted
          average cost of interest-bearing liabilities.
     (5)  Net interest margin  represents net interest income as a percentage of
          average interest-earning assets.

                                       10
<PAGE>


Rate/Volume Analysis

The following  table  presents the effects of changing  rates and volumes on the
interest  income and  interest  expense of the Bank.  The rate column  shows the
effects  attributable  to changes in rate  (changes in rate  multiplied by prior
volume).  The volume column shows the effects  attributable to changes in volume
(changes in volume  multiplied by prior rate). The net column represents the sum
of the prior  columns.  For  purposes of this  table,  changes  attributable  to
changes in both rate and volume, which cannot be segregated, have been allocated
proportionately  based on the  absolute  value of the change due to rate and the
change due to volume.
<TABLE>
<CAPTION>


                                          Year Ended September 30, 2002           Year Ended September 30, 2001
                                                   Compared to                            Compared to
                                          Year Ended September 30, 2001           Year Ended September 30, 2000
                                        ---------------------------------      ---------------------------------
                                         Rate        Volume         Net          Rate       Volume         Net
                                        -------      -------      -------      -------      -------      -------
<S>                                     <C>          <C>          <C>          <C>          <C>          <C>
                                                                (Dollars in thousands)
Interest-earning assets:
     Loans                              $  (838)     $  (426)     $(1,264)     $   243      $  (208)     $    35
     Mortgage-backed securities (1)         655          190          845       (2,729)         213       (2,516)
     Investment securities (1)           (3,969)       1,490       (2,479)       1,764        1,198        2,962
     Interest-earning deposits with
        banks                               (31)           3          (28)          25          (46)         (21)
     Other borrowings                      (210)         165          (45)        (394)         507          113
     Other                                  (64)        (169)        (233)          (4)          (6)         (10)
                                         ------        -----       ------       ------        -----          ---
         Total interest-earning
            assets                       (4,457)       1,253       (3,204)      (1,095)       1,658          563

Interest-bearing liabilities:
     Deposit accounts                    (2,771)         367       (2,404)         299         (516)        (217)
     Federal Home Loan Bank
        advances                            112          133          245          845         (559)         286
     Federal funds borrowed                  33          (76)         (43)          69         (153)         (84)
                                         ------        -----       ------       ------        -----          ---
         Total interest-bearing
            liabilities                  (2,626)         424       (2,202)       1,213       (1,228)         (15)
                                         ------        -----       ------       ------        -----          ---
Increase (decrease) in net interest
   income                               $(1,831)     $   829      $(1,002)     $(2,308)     $ 2,886      $   578
                                        =======      =======      =======      =======      =======      =======

</TABLE>

     (1)  Includes  securities  available-for-sale  and  held-to-maturity  on  a
          tax-equivalent basis.

                                       11

<PAGE>


Asset and Liability Management

The  Bank  is  particularly  subject  to  interest  rate  risk  because  a large
percentage of the Bank's interest-earning assets have longer maturities than the
maturities of the Bank's interest-bearing liabilities,  which reduces the Bank's
income as interest  rates  rise.  In  addition,  the Bank's  capital  levels can
fluctuate  with  changes in market  interest  rates as a result of market  value
change  on its  investment  in  long-term  fixed  rate  U.S.  Government  agency
securities,  various  equity  securities,  certain deep  discounted,  fixed-rate
collateralized   mortgage  obligations  and  long-term  zero  coupon  bonds.  At
September 30, 2002, the Bank held $129.7 million of these  securities,  or 59.2%
of its total assets.

The Bank has sought to reduce the  exposure  of its earning to changes in market
interest rates by attempting to manage the mismatch  between asset and liability
maturities  and  interest  rates.  The Bank seeks to achieve  this  objective by
increasing  the interest  rate  sensitivity  of its  interest-earning  assets by
originating, for its portfolio,  adjustable-rate mortgage loans and shorter term
commercial  and consumer  loans,  as well as decrease  the average  lives of its
investment securities and mortgage-backed securities portfolios. The Bank relies
on retail  deposits as its primary source of funds.  The Bank also seeks to sell
conforming  fixed-rate  mortgage  loans with  maturities  of more than 15 years.
Management believes retail deposits,  compared to brokered deposits,  reduce the
effects of interest rate  fluctuations  because they generally  represent a more
stable  source of funds.  The Bank also intends to decrease  the  interest  rate
sensitivity  of its  interest-bearing  liabilities by attempting to increase the
maturity of its borrowings and deposit accounts.

In managing its  asset/liability  mix and in an effort to enhance net  interest,
the Bank,  depending on the relationship  between long- and short-term  interest
rates, market conditions and consumer preference,  often places more emphasis on
managing  short-term  net interest  margin than on better  matching the interest
rate  sensitivity of its assets and  liabilities.  Management  believes that the
increased net interest  income  resulting from a mismatch in the maturity of its
asset and  liability  portfolios  can,  during  periods of  declining  or stable
interest rates,  provide adequate  returns to justify the increased  exposure to
sudden  and  unexpected  increases  in  interest  rates.  See  Note  14  to  the
consolidated financial statements.

The Office of Thrift  Supervision  uses certain  assumptions  in  assessing  the
interest rate risk of savings associations. These assumptions relate to interest
rates,  loan  prepayment  rates,  deposit  decay rates and the market  values of
certain assets under differing  interest rate scenarios,  among others.  As with
any method of measuring interest rate risk, certain shortcomings are inherent in
the method of analysis  presented in the foregoing table. For example,  although
certain  assets  and  liabilities  may have  similar  maturities  or  periods to
repricing,  they may react in  different  degrees to changes in market  interest
rates.  Also, the interest rates on certain types of assets and  liabilities may
fluctuate in advance of changes in market interest  rates,  while interest rates
on other types may lag behind  changes in market  rates.  Additionally,  certain
assets,  such as adjustable  rate mortgage  loans,  have features which restrict
changes in interest rates on a short-term  basis and over the life of the asset.
Further,  if interest  rates change,  expected rates of prepayments on loans and
early  withdrawals  from  certificates  could deviate  significantly  from those
assumed in calculating the table.

                                       12

<PAGE>


The Bank primarily  utilizes an interest rate risk report prepared by the Office
of Thrift  Supervision  to review its level of interest rate risk. The following
table,  which was  prepared by the Office of Thrift  Supervision,  presents  the
changes in the Bank's net  portfolio  value at September  30,  2002,  that would
occur  upon an  immediate  change in  interest  rates  based on Office of Thrift
Supervision  assumptions,  but without effect to any steps that management might
take to  counteract  that change.  Net  portfolio  value is the present value of
expected cash flows from assets,  liabilities and off-balance sheet contracts. A
higher net portfolio value ratio indicates a lower level of interest rate risk.

<TABLE>
<CAPTION>

                                                                     Net Portfolio Value as a % of
                                                                               Present
                                                                           Value of Assets
          Change in                                                 -----------------------------
          Interest Rates               Net Portfolio Value             Net Portfolio
          In Basis Points             ----------------------            Value
          (Rate Shock)        Amount       Change      % Change          Ratio        Change (1)
          ------------        ------       ------       --------         -----       ----------
            <S>             <C>           <C>             <C>            <C>           <C>
               300          $ 28,705      $(5,248)        (15)%          13.56%        (149) bp
               200            29,730       (4,224)        (12)           13.80         (126) bp
               100            29,722       (4,231)        (12)           13.61         (145) bp
            Static            33,953                                     15.06
              (100)           31,779       (2,174)         (6)           14.04         (101) bp
----------------------------
</TABLE>


     (1)  Expressed in basis points.


As  presented  in the above  table,  based on the  assumptions  by the Office of
Thrift  Supervision  as of September 30, 2002, it is estimated that a sudden 200
basis point  increase in interest  rates would decrease the Bank's net portfolio
value by $4.2 million,  or 12% at that date.  The Net  Portfolio  Value ratio of
13.8% as indicated  in the above table at 200 basis points rate shock  satisfied
the 4%  requirement  imposed by the Office of Thrift  Supervision  in connection
with its approval of the Conversion.

Liquidity and Capital Resources

Liquidity  management  is  both a  daily  and  long-term  responsibility  of the
Company's  management.  The Bank adjusts its  investment  in liquid assets based
upon  management's  assessment of expected loan demand,  expected deposit flows,
yields available on interest-earning deposits and investment securities, and the
objectives of its asset/liability  management program.  Excess liquid assets are
invested  generally  in  interest-earning  overnight  deposits  and  short-  and
immediate-term  U.S.  Government  and  agency  obligations  and  mortgage-backed
securities.  If the Bank  requires  funds  beyond its ability to  generate  them
internally, it has additional borrowing capacity with the Federal Home Loan Bank
of Atlanta.

The desired  level of liquidity  for the Bank is  determined  by  management  in
conjunction  with  the  Asset/Liability  Committee  of the  Bank.  The  level of
liquidity  is  based  on  management's   strategic   direction  for  the  Bank's
commitments to make loans and the Asset/Liability  Committee's assessment of the
Bank's  ability to  generate  funds.  Historically,  sources of  liquidity  have
included net deposits to savings  accounts,  amortizations  and  prepayments  of
loans, Federal Home Loan Bank advances,  reverse repurchase agreements and sales
of securities and loans held for sale.

                                       13
<PAGE>


The Bank's most stable and traditional source of funding has been the attraction
and  retention  of deposit  accounts,  the success of which it believes is based
primarily on the strength and  reputation of the Bank,  effective  marketing and
rates paid on  deposit  accounts.  The Bank has a  significant  market  share of
deposits  in  Newberry  County.  Due to the  migration  of  traditional  savings
balances to  non-deposit  investment  products,  including  the equity  markets,
annuities and mutual funds,  the pool of retail  deposit funds held in financial
institutions  has  contracted  over time,  resulting in the Bank relying more on
other sources of funds.

The Bank's primary sources of funds are deposits and proceeds from principal and
interest payments on loans and mortgage-backed securities.  While maturities and
scheduled amortization of loans and securities are predictable sources of funds,
deposit  flows and  mortgage  prepayments  are  greatly  influenced  by  general
interest rates, economic conditions and competition.  The Bank generally manages
the pricing of its  deposits to be  competitive  and to  increase  core  deposit
relationships.  Other  primary  sources  of funds  include  borrowings  from the
Federal  Home  Loan  Bank  of  Atlanta,   principal   repayments  on  loans  and
mortgage-backed securities, reverse repurchase agreements and sales of loans.

The Bank's most liquid assets are cash and short-term investments. The levels of
these assets depend on the Bank's  operating,  financing,  lending and investing
activities  during any given period.  At September 30, 2002, cash and short-term
investments totaled $21.1 million.  The Bank has other sources of liquidity if a
need for additional funds arises,  including securities maturing within one year
and  the   repayment   of   loans.   The   Bank   may   also   sell   securities
available-for-sale,  and use federal funds  purchased and Federal Home Loan Bank
of Atlanta advances as sources of funds. At September 30, 2002, the Bank had the
ability to borrow an  additional  $41 million from the Federal Home Loan Bank of
Atlanta. On that date, the Bank had outstanding advances of $35 million.

At September 30, 2002, the Bank had  outstanding  commitments to originate loans
of $298,600,  of which $100,600 had fixed interest rates.  These loans are to be
secured by properties  located in its primary market area. The Bank  anticipates
that  it  will  have  sufficient  funds  available  to  meet  its  current  loan
commitments.  Loan  commitments  have, in recent  periods,  been funded  through
liquidity or through Federal Home Loan Bank borrowings.  Certificates of deposit
which are  scheduled  to mature in one year or less  from  September  30,  2002,
totaled $90  million.  Management  believes,  based on past  experience,  that a
significant  portion of such  deposits  will remain with the Bank.  Based on the
foregoing,  the Bank considers its liquidity and capital resources sufficient to
meet its outstanding short-term and long-term needs.

The Bank is subject to various  regulatory capital  requirements  imposed by the
Office of Thrift Supervision.  At September 30, 2002, the Bank was in compliance
with  all  applicable  capital  requirements.  See  Note 11 to the  consolidated
financial statements.

                                       14

<PAGE>


Impact of Inflation and Changing Prices

The  consolidated  financial  statements  and  related  data  presented  in this
prospectus have been prepared in conformity with generally  accepted  accounting
principles,  which require the  measurement of financial  position and operating
results  in terms of  historical  dollars,  without  considering  changes in the
relative  purchasing  power of money  over time due to  inflation.  Unlike  many
industrial  companies,  substantially  all of the assets and  liabilities of the
Company  are  monetary  in  nature.  As a  result,  interest  rates  have a more
significant  impact  of the  Company's  performance  than the  general  level of
inflation.  Over short periods of time,  interest rates may not necessarily move
in the same direction or in the same magnitude as inflation.

