DutchFork Bancshares, Inc.

2000 ANNUAL REPORT

President's Message                                                    1

Business of the Corporation                                            2

Selected Financial and Other Data                                      3

Management's Discussion and Analysis                                   5

Report of Independent Auditor                                         15

Consolidated Balance Sheets as of September 30, 2000 and 1999         16

Consolidated Statements of Income for the Years Ended September
30, 2000 and 1999                                                     18

Consolidated Statements of Comprehensive Operations for the
Years Ended September 30, 2000 and 1999                               20

Consolidated Statements of Changes in Stockholders' Equity for
the Years Ended September 30, 2000 and 1999                           21

Consolidated Statements of Cash Flows for the Years Ended
September 30, 2000 and 1999                                           22

Notes to Consolidated Financial Statements                            24

Directors and Officers                                                54

Corporate Information                                                 54

Stockholder Information                                               55

Common Stock Information                                              55

<PAGE>

                                     [LOGO]
                           DUTCHFORK BANCSHARES. INC.

President'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  to you  the  "first"  annual  report  following  our
conversion to a public company after having operated as a mutual institution for
70 years.

Rather than repeat to you the numbers shown on the following  pages,  I will try
to give you more of an  insight  into our  history,  our  appreciation  for your
support  and some of our  intentions  for the  future.  We  believe  you  expect
personal  contact and service from personnel that truly take an interest in your
needs.  At the same time, we find it necessary to invest in modern  equipment to
fulfill  the needs of  customers  that  have  limited  time. We will  strive to
balance these needs.

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

We intend to continue with our primary  business of serving the residential real
estate  market  and the  banking  needs of the  people in our  communities.  Our
management and Board of Directors are dedicated to enhancing  shareholder value,
meeting  with  the  needs of our  customers  and  providing  a  challenging  and
rewarding work environment for our employees.

A primary goal of management is to expand our market share. To accomplish  this,
we are exploring new products,  including Internet banking, as well as expanding
our current  line of  products.  We are also in the process of  investing in new
technology  through a new  computer  system.  Newberry  Federal  will  strive to
capitalize on customer  service  opportunities  and provide quality  services to
attract and retain new customers.

As proud as we are of our 70-year  history,  the  prospects  for the  future are
very bright and exciting.  The opportunity and challenge   exist to expand   our
customer base,  enhance   shareholder    value  and stay competitive   with the
latest technology.

Thank you for your support and investment in DutchFork  Bancshares,  Inc. and
Newberry Federal Savings Bank.


Sincerely.

/s/ J. Thomas Johnson

J. Thomas Johnson
President & C.E.O.



  P.O. Box 417 . 1735 Wilson Road . Newberry, SC 29108 . Phone (803)321-3200 .
                               Fax (803) 321-3225


                                       1
<PAGE>

BUSINESS OF THE CORPORATION

DutchFork  Bancshares,  Inc. (the  "Company"),  a unitary thrift holding company
incorporated under the laws of Delaware,  owns all of the issued and outstanding
common  shares 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 four full-service
offices  and using  those  funds,  together  with  funds  from  operations,  the
conversion and borrowings,  to originate residential mortgage loans and consumer
loan 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.

As a savings and loan  holding  company,  the Company is subject to  regulation,
examination  and  oversight  by the Office of Thrift  Supervision  of the United
State Department of the Treasury ("OTS"). As a federally chartered stock savings
bank, the Bank is subject to regulation,  examination  and oversight by the OTS.
The Bank is also subject to general  oversight  by the FDIC.  The Bank is also a
member of the FHLB of Atlanta.

                                       2
<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,
                                          -------------------------------------------------------------------
                                               2000              1999             1998              1997
                                          --------------    --------------   --------------    --------------
                                                                     (In thousands)
Selected Consolidated Financial Data:
<S>                                         <C>               <C>              <C>               <C>
     Total assets                           $ 224,068         $ 211,151        $ 182,775         $ 175,575
     Cash and cash equivalents                  2,835             3,256            4,964             8,867
     Loans, net                                78,308            75,324           71,249            65,997
     Securities held-to-maturity:
         Mortgage-backed securities, net        3,874             4,466            6,819             6,826
         Investment securities, net             1,141             1,141            1,346             4,461
     Securities available-for-sale:
         Mortgage-backed securities, net      105,965            96,885           85,152            75,504
         Investment securities, net            24,772            22,068            6,542             7,916
     Deposit accounts                         147,731           137,537          141,702           128,721
     Federal Home Loan Bank advances           35,000            39,240           20,600            27,600
     Other borrowings                           2,755             7,370         -                 -
     Total equity                              31,296            16,701           18,771            17,425
     Repossessed assets                            22                14               19                 4
     Nonperforming assets and
        troubled debt restructurings              185               243              384               242
</TABLE>

<TABLE>
<CAPTION>
                                                                Year Ended September 30,
                                          ----------------------------------------------------------------
                                             2000              1999             1998              1997
                                          -----------       -----------     ------------      ------------
                                                        (In thousands, except per share amounts)
Selected Consolidated Operating Data:
<S>                                          <C>               <C>              <C>               <C>
     Total interest income                $    15,529       $    12,490     $     12,299      $     11,829
     Total interest expense                     9,093             7,490            7,555             7,287
                                          -----------       -----------     ------------      ------------
         Net interest income                    6,436             5,000            4,744             4,542
     Provision for loan losses                    340               142               85                70
                                          -----------       -----------     ------------      ------------
         Net interest income after
            provision for loan losses           6,096             4,858            4,659             4,472
     Noninterest income                         1,118             1,155            1,536             1,464
     Noninterest expense                        4,695             4,228            4,109             4,082
                                          -----------       -----------     ------------      ------------
     Income before income taxes                 2,519             1,785            2,086             1,854
     Provision for income taxes                   890               771              834               728
                                          -----------       -----------     ------------      ------------
         Net income                       $     1,629       $     1,014     $      1,252      $      1,126
                                          ===========       ===========     ============      ============
     Basic income per share               $      1.13       $       N/A     $        N/A      $        N/A
                                          ===========       ===========     ============      ============
</TABLE>