                                       15

<PAGE>


                        [CLIFTON D. BODIFORD LETTERHEAD]

                          Report of Independent Auditor


The Board of Directors
DutchFork Bancshares, Inc. and Subsidiaries
Newberry, South Carolina

I have  audited  the  accompanying  consolidated  balance  sheets  of  DutchFork
Bancshares,  Inc. and  Subsidiaries  as of September 30, 2002 and 2001,  and the
related consolidated statements of income, comprehensive operations,  changes in
stockholders'  equity,  and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audits.

I conducted the audits in accordance with generally  accepted auditing standards
in the United States of America. Those standards require that I plan and perform
the audits 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.  I believe that my audits provide a reasonable basis for
my opinion.

In my opinion,  the consolidated  financial statements referred to above present
fairly,  in  all  material   respects,   the  financial  position  of  DutchFork
Bancshares, Inc. and Subsidiaries at September 30, 2002 and 2001 and the results
of its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles in the United States of America.


                                                     BY: /s/ Clifton D. Bodiford
                                                        ------------------------
Columbia, South Carolina                                    Clifton D. Bodiford
October 31, 2002

                                       16
<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries
                           Consolidated Balance Sheets
<TABLE>
<CAPTION>

                                                           At September 30,
                                                         2002           2001
Assets                                               ------------   ------------
Cash and cash equivalents (Notes 1, 2
<S>    <C>                                           <C>            <C>
   and 12)                                           $ 21,130,629   $  5,065,459
Investments and mortgage-backed securities
  (Notes 1, 3, 7 and 12):
     Available-for-sale:
         Investments (cost of $61,497,869 and
           $49,340,193 at September 30, 2002
           and 2001 respectively)                      62,209,846     49,560,617
         Mortgage-backed securities (cost of
           $65,015,723 and $111,774,654 at
           September 30, 2002 and 2001
           respectively)                               64,627,627    111,688,476
     Held-to-maturity:
         Investments (fair value of
           $50,000 and $50,000 at
           September 30, 2002 and 2001
           respectively)                                   50,000         50,000
         Mortgage-backed securities (fair
           value of $2,879,938 and $3,379,484
           at September 30, 2002 and 2001
           respectively)                                2,835,439      3,373,893
Loans receivable (Notes 1, 4, 7, 10, and 12)           61,705,696     73,087,925
Premises, furniture and equipment, net (Notes
   1 and 5)                                             3,786,005      3,997,932
Accrued interest receivable:
     Loans and mortgage-backed securities
        (Note 1)                                          371,221        555,574
     Investments and other property                       489,164        506,155
Prepaid assets                                            574,318        486,219
Deferred tax asset (Notes 1 and 9)                        580,152        710,450
Other                                                     731,992        749,202
                                                     ------------   ------------
Total assets                                         $219,092,089   $249,831,902
                                                     ============   ============
</TABLE>

                                       17
<PAGE>

<TABLE>
<CAPTION>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries
                     Consolidated Balance Sheets (continued)


                                                                                        At September 30,
                                                                                     2002              2001
                                                                                -------------      -------------
<S>                                                                             <C>                <C>
Liabilities and stockholders' equity
Liabilities:
     Deposit accounts (Note 6, 12 and
      14)                                                                       $ 149,290,222      $ 147,257,904
     Federal Home Loan Bank advances
        (Notes 7 and 12)                                                           35,000,000         60,000,000
     Advances from borrowers for taxes
        and insurance                                                                  58,955             76,449
     Accrued income taxes payable                                                     174,707          2,389,519
     Accounts payable - securities                                                       --            4,854,687
     Accrued expenses                                                                 665,935            454,844
     Accrued interest payable                                                         381,900            716,440
     Other                                                                             43,001             16,237
                                                                                -------------      -------------
Total liabilities                                                                 185,614,720        215,766,080
                                                                                -------------      -------------

Commitments and contingencies (Note 10)

Stockholders' equity:
     Preferred stock, $.01 par value, 500,000 shares
        authorized and unissued                                                            --                 --
     Common stock, $.01 par value,
        4,000,000 shares authorized, 1,071,862
        and 1,201,156 issued and outstanding at
        September 30, 2002 and 2001, respectively                                      15,605             15,605
     Additional paid-in capital                                                    14,785,443         14,585,071
     Retained earnings, substantially restricted
        (Notes 9 and 11)                                                           28,065,262         25,602,497
     Accumulated other comprehensive income                                           193,388             87,391
     Treasury stock (331,377 and 177,000 shares at
        September 30, 2002 and 2001, respectively)                                 (7,468,233)        (3,851,845)
     Unearned 2001 Stock-Based Incentive Plan shares (51,187
        and 62,422 shares at September 30, 2002
        and 2001, respectively)                                                      (962,070)        (1,173,175)
     Unearned Employee Stock Ownership Plan shares                                 (1,152,026)        (1,199,722)
                                                                                  -----------        -----------
Total stockholders' equity                                                         33,477,369         34,065,822
                                                                                  -----------        -----------
Total liabilities and stockholders' equity                                      $ 219,092,089      $ 249,831,902
                                                                                =============      =============
</TABLE>

See accompanying notes.

                                       18
<PAGE>

<TABLE>
<CAPTION>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries
                        Consolidated Statements of Income


                                                                       Year Ended
                                                                       September 30,
                                                                   2002            2001
Interest income:                                                -----------     -----------
<S>                                                             <C>             <C>
     Loans receivable (Notes 1 and 4)                           $ 4,952,598     $ 6,217,245
     Investments (Notes 1 and 3)                                  2,111,381       4,771,709
     Mortgage-backed and related securities (Notes 1 and 3)       5,617,426       4,584,951
     Other interest-earning assets                                  206,269         518,328
                                                                 ----------      ----------
         Total interest income                                   12,887,674      16,092,233
                                                                 ----------      ----------

Interest expense:
     Interest expense on deposit accounts (Note 6)                4,224,980       6,628,430
     Federal Home Loan Bank advances (Note 7)                     2,629,901       2,385,467
     Other borrowings purchased                                      21,303          63,827
                                                                 ----------      ----------
         Total interest expense                                   6,876,184       9,077,724
                                                                 ----------      ----------

Net interest income                                               6,011,490       7,014,509
     Provision for loan losses (Notes 1 and 4)                         --           241,000
                                                                 ----------      ----------
     Net interest income after provision for loan losses          6,011,490       6,773,509
                                                                 ----------      ----------

Noninterest income:
     Gain on sale of securities, net                              1,738,830       1,282,363
     Gain on sale of branch (Note 20)                                  --         1,828,762
     Loan origination and commitment fees (Note 1)                  138,217         137,324
     Gain on sale of loans                                           79,623            --
     Gain on loan servicing                                            --           150,186
     Loan servicing fees                                              6,232          25,276
     Bank service charges                                           543,668         656,980
     Loan late charges                                               53,751          50,625
     Other                                                          105,190         151,251
                                                                 ----------      ----------
         Total noninterest income                                 2,665,511       4,282,767
                                                                 ----------      ----------
</TABLE>

                                       19

<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries
                  Consolidated Statements of Income (continued)


                                                    Year Ended
                                                   September 30,
                                              2002              2001
                                            ---------         ---------
Noninterest expense:
     Compensation and benefits              3,066,758         2,792,886
     Occupancy                                211,179           295,663
     SAIF deposit insurance premium            25,499            28,478
     Furniture and equipment                  303,368           308,573
     Professional fees                        293,751           299,222
     Telephone and postage                    198,110           209,709
     Insurance and related costs               30,494            39,481
     Marketing                                111,711           117,886
     Data processing                          166,140           292,212
     Supplies and printing                    126,078           183,103
     OTS assessments                           61,665            55,938
     Meetings                                  14,862            42,651
     Bank service charges                      79,620            42,047
     Loan expenses                             47,661            49,857
     Transaction account charges               56,481            82,039
     Automated teller system                   29,817            26,442
     Contributions                             11,409           148,981
     Other                                    688,669           576,762
                                           ----------        ----------
         Total noninterest expense          5,523,272         5,591,930
                                           ----------        ----------

     Income before income taxes             3,153,729         5,464,346

Provision for income taxes                    690,964         2,042,310
                                           ----------        ----------
Net income                                 $2,462,765        $3,422,036
                                           ==========        ==========

Net income per share (basic)               $     2.17        $     2.46
                                           ==========        ==========

Net income per share (diluted)             $     2.09        $     2.44
                                           ==========        ==========


See accompanying notes.

                                       20
<PAGE>
<TABLE>
<CAPTION>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries
               Consolidated Statements of Comprehensive Operations



                                                            Year Ended September 30,
                                                              2002              2001
                                                           ----------        ----------
<S>                                                        <C>               <C>
Net income                                                 $2,462,765        $3,422,036

Other comprehensive income, net of tax:
     Unrealized gains arising during the period,
        net of tax effect of $83,756 and $2,624,595
        for the years ended September 30, 2002
        and 2001, respectively                                105,997         4,304,067
                                                           ----------        ----------

Comprehensive income                                       $2,568,762        $7,726,103
                                                           ==========        ==========
</TABLE>

See accompanying notes.
                                       21
<PAGE>
<TABLE>
<CAPTION>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries
           Consolidated Statements of Changes in Stockholders' Equity
                                                                                                      Accumulated
                                                                                                         Other
                                Number of                        Additional           Retained        Comprehensive
                                 Shares        Common Stock    Paid-in Capital        Earnings        Income (Loss)
                               ----------      ------------    ---------------     ------------       ---------------
<S>                             <C>            <C>               <C>               <C>                <C>
Balance at September
   30, 2000                     1,560,550      $     15,605      $ 14,554,183      $ 22,180,461       $ (4,216,676)
Release of 3,834
   ESOP shares                       --                --              30,888              --                  --
Purchase of shares
   for incentive plan             (62,422)             --                --                --                  --
Purchase of treasury
   stock                         (177,000)             --                --                --                  --
Net income                           --                --                --           3,422,036                --
Change in net unrealized
   depreciation on
   investments available
   for sale (net of deferred
   and current income
   taxes of $2,624,595)              --                --                --                --            4,304,067
                                ---------      ------------      ------------      ------------       ------------
Balance at September
   30, 2001                     1,311,628            15,605        14,585,071        25,602,497             87,391
Release of 13,848
   ESOP shares                       --                --             226,220              --                 --
Shares issued for
   incentive plan                  11,235              --             (26,430)             --                 --
Options purchased                   7,803              --             (47,305)             --                 --
Purchase of treasury
   stock                         (162,180)             --                --                --                 --
Net income                           --                --                --           2,462,765               --
Tax benefit from stock
   options                           --                --              47,887              --                 --
Change in net unrealized
   depreciation on
   investments available
   for sale (net of deferred
   and current income
   taxes of $83,756)                 --                --                --                --              105,997
                                ---------      ------------      ------------      ------------       ------------
Balance at September
   30, 2002                     1,176,986      $     15,605      $ 14,785,443      $ 28,065,262       $    193,388
   === ====                     =========      ============      ============      ============       ============
See accompanying notes

<CAPTION>


                                                                Employee Stock       Total
                                                                  Ownership        Stockholders'
                           Treasury Stock     Incentive Plan      Plan Loan           Equity
                           --------------     ---------------    ---------------  --------------
<S>                           <C>              <C>               <C>               <C>
Balance at September
   30, 2000                   $      --        $       --        $ (1,238,058)     $ 31,295,515
Release of 3,834
   ESOP shares                       --                --              38,336            69,224
Purchase of shares
   for incentive plan                --          (1,173,175)             --          (1,173,175)
Purchase of treasury
   stock                       (3,851,845)             --                --          (3,851,845)
Net income                           --                --                --           3,422,036
Change in net unrealized
   depreciation on
   investments available
   for sale (net of deferred
   and current income
   taxes of $2,624,595)              --                --                --           4,304,067
                                ---------      ------------      ------------      ------------
Balance at September
   30, 2001                    (3,851,845)       (1,173,175)       (1,199,722)       34,065,822
Release of 13,848
   ESOP shares                       --                --              47,696           273,916
Shares issued for
   incentive plan                    --             211,105              --             184,675
Options purchased                 175,567              --                --             128,262
Purchase of treasury
   stock                       (3,791,955)             --                --          (3,791,955)
Net income                           --                --                --           2,462,765
Tax benefit from stock
   options                           --                --                --              47,887
Change in net unrealized
   depreciation on
   investments available
   for sale (net of deferred
   and current income
   taxes of $83,756)                 --                --                --             105,997
                                ---------      ------------      ------------      ------------
Balance at September
   30, 2002                  $ (7,468,233)     $   (962,070)     $ (1,152,026)     $ 33,477,369
                              ============      ============      ============     ============

</TABLE>


                                       22
<PAGE>

<TABLE>
<CAPTION>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries
                      Consolidated Statements of Cash Flows

                                                                Year Ended September 30,
                                                                 2002             2001
Operating Activities                                         ------------    ------------

<S>                                                          <C>             <C>
Net income                                                   $  2,462,765    $  3,422,036
Adjustments to reconcile net income to net cash
   provided (used) by operating activities:
     Depreciation                                                 312,661         275,240
     Provision for losses                                            --           241,000
     Incentive plan shares issued                                 184,675            --
     (Gain) loss on sales of investments and mortgage-
         backed securities                                     (1,738,830)     (1,282,363)
     Net (gain) loss on sales on loans                            (79,623)           --
     Increase (decrease) in deferred loan origination fees        (13,150)        (85,248)
     Amortization of premiums (discounts) on investments,
        mortgage-backed securities and loans                     (488,405)     (1,438,624)
     Decrease (increase) in accrued interest receivable           201,344         424,490
     Decrease in prepaid and other assets                         (70,889)        261,629
     (Increase) decrease in deferred tax asset                     46,659        (144,095)
     Increase (decrease) in accrued interest payable             (334,540)       (143,791)
     Increase (decrease) in accounts payable and accrued
         expenses                                              (4,854,687)        (21,837)
     Increase (decrease) in other liabilities                  (1,929,070)     (1,322,160)
     Origination of loans held for sale                        (7,780,691)     (2,301,775)
     Proceeds from sales of trading securities                 14,429,631       1,002,340
     Purchases of trading securities                          (14,541,042)     (1,000,000)
     Proceeds from sales of loans held for sale                 7,850,314       2,034,775
                                                              ------------     -----------
Net cash (used) by operating activities                        (6,342,878)        (78,383)
                                                              ------------     -----------

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries
                Consolidated Statements of Cash Flows (continued)

                                                              Year Ended September 30,
                                                                2002            2001
Investing Activities                                       -------------    -------------

<S>                                                          <C>               <C>
Principal payments on mortgage-backed securities             111,233,979       55,339,376
Proceeds from maturities of securities                              --          1,091,000
Purchases of available-for-sale securities                  (214,362,400)    (216,141,558)
Proceeds from sales of available-for-sale securities         140,606,777      140,438,790
Net decrease in loans receivable                              11,405,379        5,330,888
Proceeds from sales of repossessed assets                           --             22,246
Proceeds from sales of premises, furniture and equipment            --            302,785
Purchases of premises, furniture and equipment                  (100,734)        (975,133)
                                                            ------------     ------------
Net cash provided (used) by investing activities              48,783,001      (14,591,606)
                                                            ------------     ------------

Financing Activities

Net  increase (decrease) in deposit accounts                   2,032,318         (472,765)
Proceeds from Federal Home Loan Bank advances                       --         25,000,000
Payments on Federal Home Loan Bank advances and
   other borrowings                                          (25,000,000)            --
Proceeds from other borrowings                                48,625,000       28,753,749
Repayments of other borrowings                               (48,625,000)     (31,440,000)
Release of ESOP shares                                           273,916           69,224
Exercise of stock options                                        128,262             --
Purchase of treasury stock                                    (3,791,955)      (3,851,845)
Unallocated incentive plan                                          --         (1,173,175)
Increase (decrease) in advances from borrowers for
   taxes and insurance                                           (17,494)          15,722
                                                            ------------     ------------
Net cash provided (used) by financing activities             (26,374,953)      16,900,910
                                                            ------------     ------------
Net increase in cash and cash equivalents                     16,065,170        2,230,921
Cash and cash equivalents at beginning of year                 5,065,459        2,834,538
                                                            ------------     ------------
Cash and cash equivalents at end of year                   $  21,130,629    $   5,065,459
                                                           =============    =============

Supplemental Disclosures of Cash Flow Information:

Cash paid during the year for:
      Interest                                             $   7,974,524    $   9,221,515
      Taxes                                                $   2,772,638    $   3,184,908
</TABLE>

See accompanying notes

                                       24
<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries
                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2002 and 2001

1.   Organization and Summary of Significant Accounting Policies

          Organization

          DutchFork  Bancshares,  Inc. (the  "Company") is a unitary savings and
          loan holding  company  formed for the purpose of acquiring and holding
          all of the  outstanding  stock of Newberry  Federal  Savings Bank (the
          "Bank"). The Bank is in the business of obtaining deposits in Newberry
          County and the surrounding  area and investing those deposits in loans
          and securities.

          Summary of Significant Accounting Policies

          (a) Principles of Consolidation

          The  consolidated  financial  statements  include the  accounts of the
          Company,  the  Bank  and  Inter-Community   Service   Corporation,   a
          subsidiary of the Bank (the "Service Corporation").  The activities of
          the  Service  Corporation  are the sale of  insurance  and  investment
          products. Significant intercompany balances and transactions have been
          eliminated upon consolidation.

          (b) Cash Equivalents

          For  the  purpose  of  presentation  in  the  consolidated   financial
          statements cash  equivalents are defined as those  investments  with a
          maturity of three months or less when purchased.

          (c) Trading Securities

          Government  bonds held  principally  for resale in the near term,  and
          mortgage-backed  securities  held  for  sale in  conjunction  with the
          Bank's mortgage banking activities,  are classified as trading account
          securities  and  recorded at their fair values.  Unrealized  gains and
          losses on trading account securities are included immediately in other
          income.

          (d) Securities Held to Maturity

          Bonds,  notes,  and  debentures  for which  the Bank has the  positive
          intent and ability to hold to maturity are reported at cost,  adjusted
          for premiums and  discounts  that are  recognized  in interest  income
          using the interest method over the period to maturity.



                                       25
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

1.   Organization and Summary of Significant Accounting Policies (continued)

          (e) Securities Available for Sale

          Available-for-sale securities consist of bonds, notes, debentures, and
          certain equity  securities not classified as trading  securities or as
          held-to-maturity securities.

          Unrealized holding gains and losses, net of tax, on available-for-sale
          securities  are  reported as a net amount in a separate  component  of
          equity until realized.

          Gains and  losses  on the sale of  available-for-sale  securities  are
          determined using the specific-identification method.

          Declines  in  the  fair  value  of  individual   held-to-maturity  and
          available-for-sale  securities  below  their  cost that are other than
          temporary have resulted in write-downs of the individual securities to
          their fair  value.  The  related  write-downs  have been  included  in
          earnings as realized losses.

          Premiums and  discounts are  recognized  in interest  income using the
          interest method over the period to maturity.

          (f) Loans Held for Sale

          Mortgage  loans  originated  and  intended  for sale in the  secondary
          market are carried at the lower of cost or estimated fair value in the
          aggregate.  Net unrealized  losses are recognized  through a valuation
          allowance by charges to income.

          (g) Loans Receivable

          Loans  receivable that  management  intends to hold until maturity are
          reported at their outstanding  principal adjusted for any charge-offs,
          the  allowance  for loan  losses,  and any  deferred  fees or costs on
          originated  loans and  unamortized  premiums or discounts on purchased
          loans.

          Discounts and premiums on purchased  residential real estate loans are
          amortized  to income  using the  interest  method  over the  remaining
          period to contractual maturity, adjusted for anticipated prepayments.

          Loan  origination  fees  and  certain  direct  origination  costs  are
          capitalized  and  recognized  as an  adjustment  of the  yield  of the
          related  loan.  The net  amount is  deferred  and  amortized  over the
          contractual life of the loan.

          The accrual of interest on impaired  loans is  discontinued  when,  in
          management's  opinion,  the borrower may be unable to meet payments as
          they become due. When  interest  accrual is  discontinued,  all unpaid
          accrued   interest  is  reversed.   Interest  income  is  subsequently
          recognized only to the extent cash payments are received.


                                       26
<PAGE>
                           DutchFork Bancshares, Inc.
                                and Subsidiaries

1.   Organization and Summary of Significant Accounting Policies (continued)

          (g) Loans Receivable (continued)

          The  allowance  for loan losses is  increased by charges to income and
          decreased by charge-offs  (net of recoveries).  Management's  periodic
          evaluation  of the  adequacy of the  allowance  is based on the Bank's
          past loan loss experience,  known and inherent risks in the portfolio,
          adverse  situations  that may affect the borrower's  ability to repay,
          the estimated value of any underlying collateral, and current economic
          conditions.

          For  impairment  recognized in accordance  with  Financial  Accounting
          Standards Board (FASB) Statement of Financial Accounting Standards No.
          114,  Accounting  by Creditors for  Impairment  of a Loan,  the entire
          change in present value of expected cash flows is reported as bad debt
          expense  in  the  same  manner  in  which  impairment   initially  was
          recognized  or as a reduction  in the amount of bad debt  expense that
          otherwise would be reported.

          (h) Foreclosed Real Estate

          Real  estate  properties   acquired  through,  or  in  lieu  of,  loan
          foreclosure are to be sold and are initially recorded at fair value at
          the  date  of  foreclosure   establishing  a  new  cost  basis.  After
          foreclosure,  valuations are periodically  performed by management and
          the real  estate is  carried at the lower of  carrying  amount or fair
          value,  less cost to sell.  Revenue and expenses from  operations  and
          changes in the valuation  allowance are included in loss on foreclosed
          real estate.

          (i) Income Taxes

          Deferred tax assets and liabilities are reflected at currently enacted
          income tax rates  applicable  to the period in which the  deferred tax
          assets or  liabilities  are  expected to be  realized  or settled.  As
          changes  in tax laws or rates are  enacted,  deferred  tax  assets and
          liabilities are adjusted through the provision for income taxes.

          (j) Premises and Equipment

          Land is carried at cost.  Bank premises,  and equipment are carried at
          cost,  less  accumulated  depreciation  computed  principally  by  the
          straight-line method.


                                       27

<PAGE>



                           DutchFork Bancshares, Inc.
                                and Subsidiaries


1.   Organization and Summary of Significant Accounting Policies (continued)

          (k) Financial Instruments

          The majority of derivative financial instruments held or issued by the
          Bank are held or issued for purposes other than trading.

          Interest-Rate  Exchange Agreements.  Interest-rate exchange agreements
          (swaps) used in  asset/liability  management  activities are accounted
          for using the accrual method. Net interest income (expense)  resulting
          from the  differential  between  exchanging  floating  and  fixed-rate
          interest  payments is recorded on a current basis.  Gains or losses on
          the sales of swaps used in asset/liability  management  activities are
          deferred  and  amortized  into  interest  income or  expense  over the
          maturity period of the swap.

          Financial Futures. Interest-rate futures contracts are entered into by
          the Bank as hedges against exposure to interest-rate  risk and are not
          for speculation purposes. Changes in the market value of interest-rate
          futures  contracts  are  deferred  while  the  contracts  are open and
          subsequently  amortized  into  interest  income  or  expense  over the
          maturity period of the hedged assets or liabilities after the contract
          closes.

          Other  Off-Balance-Sheet   Instruments.  In  the  ordinary  course  of
          business  the  Bank  has  entered  into  off-balance  sheet  financial
          instruments  consisting of commitments  to extend credit,  and standby
          letters of credit.  Such  financial  instruments  are  recorded in the
          financial statements when they are funded or related fees are incurred
          or received.

          Derivatives Used for Risk Management. On October 1, 2000, the Bank
          adopted SFAS No. 133, Accounting for Derivative Instruments and
          Hedging Activities, which establishes accounting and reporting
          standards for derivatives and hedging activities.

          Under SFAS 133, the Bank may designate a derivative as either a hedge
          of the fair value of a recognized fixed rate asset or liability or an
          unrecognized firm commitment ("fair value" hedge), or a hedge of a
          forecasted transaction or of the variability of future cash flows of a
          floating rate asset or liability ("cash flow" hedge). All derivatives
          are recorded as assets or liabilities on the balance sheet at their
          respective fair values with unrealized gains and losses recorded
          either in comprehensive income or in the results of operations,
          depending on the purpose for which the derivative is held.

          Changes in the fair value of a derivative that is designated and
          qualifies as a fair value hedge, along with the gain or loss on the
          hedged asset or liability that is attributable to the hedged risk, are
          recorded as other fee income in the results of operations. To the
          extent of the effectiveness of a hedge, changes in the fair value of a
          derivative that is designated and qualifies as a cash flow hedge are
          recorded in other comprehensive income. For all hedge relationships,
          ineffectiveness resulting from differences between the changes in fair
          value or cash flows of the hedged item and changes in fair value of
          the derivative are recognized as other fee income in the results of
          operations. The net interest settlement on derivatives designated as
          fair value or cash flow hedges is treated as an adjustment to the
          interest income or interest expense of the hedged assets or
          liabilities.

          At the inception of a hedge transaction, the Bank formally documents
          the hedge relationship and the risk management objective and strategy
          for undertaking the hedge. This process includes identification of the
          hedging instrument, hedged item, risk being hedged and the methodology
          for measuring ineffectiveness. In addition, the Bank assesses, both at
          the inception of the hedge and on an ongoing quarterly basis, whether
          the derivative used in the hedging transaction has been highly
          effective in offsetting changes in fair value or cash flows of the
          hedged item, and whether the derivative is expected to continue to be
          highly effective.

          The Bank discontinues hedge accounting prospectively when either it is
          determined that the derivative is no longer highly effective in
          offsetting changes in the fair value of a hedged item; the derivative
          expires or is sold, terminated or exercised; the derivative is
          de-designated because it is unlikely that a forecasted transaction
          will occur; or management determines that designation of the
          derivative as a hedging instrument is no longer appropriate.