                                       3
<PAGE>

<TABLE>
<CAPTION>
                                                            At or For the Year Ended September 30,
                                            -------------------------------------------------------------------
                                                 2000              1999             1998              1997
                                            --------------    --------------   --------------    --------------
Selected Consolidated Operating
<S>                                                <C>               <C>              <C>               <C>
   Ratios and Other Data (1):
Performance Ratios:
     Average yield on interest-earning assets      7.38%             6.94%            7.12%             7.21%
     Average rate paid on interest-bearing
        liabilities                                4.64              4.50             4.73              4.72
     Average interest rate spread (2)              2.74              2.44             2.40              2.49
     Net interest margin (3)                       3.06              2.78             2.75              2.77
     Ratio of interest-earning assets to
        interest-bearing liabilities             107.45            108.16           108.02            106.36
     Net interest income after provision for
        loan losses to noninterest expense       129.84            114.91           113.38            109.56
     Noninterest expense as a percent of
        average assets                             2.12              2.26             2.28              2.36
     Return on average assets                      0.74              0.54             0.69              0.65
     Return on average equity                      8.13              5.43             6.79              6.82
     Ratio of average equity to average
        assets                                     9.04              9.97            10.23              9.56
Regulatory Capital Ratios:
     Tangible capital ratio                       15.27              9.24            10.28              9.96
     Core capital ratio                           15.27              9.24            10.28              9.96
     Risk-based capital ratio                     32.34             17.39            24.89             21.29
Asset Quality Ratios:
     Nonperforming loans and troubled
        debt restructurings as a percent
        of total loans (4)                         0.20              0.30             0.51              0.35
     Nonperforming assets and troubled
        debt restructurings as a percent
        of total assets (5)                        0.08              0.12             0.21              0.14
     Allowance for loan losses as a
        percent of total loans                     0.56              0.24             0.25              0.28
     Allowance for loan losses as a
        percent of nonperforming loans
        and troubled debt restructurings (4)     251.48             80.79            49.59             80.25
     Net loans charged-off to average
        interest-earning loans                     0.19              0.18             0.14              0.17
Number at end of period:
     Full service offices                             4                 4                4                 4
     Mortgage loans                               3,866             3,807            3,823             3,766
     Deposit accounts                            16,906            16,266           15,728            14,762
</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)  Nonperforming loans consist solely of all nonaccrual loans.
(5)  Nonperforming  assets  consist  of  nonperforming   loans,   troubled  debt
     restructurings, other repossessed assets and real estate owned.

                                       4
<PAGE>

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

General

The following is management's  analysis of DutchFork Bancshares' (the "Company")
consolidated  financial  condition and consolidated  results of operations as of
and for the years ended September 30, 2000 and 1999. 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 Conversion was  consummated on July 5, 2000. A total of 1,560,550  shares of
the Company's common stock were sold at a price of $10.00 per share, and the net
proceeds  from  the sale  were  $13,319,013  after  deducting  the  costs of the
conversion and the shares issued to the Employee  Stock  Ownership Plan ("ESOP")
which  were  financed  by a loan  from  the  Company.  The  majority  of the net
proceeds, or $13,229,000,  were invested in the capital stock issued by Newberry
Federal Savings Bank (the "Bank") in connection with the Conversion.

The Bank provides financial services from its four banking locations in Newberry
and western Lexington Counties in 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'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,  notably  changes in
market interest rates,  government  policies and regulations.  The Bank exceeded
all of its regulatory capital requirements at September 30, 2000.

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  $1.9  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, event 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.

                                       5
<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.

Operating Strategy

The Bank is an independent,  community-oriented savings bank, delivering quality
customer  services and offering a wide range of deposit and loan products to its
customers.  Because  of weak loan  demand in the  Bank's  primary  market  area,
management has maintained a substantial  investment in investment securities and
mortgage-backed   securities  classified  as  available-for-sale.   Management's
objective  in managing  the  securities  portfolio is to maintain a portfolio of
high quality,  highly liquid  investments with  competitive  returns in order to
maximize current income without compromising credit quality.

Going forward,  one of management's  objectives is to reduce the Bank's exposure
to rising interest  rates.  Rising market interest rates would likely reduce the
Bank's net interest income because its interest-bearing  liabilities,  which are
primarily short-term  borrowings and short-term  deposits,  would reprice faster
than its  interest-earning  assets,  which include a large portion of fixed-rate
loans and long-term investment securities.

                                       6
<PAGE>

Comparison of Financial Condition at September 30, 2000 and September 30, 1999

Total assets  increased  by $12.9  million from  September  30, 1999,  to $224.1
million at  September  30, 2000.  Loans  receivable  increased by $3.0  million,
comprised  mainly  of  consumer  and small  commercial  and real  estate  loans.
Investment  securities  available-for-sale  increased  $2.7  million  due to the
purchase of  adjustable-rate  securities as a hedge against the fixed-rate loans
in the loan portfolio.  Mortgage-backed securities held-for-investment decreased
$591,000  due  to  repayments  and   prepayments.   Mortgage-backed   securities
available-for-sale  increased  $9.1 million as a result of  purchases  exceeding
both  payments  and  sales.  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  $10.2 million from September 30, 1999 to September
30, 2000,  comprised mainly of shorter term certificates of deposit and checking
accounts.  Management  attributes  this  growth to  competitive  pricing and the
closing  of  branches  of other  banks in its  primary  market  area.  The funds
generated  from loan  repayments,  securities  prepayments  and  maturities  and
increased  deposit accounts were partially used to reduce Federal Home Loan Bank
advances and other  borrowings,  with the remaining  funds  invested in cash and
cash equivalents.

At  September  30,  1999,  total equity was $16.7  million,  which  consisted of
retained earnings of $20.6 million reduced by a $3.9 million unrealized loss. At
September 30, 2000, total equity was $31.3 million, an increase of $14.6 million
reflecting  the $13.3  million net  proceeds of the offering and $1.3 million of
comprehensive  income for the year.  Retained  earnings at September 30, 2000 of
$22.2 million is reduced by a $4.2 million unrealized loss, net of taxes, on the
investment  securities and mortgage-backed  securities  portfolios classified as
available-for-sale.  Because the Bank has a substantial  portfolio of investment
securities and mortgage-backed securities available-for-sale,  the market values
of these  securities  fluctuates  significantly as a result of changes in market
interest rates.

Comparison of Operating Results for the Years Ended September 30, 2000 and 1999

Net income.  Net income  increased  from $1.0 million in 1999 to $1.6 million in
2000  primarily  as a result of an  increase  of $1.4  million  in net  interest
income.

Net interest income.  Net interest income increased from $5.0 million in 1999 to
$6.4 million in 2000 primarily as a result of a slight  increase in the interest
rate  spread  from  2.44% to 2.74%,  and an  increase  in the  dollar  amount of
interest-earning assets. While interest-earning  liabilities also increased, the
Bank received the net margin along with a greater  increase in  interest-earning
assets than liabilities due to the $13.2 million proceeds of the offering.

                                       7
<PAGE>

Provision for Loan Losses. The provision for loan losses increased from $142,000
in 1999 to  $340,000  in 2000.  During  the first  half of the  year,  there was
evidence  of  increasing  consumer  loan  losses due to changes in the  economy;
therefore, efforts were made to increase the allowance for loan losses. Since by
year-end overall charge-offs, net of recoveries, had declined, the result was an
increase in the allowance for loan losses by approximately $281,000.  Management
believes the allowance is adequate at September 30, 2000. However, no assurances
can be given that the allowance for loan losses will not have to be increased in
the future.