          The Bank utilizes interest rate floors and caps to protect against
          short-term fluctuations in interest rates. These are not utilized as
          fair value hedges or cash flow hedges; therefore, they are not
          measured for effectiveness. The exposure to the Bank is the cost of
          the floor or cap, which is marked to market at each reporting period.

          (l) Fair Values of Financial Instruments

          The  following  methods  and  assumptions  were  used  by the  Bank in
          estimating fair values of financial instruments as disclosed herein:

          Cash and  short-term  instruments.  The  carrying  amounts of cash and
          short-term instruments approximate their fair value.

          Available-for-sale  and held-to-maturity  securities.  Fair values for
          securities,  excluding  restricted  equity  securities,  are  based on
          quoted  market  prices.  The  carrying  values  of  restricted  equity
          securities approximate fair values.

                                       28

<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

1.   Organization and Summary of Significant Accounting Policies (continued)

          (l) Fair Values of Financial Instruments (continued)

          Loans receivable.  For variable-rate loans that reprice frequently and
          have no  significant  change in credit risk,  fair values are based on
          carrying values.  Fair values for certain mortgage loans (for example,
          one-to-four family residential), credit-card loans, and other consumer
          loans are based on quoted market prices of similar loans  adjusted for
          differences  in loan  characteristics.  Fair values for impaired loans
          are  estimated  using  discounted  cash flow  analyses  or  underlying
          collateral values, where applicable.

          Deposit  liabilities.  The fair values  disclosed for demand  deposits
          are,  by  definition,  equal to the  amount  payable  on demand at the
          reporting date (that is, their carrying amounts). The carrying amounts
          of variable-rate, fixed-term money-market accounts and certificates of
          deposit  approximate  their fair values at the  reporting  date.  Fair
          values for  fixed-rate  certificates  of deposit are  estimated  using
          rates currently being offered for similar certificates.

          The fair values of the Bank's debt are estimated using discounted cash
          flow analyses based on the Bank's current incremental  borrowing rates
          for similar types of borrowing arrangements.

          Accrued interest. The carrying amounts of accrued interest approximate
          their fair values.

          Off-balance  sheet  instruments.  Fair  values  for  off-balance-sheet
          lending  commitments are based on fees currently charged to enter into
          similar  agreements,  taking into account the  remaining  terms of the
          agreements and the counterparties' credit standings.

          (m) Use of Estimates

          The financial  statements  are prepared in accordance  with  generally
          accepted  accounting  principles  which  require  management  to  make
          estimates  and  assumptions  that affect the  amounts  reported in the
          financial  statements  and  accompanying  notes.  Actual results could
          differ from those estimates.
                                       29
<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

1.   Organization and Summary of Significant Accounting Policies (continued)

          (m) Use of Estimates (continued)

          Material  estimates that are  particularly  susceptible to significant
          change relate to the determination of the reserve for loan losses. The
          estimation  process  includes  management's  judgment  as to  inherent
          losses  on  existing  loans  based on an  internal  review of the loan
          portfolio,  including an analysis of the borrowers'  current financial
          position,  the  consideration  of  current  and  anticipated  economic
          conditions and the effect on specific  borrowers.  In determining  the
          collectibility  of loans,  management also considers the fair value of
          underlying  collateral.  Various regulatory  agencies,  as an integral
          part of their  examination  process,  review the Bank's  allowance for
          loan losses. Such agencies may require the Bank to recognize additions
          to the allowance based on their judgments about information  available
          to them at the time of the examination.  Because of these factors,  it
          is  possible   that  the   allowance  for  loan  losses  could  change
          materially.

          (n) Reclassifications

          Certain  2001  amounts  have been  reclassified  to conform  with 2002
          classifications.

          (o) Marketing Expenses

          The  Bank  expenses  the  cost of  marketing  as  incurred.  Marketing
          expenses  totaled  $111,711 and $117,886 for the years ended September
          30, 2002 and 2001, respectively.

          (p) Disclosures Regarding Segments

          The Company  adopted SFAS No. 131,  "Disclosures  about Segments of an
          Enterprise and Related  Information" in fiscal year 1999. SFAS No. 131
          established  standards  for  the way  that  public  businesses  report
          information  about operating  segments in annual financial  statements
          and requires that those enterprises report selected  information about
          operating  segments in interim financial  reports to shareholders.  It
          also establishes  standards for related disclosures about products and
          services,  geographic areas and major  customers.  The Company adopted
          SFAS  No.  131  without  any  impact  on  its  consolidated  financial
          statements.

                                       30
<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

2. Cash and Cash Equivalents

     Cash and cash equivalents are as follows:

                                                     At September 30,
                                                    2002          2001
                                                 -----------   -----------
     Cash and due from banks                     $ 3,843,983   $ 4,668,431
     Interest bearing deposits                    17,286,646       397,028
                                                 -----------   -----------
                                                 $21,130,629   $ 5,065,459
                                                 ===========   ===========

3. Investments and Mortgage-Backed Securities

     Securities Available-for-Sale - The amortized cost, gross unrealized
     gains, gross unrealized losses and fair values of securities available
     for sale consisted of the following:
<TABLE>
<CAPTION>

                                                      At September 30, 2002
                                      -----------------------------------------------------------
                                                                        Gross           Gross
                                       Amortized      Unrealized      Unrealized        Fair
                                         Cost            Gains          Losses          Value
Bonds and notes:                     -----------     -----------     -----------     -----------
<S>                                   <C>             <C>             <C>             <C>
US government and agency
   securities                         $ 1,518,968     $    11,032     $      --       $ 1,530,000
  Corporate bonds                      16,337,243         913,041          25,613      17,224,671
                                      -----------     -----------     -----------     -----------
    Total bonds and notes              17,856,211         924,073          25,613      18,754,671
                                      -----------     -----------     -----------     -----------
Equity securities:
  Mutual funds                            982,212            --           103,326         878,886
  Preferred stock                      39,588,361         360,687         495,170      39,453,878
  Stock in Federal Home Loan Bank       3,000,000            --              --         3,000,000
  Other                                    71,085          51,326            --           122,411
                                      -----------     -----------     -----------     -----------
    Total equity securities            43,641,658         412,013         598,496      43,455,175
                                      -----------     -----------     -----------     -----------
Total investments                     $61,497,869     $ 1,336,086     $   624,109     $62,209,846
                                      ===========     ===========     ===========     ===========

Mortgage-backed securities:
  Government guaranteed               $61,622,723     $   909,251     $ 1,297,347     $61,234,627
  Private issues                        3,393,000            --              --         3,393,000
                                      -----------     -----------     -----------     -----------
Total mortgage-backed securities      $65,015,723     $   909,251     $ 1,297,347     $64,627,627
                                      ===========     ===========     ===========     ===========
</TABLE>
                                       31
<PAGE>
<TABLE>
<CAPTION>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

3. Investments and Mortgage-Backed Securities (continued)

                                                      At September 30, 2001
                                  ------------------------------------------------------------
                                                     Gross           Gross
                                  Amortized        Unrealized      Unrealized         Fair
                                     Cost             Gains          Losses           Value
<S>                               <C>             <C>             <C>             <C>
   Bonds and notes-US government  ------------    ------------    ------------    ------------
  and agency securities           $ 11,818,862    $     29,648    $    103,688    $ 11,744,822
                                  ------------    ------------    ------------    ------------
Equity securities:
  Mutual funds                         982,212            --           106,328         875,884
  Preferred stock                   33,468,034         413,479          64,013      33,817,500
  Stock in Federal Home Loan Bank    3,000,000            --              --         3,000,000
  Other                                 71,085          51,326            --           122,411
                                  ------------    ------------    ------------    ------------
    Total equity securities         37,521,331         464,805         170,341      37,815,795
                                  ------------    ------------    ------------    ------------
Total investments                 $ 49,340,193    $    494,453    $    274,029    $ 49,560,617
                                  ============    ============    ============    ============

Mortgage-backed securities:
  Government guaranteed           $103,421,912    $  5,439,298    $  5,697,935    $103,163,275
  Private issues                     8,352,742         172,459            --         8,525,201
                                  ------------    ------------    ------------    ------------
Total mortgage-backed securities  $111,774,654    $  5,611,757    $  5,697,935    $111,688,476
                                  ============    ============    ============    ============
</TABLE>

   Securities Held to Maturity - The amortized cost, gross unrealized gains,
   gross unrealized losses and fair value of securities held to maturity
   consisted of the following:
<TABLE>
<CAPTION>

                                                        At September 30, 2002
                                   -----------------------------------------------------------------
                                                                          Gross             Gross
                                     Amortized         Unrealized        Unrealized         Fair
                                       Cost              Gains            Losses            Value
<S>                                <C>                <C>                <C>             <C>
Equity securities:                 -------------      ------------       ----------      -----------
     Other                         $      50,000      $       --         $     --        $    50,000
                                   -------------      ------------       ----------      -----------
Mortgage-backed securities:
     Government guaranteed             2,835,439            44,499             --          2,879,938
                                   -------------      ------------       ----------      -----------
                                   $   2,885,439      $     44,499       $     --        $ 2,929,938
                                   =============      ============       ==========      ===========


<CAPTION>
                                                       At September 30, 2001
                                   -----------------------------------------------------------------
                                                                           Gross            Gross
                                     Amortized         Unrealized        Unrealized         Fair
                                       Cost              Gains             Losses           Value
<S>                                <C>                <C>                <C>             <C>
Equity securities:                 -------------      ------------       ----------      -----------
     Other                         $      50,000      $      --          $     --        $    50,000
                                   -------------      ------------       ----------      -----------
Mortgage-backed securities:
     Government guaranteed             3,373,893            27,408           21,817        3,379,484
                                   -------------      ------------       ----------      -----------
                                   $   3,423,893      $     27,408       $   21,817      $ 3,429,484
                                   =============      ============       ==========      ===========
</TABLE>
                                       32

<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

3. Investments and Mortgage-Backed Securities (continued)

     The  market  value of  municipal  securities  and other  securities  is not
     readily determinable, but approximates cost.

     At  September  30,  2002,  investments  with a book value of  approximately
     $8,879,000 were pledged as collateral for various deposits, and investments
     with a book value of $35,473,475 were pledged as collateral on Federal Home
     Loan Bank advances. At September 30, 2001, investments with a book value of
     approximately  $12,725,000 were pledged as collateral on various  deposits,
     and investments with a book value of $34,841,382 were pledged as collateral
     on Federal Home Loan Bank advances.

     Gross   realized   gains   and   gross   realized   losses   on   sales  of
     available-for-sale  securities were $1,743,006 and $4,176, respectively for
     the year ended  September 30, 2002. For the year ended  September 30, 2001,
     gross realized gains were $1,334,443 and realized losses were $52,080.

     Mortgage-backed  securities  are  deemed  to be due in the  final  year  of
     maturity.  The  scheduled  maturities  of  securities  (other  than  equity
     securities) were as follows:
<TABLE>
<CAPTION>


                                                                At September 30, 2002
                                          -------------------------------------------------------------------
                                             Held-to-Maturity Securities       Available-for-Sale Securities
                                          -------------------------------     -------------------------------
                                            Amortized           Fair            Amortized            Fair
                                              Cost              Value             Cost               Value
                                          -------------     -------------     ------------       ------------
     <S>                                  <C>               <C>               <C>                <C>
     Due in one year or less              $       --        $        --       $        --        $        --
     Due from one to five years                   --                 --         10,906,615         10,881,002
     Due from five to ten years                   --                 --                --                 --
     Due after ten years                      2,835,439         2,879,938       71,965,319         72,501,296
                                          -------------     -------------     ------------       ------------
                                          $   2,835,439     $   2,879,938     $ 82,871,934       $ 83,382,298
                                          =============     =============     ============       ============

<CAPTION>

                                                                At September 30, 2001
                                          -------------------------------------------------------------------
                                            Held-to-Maturity Securities       Available-for-Sale Securities
                                          -------------------------------     -------------------------------
                                            Amortized           Fair           Amortized            Fair
                                              Cost              Value            Cost               Value
                                          -------------     -------------     ------------       ------------
     <S>                                  <C>               <C>               <C>                <C>
     Due in one year or less              $        --       $        --       $  4,854,687       $  4,854,687
     Due from one to five years                    --                --                --                 --
     Due from five to ten years                    --                --            976,082            996,553
     Due after ten years                      3,423,893         3,429,484      117,762,747        117,582,058
                                          -------------     -------------      -----------      -------------
                                          $   3,423,893     $   3,429,484     $123,593,516       $123,433,298
                                          =============     =============     ============       ============
</TABLE>
                                       33
<PAGE>



                           DutchFork Bancshares, Inc.
                                and Subsidiaries

3. Investments and Mortgage-Backed Securities (continued)

     The Bank has adopted Statement of Financial  Accounting  Standards No. 115,
     Accounting  for Certain  Investments  in Debt and Equity  Securities  (FASB
     115).  Under the Statement,  debt securities that the Bank has the positive
     intent and ability to hold to maturity are classified as "held-to-maturity"
     securities and reported at amortized cost. Debt and equity  securities that
     are bought and held principally for the purpose of selling in the near term
     are  classified as "trading"  securities  and reported at fair value,  with
     unrealized  gains  and  losses  included  in  earnings.   Debt  and  equity
     securities  that are not classified as either  held-to-maturity  or trading
     securities are classified as  "available-for-sale"  securities and reported
     at fair value with  unrealized  gains and losses excluded from earnings and
     reported as a separate component of retained earnings.

     Investment in stock of the Federal Home Loan Bank of Atlanta is required by
     law of every Federally-insured savings institution.  No ready market exists
     for this stock and it has no quoted  market value.  However,  redemption of
     this stock has historically been at par value.

     The Bank, as a member of the Federal Home Loan Bank of Atlanta, is required
     to acquire and hold shares of capital  stock in the Federal  Home Loan Bank
     of Atlanta in an amount  equal to the greater of (i) 1.0% of the  aggregate
     outstanding  principal amount of residential  mortgage loans, home purchase
     contracts  and similar  obligations  at the beginning of each year, or (ii)
     1/20th of its  advances  (borrowings)  from the  Federal  Home Loan Bank of
     Atlanta. The Bank is in compliance with this requirement with an investment
     in Federal Home Loan Bank of Atlanta  stock of  $3,000,000 at September 30,
     2002.

                                       34
<PAGE>
<TABLE>
<CAPTION>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

4. Loans Receivable

     Loans receivable consisted of the following:

                                                            At September 30,
                                                       2002                2001
                                                   -------------       -------------
     <S>                                           <C>                 <C>
     Commercial real estate                        $   8,164,632       $   8,869,421
     Commercial-other                                  8,475,251           8,669,174
     Real estate construction                          3,493,438           2,277,765
     Residential mortgage - 1-4 family                28,369,889          44,620,542
     Multi-family                                        879,028              47,462
     Consumer loans                                   13,498,564          13,356,343
                                                   -------------       -------------
                                                      62,880,802          77,840,707
                                                   -------------       -------------
     Less:
     Allowance for losses                                424,322             634,518
     Loans in process                                    745,270           4,099,600
     Deferred loan origination fees, net                   5,514              18,664
                                                   -------------       -------------
                                                       1,175,106           4,752,782
                                                   -------------       -------------
     Loans receivable, net                         $  61,705,696       $  73,087,925
                                                   =============       =============
</TABLE>

     The  Bank's  loan  portfolio   consists   principally  of  adjustable  rate
     residential  first mortgage loans to individuals  and to builders of single
     family homes in South Carolina, primarily in Newberry County.

     Loans  receivable  at  September  30, 2002 and 2001  included  $277,000 and
     $267,000 of loans held for sale, respectively.

     Mortgage  loans include  $583,000 and $700,000  representing  participating
     interests in loans originated and serviced by other financial  institutions
     as of September 30, 2002 and 2001, respectively.

     Non-accrual loans are as follows:

                                                  At September 30,
                                               2002             2001
                                            ----------       ----------
     Non-accrual loans                      $  770,880       $  148,727
                                            ==========       ==========
     Interest income which would
       have been recognized under
       original terms                       $   70,813       $   11,898
     Interest income recognized                 56,458            8,879
                                            ----------       ----------
     Interest income not recognized          $  14,355       $    3,019
                                            ==========       ==========
                                       35

<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

4. Loans Receivable (continued)

     Mortgage loans at September 30, 2002 and 2001 are net of participations and
     whole loans sold and serviced for others in the amounts of  $1,805,349  and
     $2,603,986,  respectively. Servicing loans for others generally consists of
     collecting  mortgage  payments,  maintaining escrow accounts and disbursing
     payments to  investors.  Loan  servicing  income is recorded on the accrual
     basis and  includes  servicing  fees from  investors  and  certain  charges
     collected  from  borrowers,  such as late payment  fees.  Custodial  escrow
     balances  maintained  in  connection  with loans  serviced  for others were
     $17,032 and $25,577 at September 30, 2002 and 2001, respectively.

     Changes in the allowance for losses are summarized as follows:

                                 Year Ended       Year Ended
                                September 30,    September 30,
                                    2002             2001
                                  ---------        ---------
     Beginning balance            $ 634,518        $ 465,244
     Provision for losses           -                241,000
     Charge-offs                   (235,103)         (94,807)
     Recoveries                      24,907           23,081
                                  ---------        ----------
     Ending balance               $ 424,322        $ 634,518
                                  =========        ==========

     Restructured loans totaled approximately $364,134 and $310,043 at September
     30, 2002 and 2001, respectively.

     The Bank is not committed to lend  additional  funds to debtors whose loans
     have been modified.

     Loan activity for loans to executive officers and directors was as follows:

                                     Year Ended      Year Ended
                                    September 30,   September 30,
                                        2002            2001
                                      ---------       ---------
     Balance, beginning of period     $ 547,707       $ 588,597
     New loans                           18,401          25,929
     Repayments (net of advances)      (140,002)        (66,819)
                                      ---------       ---------
     Balance, end of period           $ 426,106       $ 547,707
                                      =========       =========

                                       36
<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

5. Premises, Furniture, and Equipment

     Premises, furniture and equipment are summarized as follows:

                                            At September 30,
                                        2002              2001
                                     ----------        ----------
     Land                            $1,275,748        $1,263,280
     Buildings and improvements       2,717,172         2,717,172
     Furniture and equipment          1,468,810         1,380,544
                                     ----------        ----------
                                      5,461,730         5,360,996
     Less accumulated depreciation    1,675,725         1,363,064
                                     ----------        ----------

     Premises, furniture and
        equipment, net               $3,786,005        $3,997,932
                                     ==========        ==========

     Depreciation  expense for the years ended  September  30, 2002 and 2001 was
     $312,661 and $275,240, respectively.

6. Deposit Accounts

     The  following is a comparative  summary of deposits and interest  rates by
     type:


                                             At September 30,
                                         2002              2001
                                     -------------     ------------
     NOW and money market:
       0.00% to 3.00%                $  31,330,549     $ 31,999,162
                                     -------------     ------------
     Savings: 0.27% to 2.50%            17,592,590       14,643,095
                                     -------------     ------------
     Certificates of deposit:
       0.00% to 2.00%                   12,459,560             --
       2.01% to 4.00%                   79,198,855       20,868,843
       4.01% to 5.00%                    5,828,005       38,606,732
       5.01% to 6.00%                    1,531,593       31,193,454
       6.01% to 7.00%                    1,207,633        9,434,070
       7.01% to 8.00%                      141,437          512,548
                                     -------------     ------------
     Total certificates of
       deposit                         100,367,083      100,615,647
                                     -------------     ------------
     Total deposit accounts          $ 149,290,222     $147,257,904
                                     =============     ============

     Weighted average interest rate
       of NOW and money market
       accounts                               0.85%            2.24%
                                     =============     ============

     The aggregate  amount of  short-term  CD's with a minimum  denomination  of
     $100,000 was approximately $34.6 million and $30.3 million at September 30,
     2002  and  2001,  respectively.  Non-interest  bearing  deposits  were  not
     material at September 30, 2002 and 2001. Deposits in excess of $100,000 are
     not insured. The Bank did not have any brokered deposits.
                                       37
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

6. Deposit Accounts (continued)

     The scheduled  maturities of  certificates of deposit at September 30, 2002
     are as follows:


     2003                                $  89,579,528
     2004                                    6,720,232
     2005                                    3,184,158
     2006                                      255,522
     2007                                      620,804
     Thereafter                                  6,839
                                         -------------
     Total certificates of deposit       $ 100,367,083
                                         =============

7. Federal Home Loan Bank Advances

     The Bank has an agreement for advances and security  agreement with blanket
     floating  lien  with the  Federal  Home  Loan  Bank  (FHLB).  Advances  are
     collateralized  by the  Bank's  investment  in stock in the  FHLB,  certain
     wholly owned first mortgage loans on 1-4 family dwelling that have not been
     delinquent 30 days or more during the most recent twelve month period,  and
     certain  investments.  Loans of $24,837,647  and investments of $35,473,475
     collateralized  the advances at September  30, 2002. At September 30, 2001,
     loans of $35,134,720  and investments of $34,841,382  collateralized  these
     advances.

     Advances from the FHLB consisted of the following:
                                                    At September 30,
                                                2002             2001
                                            ------------     ------------
     Contractual Maturity
     Within one year- adjustable rate       $   -            $ 25,000,000
     2008-fixed rate                         10,000,000        10,000,000
     2010-fixed rate                         25,000,000        25,000,000
                                            ------------     -------------
                                            $ 35,000,000     $ 60,000,000
                                            ============      ============
     Weighted average rate                          5.73%            4.44%
                                            ============      ============



                                       38
<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

8. Other Borrowings

     Federal funds and other borrowings generally mature within one to four days
     of the transaction  date. No securities have been pledged to  collateralize
     other borrowings since September 15, 1998.

     Information  concerning federal funds and other borrowings is summarized as
     follows:

                                                     Year Ended September 30,
                                                    2002               2001
                                                ------------      --------------
     Average balance during the period          $    952,184      $   1,034,658
     Average interest rate during the period            1.97%              4.84%
     Average interest rate at end of period              --                 --
     Maximum month end balances                 $ 19,335,000      $   3,490,000

9. Income Taxes

     The Company and subsidiaries file  consolidated  federal income tax returns
     on a fiscal year basis.

     Income tax expense is summarized as follows:

                                 Year Ended September 30,
                                2002               2001
                             ------------       -----------
     Current                 $    560,666       $ 2,186,405
     Deferred                     130,298          (144,095)
                             ------------       -----------
                             $    690,964       $ 2,042,310
                             ============       ===========

     Income  taxes  differed  from amounts  computed by applying  the  statutory
     federal rate (34%) to income before income taxes as follows:

                                                   Year Ended September 30,
                                                    2002            2001
                                                 -----------     -----------
     Tax at federal income tax rate              $ 1,072,268     $ 1,857,878
     Increase (decrease) resulting from:
       Effect of nontaxable dividends               (462,297)            --
       State income tax expense, net
         of federal tax benefit                       48,146         180,323
     Other, net                                       32,847           4,109
                                                 -----------     -----------
     Total                                       $   690,964     $ 2,042,310
                                                 ===========     ===========
         Effective tax rate                             21.9%           37.4%
                                                 ============    ===========
                                       39
<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

9. Income Taxes (continued)

     The tax effects of significant  items comprising the Company's net deferred
     tax asset as of September 30 are as follows:

<TABLE>
<CAPTION>

                                                                    2002              2001
                                                                 -----------       ----------
     <S>                                                         <C>               <C>
     Deferred tax assets:
       Differences between book and tax basis of bad debt
         reserves                                                $   147,839       $  223,913
       Differences between book and tax basis of investments         599,258          603,963
       Deferred compensation for Directors                            76,000           91,200
       Stock incentive compensation plan                             104,822          128,862
       Other                                                          13,285           15,142
                                                                 -----------       ----------
     Total deferred tax assets                                       941,204        1,063,080
       Valuation allowance                                               --               --
                                                                 -----------       ----------
       Net deferred tax assets                                       941,204        1,063,080
                                                                 -----------       ----------
     Deferred tax liabilities:
       Differences between book and tax pension expense                  --           (36,948)
       Differences between book and tax basis of Federal Home
         Loan Bank stock                                            (112,692)        (112,692)
       Deferred gain on sale of branch real estate                   (70,683)         (70,683)
       Differences between book and tax basis of property           (177,677)        (132,307)
                                                                 -----------       ----------
     Total deferred tax liabilities                                 (361,052)        (352,630)
                                                                 -----------       ----------
     Net deferred tax asset                                      $   580,152       $  710,450
                                                                 ===========       ==========
</TABLE>

     During the years ended September 30, 2002 and 2001, income taxes (benefits)
     of $83,756 and  $2,624,595,  respectively,  were allocated to the change in
     retained  earnings  for the tax effects of  unrealized  gains and losses on
     assets available for sale.

     Savings  banks  which  meet  certain   definitional   tests  and  operating
     requirements  prescribed  by the Internal  Revenue Code have been allowed a
     special bad debt deduction and other special tax  provisions.  If a savings
     bank did not meet the federal  income tax  requirements  necessary  to meet
     these  definitions,  the  savings  bank  would lose the  benefits  of these
     special provisions.

     The special bad debt  deduction  was based on either  specified  experience
     formulas or a specified  percentage  of taxable  income.  The deduction was
     subject  to  certain  limitations  based on the  aggregate  loans,  savings
     account  balances,  and retained  earnings at year end. Gains and losses on
     sales of  repossessed  property  and  provisions  for  losses  on loans and
     foreclosed  real  estate  were  generally  adjustments  to the tax bad debt
     reserve and not includable in the computation of taxable income before this
     deduction.