Noninterest  income.  While noninterest income decreased by only $37,000 for the
year ended September 30, 2000, there were some more  significant  changes in the
components.  Bank service charges  increased by $86,000 due to increases in fees
received on checking  accounts,  debit cards and ATM transaction fees. Net gains
of the sale of  securities  decreased  by $100,000,  due to the rising  interest
rates,  which  decrease  imbedded gains in the  securities  portfolio.  The Bank
manages its unrealized  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 Note 14 to the consolidated financial statements.

Noninterest expense. Noninterest expense totaled $4.7 million for the year ended
September  30, 2000  compared to $4.2  million for the same period in 1999.  The
increase of $468,000 was  primarily a result of a $54,000  increase in furniture
and equipment,  a $32,000 increase in professional  fees, a $203,000 increase in
charitable  contributions  to promote economic  development in the community,  a
$39,000  increase in  compensation  and  benefits,  a $34,000  increase in other
expense and a $115,000  increase in the cost of interest  rate caps and a floor.
The  significant  increase in  contributions  reflected the Company's  continued
commitment to the community. The other major increase was in the amortization of
the expense of interest rate caps and a floor.  See Note 14 to the  consolidated
financial statements.

Provision for Income Taxes.  The  provision for income taxes  increased  between
1999 and 2000 as a result of higher income before income taxes.

                                       8
<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, 2000                2000                             1999
                                         --------------------- --------------------------------  -------------------------------
                                                                                        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)               $   78,308     7.89%  $   76,438   $    6,182     8.09%   $  73,561 $    5,780     7.86%
     Mortgage-backed securities (2)        109,840     6.64      107,362        7,288     6.79       90,625      5,708     6.30
     Investment securities (3)              22,976     7.06       21,157        1,623     7.67        9,451        538     5.69
     Interest-bearing deposits                 408    17.65        1,335           72     5.39        1,878         95     5.06
     Federal funds sold                          -        -        1,322           67     5.07        2,059        101     4.91
     Other                                   2,937    10.10        2,889          297    10.28        2,525        268    10.61
                                        -----------           ----------   ----------             --------- ----------
         Total interest-earning
            assets                         214,469     7.24      210,503       15,529     7.38      180,099     12,490     6.94
     Noninterest-earning assets              9,599                10,927                              7,081
                                        -----------           ----------                          ---------
         Total assets                    $ 224,068             $ 221,430                          $ 187,180
                                        ===========           ==========                          =========

Interest-bearing liabilities:
     Deposit accounts                    $ 147,731     4.63    $ 150,921        6,846     4.54    $ 139,440      5,990     4.30
     Federal Home Loan Bank
        advances                            35,000     6.00       35,292        2,099     5.95       24,944      1,438     5.76
     Other borrowings                        7,541     1.96        9,694          148     1.53        2,121         62     2.92
                                        -----------           ----------   ----------             --------- ----------
         Total interest-bearing
            liabilities                    190,272     4.78%     195,907        9,093     4.64%     166,505      7,490     4.50%
     Noninterest-bearing
        liabilities                          2,500                 5,496                              2,013
                                        -----------           ----------                          ---------
         Total liabilities                 192,772               201,403                            168,518
     Total retained earnings                31,296                20,027                             18,662
                                        -----------           ----------                          ---------
         Total liabilities and
            retained earnings            $ 224,068             $ 221,430                          $ 187,180
                                        ===========           ==========                          =========
Net interest-earning assets              $  24,197             $  14,596                          $  13,594
Net interest income/interest
   rate spread (4)                                     2.46%               $    6,436     2.74%             $    5,000     2.44%
Net interest margin as a
   percentage of interest-
   earning assets                                      3.00%                              3.06%                            2.78%
Ratio of interest-earning
   assets to interest-bearing
   liabilities                                       112.72%                            107.45%                          108.16%
</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.
(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.

                                       9

<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, 2000          Year Ended September 30, 1999
                                                     Compared to                            Compared to
                                            Year Ended September 30, 1999          Year Ended September 30, 1998
                                        -----------------------------------      ---------------------------------
                                          Rate         Volume         Net         Rate        Volume         Net
                                        --------      --------     --------      -------     --------     --------
                                                                   (Dollars in thousands)
Interest-earning assets:
<S>                                     <C>           <C>          <C>           <C>         <C>          <C>
     Loans                              $    172      $    230     $    402      $  (411)    $    462     $     51
     Mortgage-backed securities (1)          468         1,112        1,580          313          503          816
     Investment securities (1)               238           847        1,085         (152)        (306)        (458)
     Interest-earning deposits with
        banks                                  7           (30)         (23)         (38)         (21)         (59)
     Other borrowings                        (25)           (9)         (34)        (135)         (29)        (164)
     Other                                    21             8           29            3            2            5
                                        --------      --------     --------      -------     --------     --------
         Total interest-earning
            assets                           881         2,158        3,039         (420)         611          191

Interest-bearing liabilities:
     Deposit accounts                        346           510          856         (358)          96         (262)
     Federal Home Loan Bank
        advances                            (102)          763          661           44          104          148
     Federal funds borrowed                    6            80           86           19           30           49
                                        --------      --------     --------      -------     --------     --------
         Total interest-bearing
            liabilities                      250         1,353        1,603         (295)         230          (65)
                                        --------      --------     --------      --------    --------     --------
Increase (decrease) in net interest
   income                               $    631      $    805     $  1,436      $  (125)    $    381     $    256
                                        ========      ========     ========      ========    ========     ========
</TABLE>

------------------

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

                                       10

<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,   certain  deep  discounted,   fixed-rate   collateralized  mortgage
obligations  and long-term  zero coupon bonds.  At September 30, 2000,  the Bank
held $38.1 million of these securities, or 17.0% 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.

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,  2000,  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.


                                       11
<PAGE>


<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           $21,486    $(15,224)      (41)%        10.59%        $ (554)
     200            27,050      (9,661)      (26)         12.78           (335)
     100            32,337      (4,373)      (12)         14.68           (145)
  Static            36,710           -         -          16.12              -
    (100)           41,440       4,730        13          17.62            150
    (200)           42,378       5,668        15          17.74            161
    (300)           41,824       5,114        14          17.33            121
</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, 2000, it is estimated that a sudden 200
basis point  increase in interest  rates would decrease the Bank's net portfolio
value by $9.7 million,  or 26.3% at fiscal  year-end.  The Net  Portfolio  Value
ratio of 12.78% as  indicated  in the above table at 200 basis points rate shock
satisfied the 4% requirement  imposed by the OTS in connection with its approval
of the Conversion.

Liquidity and Capital Resources

Liquidity management is both a daily and long-term responsibility of 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  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.

                                       12
<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.

Federal  regulations  require  the Bank to  maintain  minimum  levels  of liquid
assets. The required percentage has varied from time-to-time based upon economic
conditions  and savings flow and is currently 4.0% of net  withdrawable  savings
deposits  and  borrowings  payable  on demand or in one year or less  during the
preceding calendar month. Liquid assets for purposes of this ratio include cash,
certain  time  deposits,  U.S.  Government,   government  agency  and  corporate
securities and other obligations  generally having remaining  maturities of less
than five years.  The Bank has  historically  maintained its liquidity ratio for
regulatory  purposes at levels in excess of those  required.  At  September  30,
2000, the Bank's liquidity ratio for regulatory purposes was 78.8%.

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, 2000, cash and short-term
investments  totaled $6.2 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, 2000, the Bank had the
ability to borrow a total of  approximately  $56.2 million from the Federal Home
Loan Bank of Atlanta.  On that date, the Bank had outstanding  advances of $35.0
million.

At September 30, 2000, the Bank had  outstanding  commitments to originate loans
of $683,000,  $471,000 of which 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,  2000
totaled $88  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, 2000,  Newberry  Federal was in
compliance  with all applicable  capital  requirements.

                                       13
<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.

Impact of New Accounting Standards

Accounting  for  Derivative  Instruments  and Hedging  Activities.  Statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and Hedging  Activities,"  addresses the accounting for derivative  instruments,
including certain derivative instruments embedded in other contracts and hedging
activities.  As recently amended by Statement of Financial  Accounting Standards
No. 137, the statement is effective for all fiscal  quarters of all fiscal years
beginning  after June 15, 2000.  On that date,  hedging  relationships  shall be
designed in accordance with the statement. Earlier application is encouraged but
is  permitted  only at the  beginning  of any fiscal  quarter  that begins after
issuance of the statement.  Earlier  application  of selected  provisions of the
statement is not permitted.  The statement shall not be applied retroactively to
financial  statements of prior periods.  The statement is not expected to have a
material  adverse impact on the  consolidated  financial  position or results of
operations of the Company.

Accounting for  Mortgage-Backed  Securities Retained After the Securitization of
Mortgage  Loans Held for Sale by a Mortgage  Banking  Enterprise.  Statement  of
Financial   Accounting   Standards  No.  134,  "Accounting  for  Mortgage-Backed
Securities  Retained After the Securitization of Mortgage Loans Held for Sale by
a Mortgage  Banking  Enterprise,"  issued in October 1998,  amends  Statement of
Financial  Accounting Standards No. 65, "Accounting for Certain Mortgage Banking
Activities,"   and  Statement  of  Financial   Accounting   Standards  No.  115,
"Accounting for Certain  Investments in Debt and Equity  Securities,"  for years
beginning after December 15, 1998.  Statement of Financial  Accounting Standards
No. 134 allows entities with mortgage banking  operations which convert pools of
mortgages into  securities to classify these  securities as  available-for-sale,
trading or  held-to-maturity,  instead of the  current  requirement  to classify
these pools as trading.  The Company  adopted this  standard on October 1, 1999;
however, the impact was not material to the consolidated financial statements.

                                       14
<PAGE>

                      [Letterhead of Clifton D. Bodiford]

                          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, 2000 and 1999,  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.
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, 2000 and 1999 and the results
of its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

                                        /s/ Clifton D. Bodiford

November 3, 2000


                                       15
<PAGE>



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

                                                                 At September 30,
                                                              2000              1999
                                                         -------------  ----------------
<S>                                                        <C>            <C>
Assets

Cash and cash equivalents (Notes 1, 2
   and 12)                                                 $  2,834,538   $  3,256,053
Investments and mortgage-backed securities
  (Notes 1, 3, 7 and 12):
     Available-for-sale:
         Investments (cost of $27,429,604 and
           $24,577,854 at September 30, 2000
           and 1999 respectively)                            24,772,470     22,067,828
         Mortgage-backed securities (cost of
           $110,102,612 and $100,578,925 at
           September 30, 2000 and 1999
           respectively)                                    105,965,236     96,884,504
     Held-to-maturity:
         Investments (fair value of
           $1,141,000 and $1,141,000 at
           September 30, 2000 and 1999
           respectively)                                      1,141,000      1,141,000
         Mortgage-backed securities (fair
           value of $3,493,114 and $4,339,769
           at September 30, 2000 and 1999
           respectively)                                      3,874,486      4,465,704
Loans receivable (Notes 1, 4, 7, 10, and 12)                 78,307,565     75,324,278
Repossessed assets                                               22,246         14,271
Premises, furniture and equipment, net (Notes
   1 and 5)                                                   3,600,824      3,656,352
Accrued interest receivable:
     Loans and mortgage-backed securities
        (Note 1)                                                560,940        489,453
     Investments and other property                             925,279        778,828
Prepaid assets                                                  351,971        255,218
Prepaid income tax and tax refunds
   receivable                                                    43,600      1,440,936
Deferred tax asset (Notes 1 and 9)                              566,355        461,406
Other                                                         1,101,479        914,991
                                                           ------------   ------------
Total assets                                               $224,067,989   $211,150,822
                                                           ============   ============
</TABLE>

                                       16

<PAGE>



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

<TABLE>
<CAPTION>

                                                                   At September 30,
                                                               2000                 1999
                                                          --------------        ------------
Liabilities and stockholders' equity
Liabilities:
<S>                                                         <C>                 <C>
     Deposit accounts (Note 6, 12 and
        14)                                                 $147,730,669        $137,537,411
     Federal Home Loan Bank advances
        (Notes 7 and 12)                                      35,000,000          39,240,000
     Other borrowings                                          2,755,000           7,370,000
     Advances from borrowers for taxes
        and insurance                                             60,727              59,983
     Accrued income taxes payable                                838,707
     Accounts payable - securities                             4,785,938           8,893,350
     Accounts payable                                             21,837              50,713
     Accrued expenses                                            655,789             698,873
     Accrued interest payable                                    860,231             523,227
     Other                                                        63,576              76,461
                                                           -------------       -------------
Total liabilities                                            192,772,474         194,450,018
                                                           -------------       -------------

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, 1,560,550 issued
        and outstanding at September 30, 2000                     15,605                  --
     Additional paid-in capital                               14,554,183                  --
     Retained earnings, substantially restricted
        (Notes 9 and 11)                                      22,180,461          20,551,275
     Accumulated other comprehensive income (loss)            (4,216,676)         (3,850,471)
     Unearned employee stock ownership plan shares            (1,238,058)                 --
                                                           -------------       -------------
Total stockholders' equity                                    31,295,515          16,700,804
                                                           -------------       -------------
Total liabilities and stockholders' equity                 $ 224,067,989       $ 211,150,822
                                                           =============       =============
</TABLE>

See accompanying notes.