                                       40
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

9. Income Taxes (continued)

     In 1996,  legislation  was passed  that  eliminated  the  special  bad debt
     deduction for thrift institutions effective for years beginning after 1995,
     or for the Bank's fiscal year beginning  October 1, 1996. For tax purposes,
     the Bank was  required  to  recapture  its post - 1987  additions  ("excess
     reserves")  to its bad  debt  reserves.  Under  the  legislation,  the Bank
     qualifies as a "small  bank," and the excess  reserves  will be restored to
     taxable income  ratably over the six years,  beginning in the year the bank
     no longer  qualifies as a bank.  Deferred  taxes have been provided for the
     amount of these excess reserves.  No deferred tax liability is provided for
     $4.8  million  tax basis bad debt  reserves  that arose prior to the Bank's
     1988 fiscal year.

10. Commitments

     In the normal course of business, the Bank enters into financial instrument
     transactions  to satisfy the financial needs of its customers and to manage
     its own  exposure  to credit  and  market  risks.  Many of these  financial
     instruments  typically  have  off-balance  sheet risk  resulting from their
     nature  including  the  terms  of  settlement.  These  instruments  may  be
     categorized as commitments.

     Market risk  arises from the  possibility  that market  changes,  including
     interest rate  movements,  may make  financial  instruments  less valuable.
     Credit risk  results  from the  possibility  that a loss may occur from the
     failure of another party to perform according to the terms of the contract.
     The  Bank  has  control  procedures   regarding  the  extent  of  the  Bank
     transactions   with   specific   counter-parties,   the   manner  in  which
     transactions  are  settled  and the  ongoing  assessment  of  counter-party
     creditworthiness.

     The contract or notional (face) amounts  disclosed below and at Notes 1 and
     12 provide a measure of the Bank's  involvement in such instruments but are
     not  indicative  of potential  loss.  Management  does not  anticipate  any
     material adverse effect on the Bank's financial position resulting from its
     involvement in these instruments.

     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.  Commitments to extend credit at
     fixed rates exposes the Bank to some degree of interest rate risk. The Bank
     evaluates each customer's  creditworthiness  on a case-by-case  basis.  The
     amount  of  collateral  obtained,  if  deemed  necessary  by the Bank  upon
     extension of credit,  is based on  management's  credit  evaluation  of the
     counter-party.  Collateral  held  varies,  but may include  real  property,
     equipment and income-producing commercial properties.

                                       41
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

10. Commitments (continued)


     Most of the Bank's  business  activity is with customers in South Carolina.
     As  of  September  30,  2002  and  2001,   the  Bank  had  no   significant
     concentrations of credit risk in its loan portfolio.

     The  Bank  had  commitments   outstanding  to  originate  loans  (excluding
     undisbursed portion of loans in process) as follows:


                                       September 30, 2002    September 30, 2001
                                       ------------------    ------------------
          Variable rate                     $ 198,000            $ 198,000
          Fixed rate (at 5.875%)              100,600              245,114

     Lines  of  credit   extended  to   borrowers   amounted  to   approximately
     $11,199,075, of which $8,757,307 was undisbursed at September 30, 2002.

11. Regulatory Capital Requirements

     The  Office of  Thrift  Supervision  capital  regulations  require  savings
     institutions  to meet three  minimum  capital  standards:  a 1.5%  tangible
     capital  ratio,  a 3% leverage  ratio and an 8% risk-based  capital  ratio.
     Effective April 1, 1999,  however,  the minimum leverage ratio increased to
     4% for all institutions  except those with the highest rating on the CAMELS
     financial  institution  rating system.  In addition,  the prompt corrective
     action  standards  discussed below also establish,  in effect, a minimum 2%
     tangible  capital  standard,  a 4%  leverage  ratio  (3%  for  institutions
     receiving the highest  rating on the CAMELS  financial  institution  rating
     system) and,  together with the risk-based  capital  standard  itself, a 4%
     Tier 1  risk-based  capital  standard.  The  Office of  Thrift  Supervision
     regulations  also  require  that,  in meeting the  tangible,  leverage  and
     risk-based   capital   standards,   institutions   must  generally   deduct
     investments in and loans to subsidiaries engaged in activities that are not
     permissible for a national bank.

                                       42
<PAGE>
                           DutchFork Bancshares, Inc.
                                and Subsidiaries

11. Regulatory Capital Requirements (continued)

     The risk-based  capital standard requires an institution to maintain Tier 1
     or core capital to risk-weighted assets of at least 4% and total capital to
     risk-weighted  assets of at least 8%.  Total  capital  is  defined  as core
     capital  and   supplementary   capital.   In  determining   the  amount  of
     risk-weighted  assets,  all assets,  including  certain  off-balance  sheet
     assets, are multiplied by a risk-weight  factor of 0% to 100%,  assigned by
     the  Office of Thrift  Supervision  capital  regulation  based on the risks
     believed  inherent in the type of asset.  Core or Tier 1 capital is defined
     as common stockholders' equity and retained earnings, certain noncumulative
     perpetual  preferred stock and related surplus,  and minority  interests in
     equity accounts of consolidated  subsidiaries,  less intangible  other than
     certain  mortgage  servicing  rights and  credit  card  relationships.  The
     components of  supplementary  capital include  cumulative  preferred stock,
     long-term  perpetual  preferred stock,  mandatory  convertible  securities,
     subordinated  debt and intermediate  preferred stock, and the allowance for
     loan and  lease  losses  limited  to a  maximum  of 1.25% of  risk-weighted
     assets.  Overall,  the amount of supplementary  capital included as part of
     total capital cannot exceed 100% of core capital.

     The capital  regulations  also incorporate an interest rate risk component.
     Savings  institutions  with "above normal"  interest rate risk exposure are
     subject to a deduction from total capital for purposes of calculating their
     risk-based   capital   requirements.   Presently,   the  Office  of  Thrift
     Supervision  has  deferred   implementation   of  the  interest  rate  risk
     component.

     The Bank is 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 Bank's  financial  statements.  Under capital
     adequacy  guidelines  and the  regulatory  framework for prompt  corrective
     action,  the Bank  must  meet  specific  capital  guidelines  that  involve
     quantitative  measures  of  the  Bank's  assets,  liabilities  and  certain
     off-balance-sheet   items  as  calculated   under   regulatory   accounting
     practices.  The Bank's capital amounts and  classification are also subject
     to  qualitative   judgments  by  the  regulators  about  components,   risk
     weightings, and other factors.

     As of July 22, 2002, the most recent notification from the Office of Thrift
     Supervision  categorized the Bank as well capitalized  under the regulatory
     framework  for  prompt  corrective   action.  To  be  categorized  as  well
     capitalized,  the Bank must  maintain  minimum total  risk-based,  core and
     tangible  ratios as set forth in the  table.  There  are no  conditions  or
     events since that  notification  that management  believes have changed the
     institution's category.


                                       43
<PAGE>
                           DutchFork Bancshares, Inc.
                                and Subsidiaries

11. Regulatory Capital Requirements (continued)

     The Bank may not declare or pay cash  dividends on, or  repurchase  any of,
     its shares of common stock, if the effect would cause stockholders'  equity
     to be reduced  below  applicable  regulatory  capital  requirements  or the
     liquidation  account  established  by  the  Bank  in  connection  with  the
     Conversion,  or if such  declaration  and payment would  otherwise  violate
     regulatory requirements.

     The Bank's actual capital amounts and ratios are presented in the following
     table:
<TABLE>
<CAPTION>


                                                                      To Be Well
                                                                      Capitalized
                                                    Minimum           For Prompt
                                                  For Capital         Corrective
                                                   Adequacy             Action
                                 Actual            Purposes           Provisions
                             ----------------   ---------------    ----------------
                             Ratio    Amount    Ratio   Amount     Ratio     Amount
                             -----    ------    -----   ------     -----     ------
                                            (dollars in thousands)
<S>                          <C>      <C>       <C>     <C>         <C>     <C>
September 30, 2002
  Tangible capital           14.76%   $32,251   2.00%   $ 4,369       N/A       N/A
  Core capital               14.76%   $32,251   4.00%   $ 8,738     5.00%   $10,923
  Risk-based capital         28.80%   $32,658   8.00%   $ 9,072    10.00%   $11,341

September 30, 2001
  Tangible capital           13.38%   $32,504   2.00%   $ 4,847       N/A       N/A
  Core capital               13.38%   $32,504   4.00%   $ 9,693     5.00%   $12,116
  Risk-based capital         25.21%   $31,978   8.00%   $10,148    10.00%   $12,686

</TABLE>
                                       44
<PAGE>
                           DutchFork Bancshares, Inc.
                                and Subsidiaries

11. Regulatory Capital Requirements (continued)

     A reconciliation of capital under generally accepted accounting  principles
     (GAAP) to tangible, core and risk-based capital is as follows:
<TABLE>
<CAPTION>


                                                                            At September 30,
                                                                         2002            2001
                                                                       --------        --------
<S>                                                                    <C>             <C>
GAAP capital                                                           $ 33,429        $ 34,066
Consolidation/elimination entries                                          (561)         (1,562)
                                                                       --------        --------
Bank capital                                                             32,868          32,504
Investment in subsidiary                                                   (424)           (438)
Unrealized losses (gains) on available-for-sale securities                 (193)            (88)
                                                                       --------        --------
Core and tangible capital                                                32,251          31,978
Unrealized losses (gains) on available-for-sale securities                  103              48
Allowance for loan and lease losses                                         424             634
Equity investments                                                         (120)           (120)
                                                                       --------        --------
Risk-based capital                                                     $ 32,658        $ 32,540
                                                                       ========        ========
</TABLE>

12. Fair Value of Financial Instruments

          The  following  tables  set  forth  the fair  value  of the  Company's
          financial and nonfinancial instruments (in thousands):
<TABLE>
<CAPTION>


                                                            At September 30,
                                                     2002                     2001
                                             ---------------------    ---------------------
                                             Carrying       Fair       Carrying     Fair
                                              Value         Value       Value       Value
                                             ---------     -------    ----------  ---------
    <S>                                      <C>          <C>         <C>          <C>
    Financial instruments:
       Assets:
       Cash and cash equivalents             $ 21,131     $ 21,131    $   5,065    $  5,065
       Investments and mortgage-backed
         securities                           129,723      129,773      164,673     164,679
       Loans receivable                        61,706       62,060       73,088      76,714
       Accrued interest receivable                860          860        1,062       1,062
       Liabilities:
       Deposit accounts:
         Demand deposits and passbook
           accounts                            48,924       48,924       46,642      46,642
         Certificates of deposit              100,367      100,735      100,617     100,617
       FHLB advances                           35,000       35,000       60,000      60,000
       Other borrowings                           --           --           --          --
       Advances from borrowers for
         taxes and insurance                       59           59           76          76

</TABLE>

                                       45
<PAGE>



                           DutchFork Bancshares, Inc.
                                and Subsidiaries

12. Fair Value of Financial Instruments (continued)

     Commitments  to extend  credit.  The fair values of these  instruments  are
     immaterial because their underlying interest rates approximate market.

     The  fair  value of cash and cash  equivalents  approximates  the  carrying
     value.  The fair  values of loans  receivable  are based on current  market
     prices  for  securities  backed  by  similar  loans.  The  fair  values  of
     investments  and  mortgage-backed  securities  are based on  quoted  market
     prices, if available. If a quoted market price is not available, fair value
     is estimated using quoted market prices for similar securities.

     The fair value of demand  deposits and savings  accounts  approximates  the
     carrying  value.  The fair value of  certificates  of deposit is  estimated
     using the rates currently  offered for deposits of similar remaining terms.
     The fair  value of  Federal  Home  Loan Bank  advances  and  federal  funds
     purchased  is estimated  based on current  rate for  advances  with similar
     terms.

     The fair value of loan  commitments is estimated based on current levels of
     interest rates versus the committed interest rates.

     Management  uses  its  best  judgment  in  estimating  the  fair  value  of
     non-traded financial instruments, but there are inherent limitations in any
     estimation  technique.  For example,  liquid  markets do not exist for many
     categories of loans held by the Company.  By definition,  the function as a
     financial  intermediary  is, in large  part,  to  provide  liquidity  where
     organized  markets  do not  exist.  Therefore,  the  fair  value  estimates
     presented  herein are not  necessarily  indicative of the amounts which the
     Company could realize in a current transaction.

     The information  presented is based on pertinent  information  available to
     management  as of September 30, 2002.  Although  management is not aware of
     any factors, other than changes in interest rates, that would significantly
     affect the estimated fair values, the current estimated fair value of these
     instruments may have changed significantly since then.

13. Employee Benefit Plans

     Pension Plan

     During the year ended  September  30,  2000,  the Company  transferred  the
     assets  and   liabilities  of  its  defined   benefit  pension  plan  to  a
     multiple-employer  defined benefit pension plan covering  substantially all
     employees.  Separate  actuarial  valuations are currently not available for
     each  participating  employer,  nor are  plan  assets  segregated.  Pension
     expense was zero for the years ended  September  30, 2001 and  $213,027 for
     the year ended September 30, 2002.