                                       17
<PAGE>



                           DutchFork Bancshares, Inc.
                                and Subsidiaries
                        Consolidated Statements of Income
<TABLE>
<CAPTION>

                                                                          Year Ended
                                                                         September 30,
                                                                    2000             1999
                                                                ------------      -----------
<S>                                                              <C>              <C>
Interest income:

     Loans receivable (Notes 1 and 4)                            $ 6,182,496      $ 5,780,396
     Investments (Notes 1 and 3)                                   1,694,566        5,874,925
     Mortgage-backed and related securities (Notes 1 and 3)        7,287,872          465,361
     Other interest-earning assets                                   364,017          368,890
                                                                 -----------      -----------
         Total interest income                                    15,528,951       12,489,572
                                                                 -----------      -----------

Interest expense:

     Interest expense on deposit accounts (Note 6)                 6,846,302        5,989,748
     Federal Home Loan Bank advances (Note 7)                      2,099,061        1,438,133
     Other borrowings purchased                                      147,425           61,823
                                                                 -----------      -----------
         Total interest expense                                    9,092,788        7,489,704
                                                                 -----------      -----------

Net interest income                                                6,436,163        4,999,868
     Provision for loan losses (Notes 1 and 4)                       340,000          142,000
                                                                 -----------      -----------
     Net interest income after provision for loan losses           6,096,163        4,857,868
                                                                 -----------      -----------

Noninterest income:

     Gain (loss) on sale of securities, net                           94,465          194,170
     Loan origination and commitment fees (Note 1)                   107,014          138,449
     Profit on sale of loans                                           1,447               --
     Loan servicing fees                                              76,179           76,304
     Bank service charges                                            671,132          585,229
     Loan late charges                                                55,628           50,669
     Other                                                           112,630          110,245
                                                                 -----------      -----------
         Total noninterest income                                  1,118,495        1,155,066
                                                                 -----------      -----------
</TABLE>



                                       18
<PAGE>


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

<TABLE>
<CAPTION>


                                                   Year Ended
                                                  September 30,
                                              2000            1999
                                           ---------       ---------
<S>                                        <C>             <C>
Noninterest expense:

     Compensation and benefits             2,075,739       2,036,812
     Occupancy                               298,270         295,511
     SAIF deposit insurance premium           43,351          82,298
     Foreclosed real estate expenses           1,611           7,651
     Furniture and equipment                 432,583         378,450
     Professional fees                       209,632         177,696
     Telephone and postage                   167,180         156,575
     Insurance                               156,453          41,076
     Marketing                               163,830         153,569
     Data processing                         328,143         300,301
     Supplies and printing                    81,908          72,451
     OTS assessments                          51,090          48,328
     Meetings                                 52,174          68,858
     Bank service charges                     39,579          33,666
     Loan expenses                            52,902          77,211
     Transaction account charges              39,895          43,816
     Automated teller system                  33,700          23,473
     Contributions                           314,801         111,578
     Other                                   152,321         118,268
                                          ----------      ----------
         Total noninterest expense         4,695,162       4,227,588
                                          ----------      ----------

     Income before income taxes            2,519,496       1,785,346

Provision for income taxes                   890,310         771,016
                                          ----------      ----------

Net income                                $1,629,186      $1,014,330
                                          ==========      ==========

Net income per share                      $     1.13      $      N/A
                                          ==========      ==========
</TABLE>


See accompanying notes.

                                       19

<PAGE>



                           DutchFork Bancshares, Inc.
                                and Subsidiaries

               Consolidated Statements of Comprehensive Operations

<TABLE>
<CAPTION>
                                                           Year Ended September 30,
                                                             2000             1999
                                                        ------------       -----------
<S>                                                      <C>               <C>
Net income                                               $ 1,629,186       $ 1,014,330

Other comprehensive income (loss), net of tax:
     Unrealized gains (losses) arising during the
        period, net of tax effect of $(223,875) and
        $(1,885,797) for the years ended September
        30, 2000 and 1999, respectively                     (366,205)       (3,084,674)
                                                         -----------       -----------

Comprehensive income (loss)                              $ 1,262,981       $(2,070,344)
                                                         ===========       ===========
</TABLE>


See accompanying notes.


                                      20
<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries
           Consolidated Statements of Changes in Stockholders' Equity


<TABLE>
<CAPTION>


                                                   Number of                           Additional          Retained
                                                    Shares           Common Stock    Paid-in Capital       Earnings
                                                --------------       ------------    ---------------  ----------------
<S>                                                <C>             <C>                 <C>              <C>
Balance at September 30, 1998                               --     $         --       $         --      $ 19,536,945
      Net income                                            --               --                 --         1,014,330
      Change in net unrealized depreciation
         on investments available for sale
         (net of deferred and current income
         tax benefit of $(1,885,797))                       --               --                 --                --
                                                  ------------     ------------       ------------      ------------
Balance at September 30, 1999                       20,551,275                                            20,551,275
      Issuance of common stock in public
         offering                                    1,560,550           15,605         14,551,848                --
      Release of 10,38 ESOP shares                          --               --              2,335                --
      Net income                                            --               --                 --         1,629,186
      Change in net unrealized depreciation
         on investments available for sale
         (net of deferred and current income
         tax benefit of $(223,875))                         --               --                 --                --
                                                  ------------     ------------       ------------      ------------
Balance at September 30, 2000                        1,560,550     $     15,605       $ 14,554,183      $ 22,180,461
                                                  ============     ============       ============      ============
</TABLE>



<TABLE>
<CAPTION>
                                                                   Accumulated
                                                 Employee Stock       Other              Total
                                                   Ownership      Comprehensive      Stockholders'
                                                    Plan Loan      Income (Loss)        Equity
                                                ---------------   -------------   ----------------
<S>                                             <C>               <C>                <C>
Balance at September 30, 1998                  $         --       $   (765,797)      $ 18,771,148
      Net income                                         --                 --          1,014,330
      Change in net unrealized depreciation
         on investments available for sale
         (net of deferred and current income
         tax benefit of $(1,885,797))                    --         (3,084,674)        (3,084,674)
                                                ------------       ------------      ------------
Balance at September 30, 1999                                       (3,850,471)        16,700,804
      Issuance of common stock in public
         offering                                (1,248,440)                --         13,319,013
      Release of 10,38 ESOP shares                   10,382                 --             12,717
      Net income                                         --                 --          1,629,186
      Change in net unrealized depreciation
         on investments available for sale
         (net of deferred and current income
         tax benefit of $(223,875))                      --           (366,205)          (366,205)
                                                ------------       ------------      ------------
Balance at September 30, 2000                  $ (1,238,058)      $ (4,216,676)      $ 31,295,515
                                               ============       ============       ============
</TABLE>


See accompanying notes.

                                       21

<PAGE>



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


<TABLE>
<CAPTION>
                                                                   Year Ended September 30,
                                                                    2000               1999
                                                              --------------      --------------
<S>                                                              <C>                <C>
Operating Activities

Net income                                                       $ 1,629,186        $ 1,014,330
Adjustments to reconcile net income to net cash
   provided (used) by operating activities:
     Depreciation                                                    249,605            234,918
     Provision for losses                                            340,000            142,000
     (Gain) loss on sales of investments and mortgage-
         backed securities                                            94,465           (194,166)
     Net loss on sales on loans                                        1,447                 --
     Net loss on sales of foreclosed real estate                      22,697              9,861
     Increase (decrease) in deferred loan origination fees             4,289             (4,747)
     Amortization of premiums (discounts) on investments,
        mortgage-backed securities and loans                      (1,107,839)          (466,154)
     Decrease (increase) in accrued interest receivable             (217,938)           485,187
     Decrease (increase) in prepaid and other assets               1,114,095            (16,285)
     Decrease in deferred tax asset                                  102,814             16,350
     Increase in accrued interest payable                            337,004            125,532
     Increase (decrease) in accounts payable and accrued
         expenses                                                 (4,136,288)         8,958,574
     Increase (decrease) in other liabilities                        800,769           (458,085)
     Origination of loans held for sale                           (1,147,134)          (531,370)
     Proceeds from sales of loans held for sale                    1,679,951                 --
                                                                 -----------        -----------
Net cash provided (used) by operating activities                    (232,877)         9,315,945
                                                                 -----------        -----------
</TABLE>

                                       22

<PAGE>


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

<TABLE>
<CAPTION>
                                                                Year Ended September 30,
                                                                2000                1999
                                                           --------------       --------------
<S>                                                        <C>                  <C>
Investing Activities

Principle payments on mortgage-backed securities              14,215,053           35,230,156
Purchases of held to maturity securities                              --              (56,000)
Proceeds from maturities of securities                                --            1,351,781
Purchases of available-for-sale securities                   (50,546,358)        (125,256,440)
Proceeds from sales of available-for-sale securities          25,560,858           59,720,666
Net (increase) decrease in loans receivable                   (3,914,511)          (3,704,569)
Proceeds from sales of repossessed assets                         22,000               18,082
Purchases of premises, furniture and equipment                  (194,077)            (147,385)
                                                           -------------        -------------
Net cash provided (used) by investing activities             (14,857,035)         (32,843,709)
                                                           -------------        -------------

Financing Activities

Net  increase (decrease) in deposit accounts                  10,193,258           (4,164,955)
Proceeds from Federal Home Loan Bank advances                  8,500,000           18,640,000
Payments on Federal Home Loan Bank advances and
   other borrowings                                          (12,740,000)                  --
Proceeds from other borrowings                                38,870,000            7,370,000
Repayments of other borrowings                               (43,485,000)                  --
Issuance of stock in public offering                          13,319,013                   --
Repayment of ESOP loan                                            10,382                   --
Increase (decrease) in advances from borrowers for
   taxes and insurance                                               744              (24,947)
                                                           -------------        -------------
Net cash provided by financing activities                     14,668,397           21,820,098
                                                           -------------        -------------
Net increase (decrease) in cash and cash equivalents            (421,515)          (1,707,666)
Cash and cash equivalents at beginning of year                 3,256,053            4,963,719
                                                           -------------        -------------
Cash and cash equivalents at end of year                   $   2,834,538        $   3,256,053
                                                           =============        =============

Supplemental Disclosures of Cash Flow Information:

Cash paid (received) during the year for:

      Interest                                               $ 9,429,792          $ 7,271,143
      Taxes                                                  $(1,464,659)         $   484,097
</TABLE>

See accompanying notes

                                       23

<PAGE>



                           DutchFork Bancshares, Inc.
                                and Subsidiaries
                   Notes to Consolidated Financial Statements
                     Years Ended September 30, 2000 and 1999

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  all of the
         outstanding  stock of Newberry  Federal Savings Bank (the "Bank").  The
         Bank is in the  business of  obtaining  deposits  in  Newberry  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.

                                       24

<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.

                                       25

<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.



                                       26
<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.

         (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.

                                       27


<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.




                                       28
<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  1999  amounts  have been  reclassified  to  conform  with 2000
         classifications.

         (o) Marketing Expenses

         The Bank expenses the cost of marketing as incurred. Marketing expenses
         totaled  $163,830 and $153,569 for the years ended  September  30, 2000
         and 1999, 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.



                                       29
<PAGE>




                            DutchFork Bancshares, Inc.
                                and Subsidiaries

2.  Cash and Cash Equivalents

         Cash and cash equivalents are as follows:

                                      At September 30,
                                    2000            1999
                               -------------    -------------
Cash and due from banks         $2,426,782       $1,725,337
Interest bearing deposits          407,756        1,530,716
                                ----------       ----------
                                $2,834,538       $3,256,053
                                ==========       ==========

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, 2000
                                        ---------------------------------------------------------------------
                                                              Gross              Gross
                                          Amortized         Unrealized         Unrealized           Fair
                                            Cost              Gains              Losses             Value
                                        ------------       ------------       ------------       ------------
<S>                                     <C>                <C>                <C>                <C>
   Bonds and notes-US government
  and agency securities                 $ 24,414,441       $  6,351,858       $  8,881,564       $ 21,884,735
                                        ------------       ------------       ------------       ------------
Equity securities:
  Mutual funds                             1,061,355                 --            146,369            914,986
  Stock in Federal Home Loan Bank          1,882,000                 --                 --          1,882,000
  Other                                       71,808             18,941                 --             90,749
                                        ------------       ------------       ------------       ------------
    Total equity securities                3,015,163             18,941            146,369          2,887,735
                                        ------------       ------------       ------------       ------------
Total investments                       $ 27,429,604       $  6,370,799       $  9,027,933       $ 24,772,470
                                        ============       ============       ============       ============

Mortgage-backed securities:
  Government guaranteed                 $ 86,555,920       $    672,348       $  3,687,593       $ 83,540,675
  Private issues                          23,546,692             49,662          1,171,793         22,424,561
                                        ------------       ------------       ------------       ------------
Total mortgage-backed securities        $110,102,612       $    722,010       $  4,859,386       $105,965,236
                                        ============       ============       ============       ============
</TABLE>


                                       30
<PAGE>



                           DutchFork Bancshares, Inc.
                                and Subsidiaries

3.  Investments and Mortgage-Backed Securities (continued)

<TABLE>
<CAPTION>
                                                                 At September 30, 1999
                                        ----------------------------------------------------------------------
                                                               Gross              Gross
                                           Amortized         Unrealized         Unrealized           Fair
                                             Cost              Gains              Losses             Value
                                        -----------------   ------------       ------------       ------------
<S>                                      <C>                <C>                <C>                <C>
Bonds and notes-US government
  and agency securities                  $ 21,487,174       $        498       $  2,376,744       $ 19,110,928
                                         ------------       ------------       ------------       ------------
Equity securities:
  Mutual funds                              1,056,858                 --            142,365            914,493
  Stock in Federal Home Loan Bank           1,962,000                 --                 --          1,962,000
  Other                                        71,822              8,585                 --             80,407
                                         ------------       ------------       ------------       ------------
    Total equity securities                 3,090,680              8,585            142,365          2,956,900
                                         ------------       ------------       ------------       ------------
Total investments                        $ 24,577,854       $      9,083       $  2,519,109       $ 22,067,828
                                         ============       ============       ============       ============