                                       46
<PAGE>
                           DutchFork Bancshares, Inc.
                                and Subsidiaries

13. Employee Benefit Plans (continued)

     Stock-Based Compensation Plan

     The Board of Directors adopted and the shareholders  subsequently  approved
     the DutchFork  Bancshares,  Inc. 2001 Stock-Based  Incentive Plan ("SBIP").
     The purpose of the SBIP is to attract and retain qualified personnel in key
     positions,  provide officers,  employees and non-employee  directors of the
     Company  and the Bank with a  proprietary  interest  in the  Company  as an
     incentive  to  contribute  to the  success  of  the  Company,  promote  the
     attention  of  management  to  other  stockholders'  concerns,  and  reward
     employees for outstanding performance.

     The SBIP authorizes the granting of options to purchase common stock of the
     Company and awards of restricted shares of common stock. Subject to certain
     adjustments to prevent dilution of awards to participants, the total number
     of shares of common stock reserved for option grants and  restricted  stock
     awards  under the SBIP is  218,477  shares,  of which  156,055  shares  are
     reserved for options and 62,422  shares are reserved for  restricted  stock
     awards.  All  employees and  non-employee  directors of the Company and its
     affiliates  are  eligible  to receive  awards  under the SBIP.  The SBIP is
     administered by a committee consisting of members of the Board of Directors
     who are not employees of the Company or its affiliates.

     On February  20, 2001,  the Company  granted  incentive  options for 60,830
     shares at $16.4375 per share, non-statutory options for 48,410 shares at an
     exercise price of $16.4375 per share and awarded the 43,696 shares reserved
     for restricted stock awards.

     The options  will enable the  recipient  to purchase  stock at the exercise
     price above.  The options vest over five years  following the date of grant
     and are exercisable for up to 10 years. During the year ended September 30,
     2002,  options for 7,803 shares were  exercised by the estate of a deceased
     director.

     The restricted stock awards do not require any payment by the recipient and
     vest over five years  following the date of the award.  The Company  funded
     the restricted stock awards with Treasury Stock. Amortization of the awards
     resulted in a charge to  compensation  and benefit  expense of $240,412 and
     $200,478 for the year ended September 30, 2002 and 2001, respectively.

     On February 20, 2002,  11,235  shares of the  restricted  stock awards were
     issued with a value of $184,675 at the grant date.

                                       47
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

13. Employee Benefit Plans (continued)

     The Company adopted SFAS No. 123, Accounting for Stock-Based  Compensation,
     which permits  entities to recognize,  as expense over the vesting  period,
     the  fair  value  of  all   stock-based   awards  on  the  date  of  grant.
     Alternatively,  SFAS No.  123 allows  entities  to  disclose  pro forma net
     income and income per share as if the fair  value-based  method  defined in
     SFAS No. 123 has been applied,  while continuing to apply the provisions of
     Accounting  Principles  Board ("APB") Opinion No. 25,  Accounting for Stock
     Issued to Employees,  under which  compensation  expense is recorded on the
     date of grant only if the  current  market  price of the  underlying  stock
     exceeds the exercise price.

     As permitted under SFAS No. 123,  Accounting for Stock-Based  Compensation,
     the Company has elected to apply the  recognition  provisions of Accounting
     Principles  Board No. 25, under which  compensation  expense is recorded on
     the date of grant only if the current market price of the underlying  stock
     exceeds the exercise price. Accordingly, adoption of SFAS No. 123 will have
     no impact on the Company's  consolidated  financial  position or results of
     operations.

     The following summarizes pro-forma data in accordance with SFAS 123:
<TABLE>
<CAPTION>

                                                          Year Ended September 30,
                                                       ------------------------------
                                                          2002               2001
                                                       -----------        -----------
<S>                                                    <C>                <C>
         Net income, pro-forma                         $ 2,104,490        $ 3,203,191
         Basic earnings/loss per common share,
            pro-forma                                  $      1.86        $      2.30
         Diluted earnings/loss per common share,
            pro-forma                                  $      1.79        $      2.28

</TABLE>

     The assumptions used in estimating  compensation  cost on a pro-forma basis
     were: dividend yield of 0%, expected life of six years,  volatility of near
     15% and risk-free interest rate of 6%.

     401(k) Plan

     The Bank  also  maintains  an  Employee  Savings  Plan  for all  employees,
     qualified  under  Section  401(k) of the Internal  Revenue  Code.  The Bank
     matches 100% of the first 5% of earned  compensation  consisting of regular
     wages and overtime  payments.  The Bank's  contributions to the 401(k) plan
     were $67,218 and $154,607 for the years ended  September 30, 2002 and 2001,
     respectively.
                                       48
<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

13. Employee Benefit Plans (continued)

     Other

     The Company has entered into employment agreements with certain executives.
     The employment  agreements were effective in connection with the completion
     of the Bank's  conversion to stock form and continue for a three-year  term
     initially,  and will be renewable  annually.  The agreements  provide for a
     base salary (to be reviewed annually) and certain other fringe benefits.

     Under the employment  agreements,  if voluntary or involuntary  termination
     follows a change in control of the Bank or DutchFork Bancshares,  Inc., the
     executives  or, if they die,  their  beneficiaries,  would be entitled to a
     severance  payment  equal  three  times the  average of the five  preceding
     taxable years' annual  compensation.  If a change in control occurred,  the
     total amount of payments due under the agreements, based on the executives'
     2001 cash compensation and without regard to future base salary adjustments
     or bonuses and excluding any benefits under any employee benefit plan which
     may be payable, would be approximately $1.3 million.

     In 2001, the Company  adopted a Director  Deferred  Compensation  Plan. The
     Plan  permits  directors  to defer  all or a  portion  of the  compensation
     otherwise  payable to the  director.  Such  deferrals  are  invested in the
     Company's common stock.

     In addition,  any director who was eligible to receive a benefit  under the
     Company's  prior  policy  for  retired   directors  is  eligible  to  waive
     participation  in such arrangement and receive a credit to their stock unit
     account equal to the Company's  accrued benefit  obligation with respect to
     such  benefit as of March 31, 2001.  All  non-retired  directors  agreed to
     waive  participation  in the prior  plan,  and the amount of  $240,000  was
     transferred to the Plan from the accrued benefit obligation.

14. Interest Rate Risk

     The Bank maintains a program of asset and liability  management designed to
     minimize  the Bank's  vulnerability  to material and  prolonged  changes in
     interest rates. An interest-earning asset or interest-bearing  liability is
     deemed to be interest-rate sensitive within a specific time period if it is
     estimated to mature or reprice within that time period. If interest-earning
     assets which are  estimated to mature or reprice  within a particular  time
     period  are less  than the  amount  of  interest-bearing  liabilities  with
     comparable maturity or repricing characteristics,  a negative difference or
     "negative-gap"  occurs,  and in general,  increases in interest rates would
     adversely  affect net  interest  income over such period and  decreases  in
     interest rates would have the opposite effect.
                                       49
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

14. Interest Rate Risk (continued)

     Similarly,  if  interest-earning  assets  which are  estimated to mature or
     reprice   within  a   particular   time   period   exceed   the  amount  of
     interest-bearing   liabilities   with  comparable   maturity  or  repricing
     characteristics, a positive difference or "positive gap" is present and, in
     general,  increases in interest rates would positively  affect net interest
     income over such  period and  decreases  in  interest  rates would have the
     opposite effect.

     Interest-Rate Exchange Agreements.  The Bank enters into interest-rate swap
     transactions in managing its  interest-rate  exposure.  Interest-rate  swap
     transactions  generally  involve the  exchange of fixed- and  floating-rate
     interest-payment   obligations  without  the  exchange  of  the  underlying
     principal amounts.

     Entering into interest-rate swap agreements involves not only the risk of
     dealing with counterparties and their ability to meet the terms of the
     contracts but also the interest-rate risk associated with unmatched
     positions. Notional principal amounts often are used to express the volume
     of these transactions, but the amounts potentially subject to credit risk
     are much smaller. The cost of the floors and caps is charged to expense
     over the term of the contract. In addition, any gain or loss on the value
     of the contract is recognized in earnings currently.

     At  September  30, 2002,  the Bank had entered into an interest  rate floor
     agreement with a notional amount of $25 million with an interest rate floor
     on the  1-month  LIBOR of 2.50%  expiring on October 9, 2003 to protect the
     rate  paid on  certain  borrowings  from the  Federal  Home Loan  Bank.  In
     addition, the Bank has entered into interest rate cap agreements to protect
     assets  and  liabilities  from  the  negative  effects  in the  event of an
     increasing rate environment.  The total notional amount of all the interest
     rate cap agreements is $175 million.  The agreements  provide for a payment
     to the Bank to pay the difference  between the cap rate of interest and the
     market rate of interest. The agreements are summarized as follows:

         Expiration Date    Notional Amount          Cap Rate       Index
         ----------------   ---------------          --------   --------------
         March 13, 2003      $ 50 million              6.00%    1-month LIBOR
         March 13, 2003      $ 25 million              6.50%    1-month LIBOR
         January 25, 2003    $ 50 million              7.00%    1-month LIBOR
         October 9, 2003     $ 25 million              5.00%    1-month LIBOR
         March 18, 2005      $ 25 million              7.00%    1-month LIBOR

                                       50
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

14. Interest Rate Risk (continued)

     Payments  received  under the  agreements  are treated as an  adjustment of
     interest  income or expense.  The Bank's exposure to credit risk is limited
     to the ability of the counterparty to make potential future payments to the
     Bank that are required  pursuant to the agreements.  The Bank's exposure to
     market risk of loss is limited to the amount of the unamortized premium. At
     September  30,  2002 and  2001,  the  unamortized  premium  related  to the
     interest rate agreements  amounted to approximately  $286,000 and $317,000,
     respectively, which approximated the fair value. The Bank received payments
     under these agreements of $129,294 and $26,355 in the years ended September
     30, 2002 and 2001,  respectively.  Expense related to these  agreements was
     $282,518  and  $393,872  for the years ended  September  30, 2002 and 2001,
     respectively.

15. Stockholders' Equity and Dividend Restrictions

     The  ability  of the  Company to pay  dividends  depends  primarily  on the
     ability of the Bank to pay dividends to the Company. The Bank is subject to
     various capital requirements administered by the federal banking agencies.

16. Conversion From Mutual to Stock

     On January 18,  2000,  the Board of Directors of the Bank adopted a Plan of
     Conversion to convert from a  federally-chartered  mutual savings bank to a
     federally-chartered  stock savings bank. The  conversion  was  accomplished
     through the amendment of the Bank's charter to stock form, the formation of
     the Company,  which  acquired 100% of the Bank's  outstanding  common stock
     upon the  conversion of the Bank from mutual to stock form, and the sale of
     the Company's common stock in an amount equal to the pro forma market value
     of the Bank after giving effect to the conversion.  A subscription offering
     of the shares of common stock was offered  initially to the Bank's eligible
     deposit account holders, then to other members of the Bank.

     The conversion was completed on July 5, 2000 with the issuance of 1,560,550
     shares at $10.00 per share. Expenses of the conversion and offering totaled
     $1,038,411, which was charged against additional paid-in capital.


                                       51
<PAGE>
                           DutchFork Bancshares, Inc.
                                and Subsidiaries

17. Liquidation Account

     In  conjunction  with the Bank's  conversion to stock form on July 5, 2000,
     the  Bank  established,   as  required  by  Office  of  Thrift  Supervision
     regulations,  a liquidation  account and will maintain this account for the
     benefit of the  remaining  eligible  account  holders as defined  under the
     Bank's plan of conversion.  The initial balance of this liquidation account
     was equal to the Bank's net worth  defined by Office of Thrift  Supervision
     regulations as of the date of the latest  statement of financial  condition
     contained in the final prospectus.  In the event of a complete  liquidation
     of the Bank (and only in such event) each eligible holder shall be entitled
     to receive a  liquidation  distribution  from this account in the amount of
     the then  current  adjusted  balance  for  deposits  then held,  before any
     liquidation  distribution  may be made  to the  stockholders.  The  Bank is
     prohibited from declaring cash dividends or repurchasing  its capital stock
     if it would  cause a  reduction  in the Bank's net worth  below  either the
     balance of the liquidation  account or the statutory net worth requirements
     set by the Office of Thrift Supervision.

18. Employee Stock Ownership Plan

     In connection  with the  conversion  from mutual to stock form, the Company
     established  an Employee  Stock  Ownership Plan ("ESOP") for the benefit of
     participating  employees.   Employees  are  eligible  to  participate  upon
     attaining age twenty-one and completing one year of service.

     The ESOP  borrowed  $1,248,440  from the  Company to fund the  purchase  of
     124,844 shares of the Company's common stock. The purchase of shares of the
     ESOP was recorded in the consolidated financial statements through a credit
     to common stock and additional paid-in capital with a corresponding  charge
     to a contra equity account for the unreleased  shares.  The loan is secured
     solely  by  the  common  stock  and  is to be  repaid  in  equal  quarterly
     installments of principal and interest  payable through June 30, 2015 at an
     interest rate of 9.50%.  The  intercompany  ESOP note and related  interest
     were eliminated in consolidation.