Mortgage-backed securities:
  Government guaranteed                  $ 76,792,538       $  1,391,260       $  3,833,097       $ 74,350,701
  Private issues                           23,786,387            137,936          1,390,520         22,533,803
                                         ------------       ------------       ------------       ------------
Total mortgage-backed securities         $100,578,925       $  1,529,196       $  5,223,617       $ 96,884,504
                                         ============       ============       ============       ============
</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, 2000
                                      -------------------------------------------------------------
                                                          Gross            Gross
                                       Amortized        Unrealized      Unrealized         Fair
                                         Cost             Gains           Losses           Value
                                      ----------       ----------       ----------       ----------
<S>                                   <C>              <C>              <C>              <C>
Municipal securities                  $1,091,000       $       --       $       --       $1,091,000
Other                                     50,000               --               --           50,000
                                      ----------       ----------       ----------       ----------
                                       1,141,000               --               --        1,141,000
                                      ----------       ----------       ----------       ----------
Mortgage-backed securities:
  Government guaranteed                3,874,486            7,238          388,610        3,493,114
                                      ----------       ----------       ----------       ----------
                                      $5,015,486       $    7,238       $  388,610       $4,634,114
                                      ==========       ==========       ==========       ==========
</TABLE>

<TABLE>
<CAPTION>
                                                         At September 30, 1999
                                     -------------------------------------------------------------
                                                         Gross           Gross
                                     Amortized         Unrealized     Unrealized         Fair
                                       Cost              Gains          Losses           Value
                                     -----------      ----------       ----------       ----------
<S>                                  <C>              <C>              <C>              <C>
   Municipal securities              $1,091,000       $       --       $       --       $1,091,000
   Other                                 50,000               --               --           50,000
                                     ----------       ----------       ----------       ----------
                                      1,141,000               --               --        1,141,000
                                     ----------       ----------       ----------       ----------
   Mortgage-backed securities:
     Government guaranteed            4,465,704           10,197          136,132        4,339,769
                                     ----------       ----------       ----------       ----------
                                     $5,606,704       $   10,197       $  136,132       $5,480,769
                                     ==========       ==========       ==========       ==========
</TABLE>



                                       31
<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, 2000,  investments  with a book value of approximately
         $15,335,000  were  pledged as  collateral  for  various  deposits,  and
         investments  with a book value of $5,889,922 were pledged as collateral
         on Federal Home Loan Bank advances. At September 30, 1999,  investments
         with  a  book  value  of  approximately  $12,153,000  were  pledged  as
         collateral on various  deposits,  and investments  with a book value of
         $5,843,699  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 $108,975 and $14,510,  respectively
         for the year ended September 30, 2000. For the year ended September 30,
         1999,  gross  realized  gains were  $207,410 and  realized  losses were
         $13,249.

         The scheduled  maturities of securities (other than equity  securities)
were as follows:
<TABLE>
<CAPTION>
                                                                    At September 30, 2000
                                           -------------------------------------------------------------------
                                              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          $         --       $         --       $  1,662,248       $  1,671,659
         Due from one to five years                 --                 --                 --                 --
         Due from five to ten years                 --                 --            971,154            930,000
         Due after ten years                 5,015,486          4,634,114        131,883,651        125,248,312
                                          ------------       ------------       ------------       ------------
                                          $  5,015,486       $  4,634,114       $134,517,053       $127,849,971
                                          ============       ============       ============       ============
</TABLE>

<TABLE>
<CAPTION>
                                                                   At September 30, 1999
                                           -------------------------------------------------------------------
                                              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                 --                 --                 --                 --
         Due from five to ten years                 --                 --            966,620            959,950
         Due after ten years                 5,606,704          5,480,769        121,099,479        115,035,482
                                          ------------       ------------       ------------       ------------
                                          $  5,606,704       $  5,480,769       $122,066,099       $115,995,432
                                          ============       ============       ============       ============
</TABLE>


                                       32
<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

3.    Investments and Mortgage-Backed Securities (continued)

         The Bank adopted Statement of Financial  Accounting  Standards No. 115,
         Accounting for Certain  Investments in Debt and Equity Securities (FASB
         115), September 30, 1994. 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 $1,530,000 at September 30, 2000.



                                       33
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

4.  Loans Receivable

         Loans receivable consisted of the following:

                                                        At September 30,
                                                     2000              1999
                                                 -----------       -----------
        Commercial real estate                   $12,496,883       $ 9,740,346
        Commercial-other                             819,653         1,891,559
        Real estate construction                   1,302,142         1,695,455
        Residential mortgage - 1-4 family         53,986,866        50,416,101
        Multi-family                                  50,687            53,621
        Consumer loans                            14,126,949        12,994,160
                                                 -----------       -----------
                                                  82,783,180        76,791,242
                                                 -----------       -----------
        Less:
        Allowance for losses                         465,244           184,170
         Loans in process                          3,906,459         1,174,593
         Deferred loan origination fees, net         103,912           108,201
                                                 -----------       -----------
                                                   4,475,615         1,466,964
                                                 -----------       -----------
        Loans receivable, net                    $78,307,565       $75,324,278
                                                 ===========       ===========

         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, 2000 included no loans held for sale,
         and at September 30, 1999, $531,370 of loans held for sale.

         Mortgage  loans  include  $0.9  million and $1.5  million  representing
         participating  interests  in loans  originated  and  serviced  by other
         financial institutions as of September 30, 2000 and 1999, respectively.

         Non-accrual loans are as follows:

                                                      At September 30,
                                                   2000              1999
                                              --------------    --------------
         Non-accrual loans                    $      132,800    $      163,000
                                              ==============    ==============
         Interest income which would
            have been recognized under
            original terms                    $       12,200   $        13,040
         Interest income recognized                    4,677             9,825
                                              --------------  ----------------
         Interest income not recognized       $        7,523   $         3,215
                                              ==============  ================




                                       34
<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries


4.  Loans Receivable (continued)

         Mortgage loans at September 30, 2000 and 1999 are net of participations
         and  whole  loans  sold and  serviced  for  others  in the  amounts  of
         $20,414,107 and $22,049,615,  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  $57,252 and $74,859 at  September  30,
         2000 and 1999, respectively.