                                       52
<PAGE>
                           DutchFork Bancshares, Inc.
                                and Subsidiaries

18. Employee Stock Ownership Plan (continued)

     The Company makes annual contributions to the ESOP equal to the ESOP's debt
     service,  less any  dividends  received  by the ESOP.  The ESOP shares were
     initially  pledged as collateral for the debt, which is due to the Company.
     As the  debt is  repaid,  shares  are  released  from  the  collateral  and
     allocated to active employees, based on the proportion of debt service paid
     in the year. The Company accounts for its ESOP in accordance with Statement
     of Position  93-6.  As shares are  released  from  collateral,  the Company
     reports  compensation  expense  equal to the  current  market  price of the
     shares,  and the shares become  outstanding  for  earnings-per-share  (EPS)
     computations.  ESOP  compensation  expense was $273,916 and $69,224 for the
     years ended September 30, 2002 and 2001,  respectively.  The ESOP shares as
     of September 30, 2002 were as follows:


          Allocated shares                             18,720
          Unreleased shares                           106,124
                                                   -----------
                                                      124,844
                                                   ===========
          Fair value of  unreleased  shares
          at  September  30,  2002                 $2,743,305
                                                   ==========


                                       53
<PAGE>

                          DutchFork Bancshares, Inc.
                                and Subsidiaries

19. Net Income Per Share

     The following  reconciles  the numerator and  denominator  of the basic and
     diluted earnings per share computation:


                                                       Year Ended September 30,
                                                     ---------------------------
                                                        2002             2001
                                                     ----------       ----------
Basic EPS computation:

   Numerator                                         $2,462,765       $3,422,036

   Denominator:
     Common shares outstanding                        1,133,702        1,389,972
                                                     ----------       ----------

   Basic EPS                                         $     2.17       $     2.46
                                                     ==========       ==========

Diluted EPS computation:
   Numerator                                         $2,462,765       $3,422,036

   Denominator:
     Common shares outstanding                        1,133,702        1,389,972
   Dilutive securities:
     Stock options - treasury stock method               32,095           10,051
     Incentive plan - treasury stock method              10,857            4,020
                                                     ----------       ----------
                                                      1,176,654        1,404,043
                                                     ----------       ----------

Diluted EPS                                          $     2.09       $     2.44
                                                     ==========       ==========

     The average market prices used in calculating  the assumed number of shares
     issued for the years  ended  September  30,  2002 and 2001 were  $23.30 and
     $19.53 per share, respectively.

20. Sale of Branch

     The Company  sold its Chapin  branch on  February  9, 2001.  The branch had
     deposits of  $13,171,607,  plus accrued  interest of $123,983.  The Company
     paid the acquirer the total of the above liabilities, less the value of the
     assets  transferred  and the premium on the deposits.  A gain of $1,828,762
     was recognized  during the year ended September 30, 2001 for the premium on
     the deposits and the sale of the branch-related assets.

21. Loan Servicing Sold

     No loan  servicing  rights  were sold during the year ended  September  30,
     2002.   During  the  year  ended  September  30,  2001,  the  Company  sold
     approximately   $16,000,000  of  loan   servicing   rights  at  a  gain  of
     approximately $150,185.

                                       54
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

22. DutchFork Bancshares, Inc. Financial Statements (Parent Company Only)

     The following is condensed financial  information of DutchFork  Bancshares,
     Inc. (parent company only), the primary asset of which is its investment in
     the Bank, for the dates indicated.
<TABLE>
<CAPTION>


                           DutchFork Bancshares, Inc.
                            Condensed Balance Sheets

                                                                 September 30,
                                                        -----------------------------
                                                            2002              2001
                                                        ------------     ------------
<S>                                                     <C>              <C>
Assets:
     Cash and short-term investments                    $  4,094,341     $  2,051,574
     Investment in subsidiary                             29,256,709       32,443,723
     Accounts receivable from ESOP                            78,432           38,652
     Other                                                    47,887          135,529
                                                        ------------     ------------
         Total assets                                   $ 33,477,369     $ 34,669,478
                                                        ============     ============

Liabilities and Stockholders' Equity:
     Bank overdraft                                     $       --       $    603,658
     Accounts payable                                           --               --
                                                        ------------     ------------
         Total liabilities                                      --            603,658
                                                        ------------     ------------

     Capital stock                                            15,605           15,605
     Additional paid-in capital                           14,785,743       14,585,071
     Retained earnings                                    28,065,262       25,602,497
     Accumulated other comprehensive (loss)                  193,388           87,389
     Unearned 2001 Stock-Based Incentive Plan shares        (962,070)      (1,173,175)
     Treasury stock                                       (7,468,233)      (3,851,845)
     Employee Stock Ownership Plan                        (1,152,026)      (1,199,722)
                                                        ------------     ------------
         Total stockholders' equity                       33,477,369       34,065,820
                                                        ------------     ------------

         Total liabilities and stockholders' equity     $ 33,477,369     $ 34,669,478
                                                        ============     ============
</TABLE>

                                       55
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

22.  DutchFork  Bancshares,  Inc.  Financial  Statements  (Parent  Company Only)
     (continued)

<TABLE>
<CAPTION>

                           DutchFork Bancshares, Inc.
                       Condensed Statements of Operations

                                                                 Year Ended September 30,
                                                               ---------------------------
                                                                  2002             2001
     <S>                                                       <C>              <C>
                                                               ----------       ----------
     Income:
       Interest                                                $  125,041       $  143,172
       Equity in undistributed earnings of subsidiary           2,549,489        3,441,198
                                                               ----------       ----------
         Total income                                           2,674,530        3,584,370
                                                               ----------       ----------

     Expenses:
       Filing fees                                             $    6,525       $   13,729
       Printing fees                                               10,543           10,403
       Registrar and transfer fees                                  7,750            7,998
       Proxy fees                                                    --              4,917
       Professional fees                                          143,048          100,126
       Other expense                                                5,307            5,126
       Income tax                                                  38,592           20,035
                                                               ----------       ----------
         Total expenses                                           211,765          162,334
                                                               ----------       ----------

     Net income                                                $2,462,765       $3,422,036
                                                               ==========       ==========

</TABLE>
                                       56
<PAGE>
                          DutchFork Bancshares, Inc.
                                and Subsidiaries

22.  DutchFork  Bancshares,  Inc.  Financial  Statements  (Parent  Company Only)
     (continued)
<TABLE>
<CAPTION>


                           DutchFork Bancshares, Inc.
                       Condensed Statements of Cash Flows

                                                                      September 30,
                                                             ------------------------------
                                                                2002               2001
     <S>                                                     <C>                <C>
                                                             -----------        -----------
     Operating activities:
     Net income                                              $ 2,462,765        $ 3,422,036
     Adjustments to reconcile net income to net
       cash provided by:
       Equity in undistributed income of subsidiary            3,293,013          3,036,297
       (Increase) decrease in other assets                        95,749            (45,217)
       Increase (decrease) in other liabilities                 (418,983)           594,254
                                                             -----------         -----------
         Total cash provided by operations                     5,432,544          7,007,370
                                                             -----------         -----------

     Financing activities:
       Purchase of treasury stock                             (3,791,955)        (3,851,845)
       Purchase of stock for Incentive Plan                          --          (1,173,175)
       Release of ESOP shares                                    273,916                --
       Exercise of stock options                                 128,262                --
                                                             -----------        -----------
         Total cash provided by financing activities          (3,389,777)        (4,955,796)
                                                             -----------        -----------

     Net increase in cash and cash equivalents                 2,042,767          2,051,574
     Cash and cash equivalents at beginning of year            2,051,574                --
                                                             -----------        -----------
     Cash and cash equivalents at end of year                $ 4,094,341        $ 2,051,574
                                                             ===========        ===========
</TABLE>


     During the year ended  September 30, 2002 and 2001, the Bank paid dividends
     of $2,200,000 and $6,500,000, respectively, to DutchFork Bancshares, Inc.

                                       57
<PAGE>

                             DIRECTORS AND OFFICERS


OFFICERS                                               DIRECTORS

DutchFork Bancshares, Inc.                 DutchFork Bancshares, Inc. and
                                           Newberry Federal Savings Bank
J. Thomas Johnson
Chairman of the Board, President           J. Thomas Johnson
   and Chief Executive Officer             Chairman of the Board, President and
                                             Chief Executive Officer of Company,
Steve P. Sligh                               Chairman of the Board and Chief
Executive Vice President, Treasurer          Executive Officer of the Bank
   and Chief Financial Officer
                                           Steve P. Sligh
Robert E. Livingston, III                  Executive Vice President, Treasurer
Corporate Secretary                          and Chief Financial Officer of the
                                             Company, and President and
Newberry Federal Savings Bank                Treasurer of the Bank

J. Thomas Johnson                          Robert E. Livingston, III
 Chairman of the Board and Chief           Ophthalmologist
   Executive Officer
                                           James E. Wiseman
Steve P. Sligh                             Retired Dentist
President and Treasurer
                                           Robert W. Owen
Robert E. Livingston, III                  Retired Pharmacist and Business Owner
Corporate Secretary

                              CORPORATE INFORMATION


MAIN OFFICE                                SPECIAL COUNSEL

1735 Wilson Road                           Muldoon Murphy & Faucette LLP
Newberry, South Carolina 29108             5101 Wisconsin Avenue, N.W.
Telephone: (803) 321-3200                  Washington, D.C. 20016

BRANCH LOCATIONS                           INDEPENDENT AUDITORS

1323 College Street                        Clifton D. Bodiford
Newberry, South Carolina 29108             Certified Public Accountant
                                           2711 Middleburg Drive, Suite 214
101 N. Wheeler Street                      Columbia, South Carolina 29204
Prosperity, South Carolina 29127
                                       58

<PAGE>


STOCKHOLDER INFORMATION

The  Annual  Meeting  of  Stockholders  will  be  held  at  Newberry   Federal's
Training/Meeting Room located at 1735 Wilson Road (entrance facing Alex Avenue),
Newberry, South Carolina, on February 5, 2003 at 2:00 p.m., Eastern Time.


SHAREHOLDER AND
GENERAL INQUIRIES                           TRANSFER AGENT

DutchFork Banchares, Inc.                   Registrar and Transfer Company
1735 Wilson Road                            10 Commerce Drive
Newberry, South Carolina 29108              Cranford, NJ 07016-3572
(803) 321-3200                              (800) 368-5948


ANNUAL AND OTHER REPORTS

A COPY OF THE FORM 10-KSB  (WITHOUT  EXHIBITS) AS FILED WITH THE  SECURITIES AND
EXCHANGE  COMMISSION WILL BE FURNISHED  WITHOUT CHARGE TO STOCKHOLDERS AS OF THE
RECORD  DATE FOR  VOTING AT THE  ANNUAL  MEETING OF  STOCKHOLDERS  UPON  WRITTEN
REQUEST TO STEVE P. SLIGH, CHIEF FINANCIAL OFFICER, DUTCHFORK BANCSHARES,  INC.,
1735 WILSON ROAD,  NEWBERRY,  SOUTH CAROLINA 29108. THE COMPANY'S FORM 10-KSB IS
ALSO  AVAILABLE   THROUGH  THE  SEC'S  WORLD  WIDE  WEB  SITE  ON  THE  INTERNET
(http://www.sec.gov).

                                       59
<PAGE>


COMMON STOCK INFORMATION

The  Company's  common stock is traded on the Nasdaq  SmallCap  Market under the
symbol "DFBS".  As of September 30, 2002,  there were 1,320,628 shares of common
stock outstanding  (including  unreleased Employee Stock Ownership Plan ("ESOP")
shares of 119,972) and 459 stockholders,  excluding persons or entities who hold
stock in nominee or "street name".

The table below shows the high and low bid range of the  Company's  common stock
for fiscal 2002 and 2001. These prices reflect  inter-dealer  prices with retail
mark-up,  mark-down or  commissions,  and may not necessarily  represent  actual
transactions.  The  Company's  common stock began  trading on July 6, 2000.  The
Company did not pay any dividends  during the years ended September 30, 2002 and
2001. The Company's ability to pay dividends depends primarily on the ability of
the Bank to pay  dividends to the Company.  See Notes 11 and 17 for  information
regarding the Bank's  dividend-paying  ability. This information was provided by
Bloomberg Professional.

                                     High                Low
                                   --------            -------
Fiscal 2002
-------------
First Quarter                      $ 21.450            $ 20.350
Second Quarter                     $ 22.500            $ 20.400
Third Quarter                      $ 26.400            $ 21.800
Fourth Quarter                     $ 26.400            $ 23.000

Fiscal 2001
-------------
First Quarter                      $ 14.188            $ 11.750
Second Quarter                     $ 16.938            $ 14.125
Third Quarter                      $ 21.250            $ 16.500
Fourth Quarter                     $ 22.650            $ 20.200


                                     60