         Changes in the allowance for losses are summarized as follows:

                                         Year Ended                Year Ended
                                        September 30,             September 30,
                                            2000                      1999
                                         ----------                ----------
            Beginning balance            $ 184,170                 $ 181,057
            Provision for losses           340,000                   142,000
            Charge-offs                   (149,851)                 (166,637)
            Recoveries                      90,925                    27,750
                                         ---------                 ----------
            Ending balance               $ 465,244                 $ 184,170
                                         =========                 ==========

         Restructured  loans  totaled   approximately  $29,614  and  $54,000  at
         September 30, 2000 and 1999, 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,
                                               2000                 1999
                                            -----------         -----------
         Balance, beginning of period       $ 564,678             $ 311,657
         New loans                             89,102               541,000
         Repayments (net of advances)         (65,183)             (287,979)
                                            ----------            ----------
         Balance, end of period             $ 588,597             $ 564,678
                                            =========             =========



                                 35
<PAGE>




                           DutchFork Bancshares, Inc.
                                and Subsidiaries

5.  Premises, Furniture, and Equipment

         Premises, furniture and equipment are summarized as follows:

                                                       At September 30,
                                                    2000              1999
                                             ---------------   -----------------
         Land                                 $    1,121,845    $    1,071,688
         Buildings and improvements                2,853,402         2,838,402
         Furniture and equipment                   1,180,642         1,051,721
                                             ---------------   ---------------
                                                   5,155,889         4,961,811
         Less accumulated depreciation             1,555,065         1,305,459
                                             ---------------   ---------------
         Premises, furniture and
               equipment, net                 $    3,600,824    $    3,656,352
                                              ==============    ==============

         Depreciation  expense for the years ended  September  30, 2000 and 1999
         was $249,605 and $234,918, respectively.

6.  Deposit Accounts

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

                                                        At September 30,
                                                     2000            1999
                                                --------------   ------------
         NOW and money market:
            0.00% to 6.00%                      $   30,997,535  $  27,432,392
                                                --------------  -------------
         Passbook: -.27% to 5.00%                   16,297,257     17,734,474
                                                --------------  -------------
         Certificates of deposit:
            2.60% to 3.99%                             417,229        785,723
            4.00% to 5.99%                          50,023,903     86,416,426
            6.00% to 7.99%                          49,994,745      3,328,455
            8.00% to 9.99%                                  --      1,839,941
                                               ---------------  -------------
Total certificates of
            deposit                                100,435,877     92,370,545
                                                --------------  -------------
         Total deposit accounts                  $ 147,730,669   $137,537,411
                                                 =============   ============

         Weighted average interest rate
            of NOW and money market
            accounts                                   2.24%            2.47%
                                                       =====            =====

         The aggregate amount of short-term CD's with a minimum  denomination of
         $100,000 was approximately $24.5 million and $21.2 million at September
         30, 2000 and 1999, respectively. Non-interest bearing deposits were not
         material at September 30, 2000 and 1999. Deposits in excess of $100,000
         are not insured. The Bank did not have any brokered deposits.



                                       36
<PAGE>



                           DutchFork Bancshares, Inc.
                                and Subsidiaries

6.  Deposit Accounts (continued)

         The scheduled  maturities of  certificates  of deposit at September 30,
2000 are as follows:

            2001                               $   88,027,478
            2002                                   11,172,574
            2003                                    1,071,252
            2004                                       39,019
            2005                                      125,554
           Thereafter                                      --
                                               --------------
         Total certificates of deposit          $ 100,435,877
                                                =============

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  $40,971,386  and
         investments of $5,889,922  collateralized the advances at September 30,
         2000. At September 30, 1999,  loans of $38,488,003  and  investments of
         $5,843,699 collateralized these advances.

         Advances from the FHLB consisted of the following:

                                                          At September 30,
                                                        2000           1999
                                                    -----------     ----------
         Contractual Maturity

         Within one year- adjustable rate          $         --   $ 29,240,000
         2008-fixed rate                             10,000,000     10,000,000
         2010-fixed rate                             25,000,000             --
                                                   ------------   ------------
                                                   $ 35,000,000   $ 39,240,000
                                                   ============   ============
         Weighted average rate                           5.73%         5.65%
                                                        ======        ======



                                       37
<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,
                                                         2000           1999
                                                     -----------     -----------
        Average balance during the period            $ 3,517,000     $ 2,120,000
        Average interest rate during the period         6.00%           4.95%
        Average interest rate at end of period          6.90%           5.50%
        Maximum month end balances                   $ 7,170,000     $ 7,370,000

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,
                                                         2000            1999
                                                      ---------       ----------
         Current                                      $ 772,440        $ 757,786
         Deferred                                       117,870           13,230
                                                      ---------       ----------
                                                      $ 890,310        $ 771,016
                                                      =========        =========

        Income taxes  differed  from amounts  computed by applying the statutory
        federal rate (34%) to income before income taxes and  cumulative  effect
        of a change in accounting principle as follows:

                                          Year Ended September 30,
                                           2000            1999
                                         --------        --------

         Tax at federal
            income tax rate              $856,629        $607,018
         Increase (decrease)
            resulting from:
            State income tax
               expense, net of
               federal tax benefit             --          75,020
            Other, net                     33,681          88,978
                                         --------        --------
         Total                           $890,310        $771,016
                                         ========        ========

         Effective tax rate                  35.3%           43.2%
                                         ========        ========



                                       38
<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>
                                                                                      2000              1999
                                                                                 --------------    --------------
<S>                                                                                  <C>             <C>
         Deferred tax assets:
            Differences between book and tax basis of bad debt reserves              $ 159,589       $   56,421
            Differences between book and tax basis of investments                      603,978          616,903
            Deferred compensation for Director Emeritus                                101,717           81,530
            Other                                                                        2,018            2,760
                                                                                   -----------      -----------
         Total deferred tax assets                                                     867,302          757,614
            Valuation allowance                                                             --               --
                                                                                   -----------      -----------

            Net deferred tax assets                                                    867,302          757,614
                                                                                     ---------        ---------
         Deferred tax liabilities:
            Differences between book and tax pension expense                           (55,948)         (46,418)
            Differences between book and tax basis of Federal Home
               Loan Bank stock                                                        (112,692)        (117,483)
            Differences between book and tax basis of property                        (132,307)        (132,307)
                                                                                    -----------      -----------
         Total deferred tax liabilities                                               (300,947)        (296,208)
                                                                                    -----------      -----------
         Net deferred tax asset                                                      $ 566,355        $ 461,406
                                                                                     =========        =========
</TABLE>


         During  the years  ended  September  30,  2000 and 1999,  income  taxes
         (benefits) of $(223,875) and $(1,885,797), 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.



                                       39
<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.  In many cases,
         these  financial  instruments  serve to reduce,  rather than  increase,
         market risk.

         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.

                                       40
<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,  2000  and  1999,  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, 2000    September 30, 1999
                                     ------------------    ------------------

              Variable rate              $ 212,400             $ 162,000

              Fixed rate (ranging
               from 8.0% to 11%)           470,539               286,869

         Lines  of  credit  extended  to  borrowers  amounted  to  approximately
         $18,578,307, of which $7,790,891 was undisbursed at September 30, 2000.

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.



                                       41
<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 December 31, 1998, 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.

         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 if such declaration and payment would otherwise  violate  regulatory
         requirements.



                                       42
<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

11.  Regulatory Capital Requirements (continued)

    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, 2000
  Tangible capital          15.27%       $ 34,738      2.00%      $ 4,550       N/A          N/A
  Core capital              15.27%       $ 34,738      4.00%      $ 9,100      5.00%     $ 11,375
  Risk-based capital        32.34%       $ 35,181      8.00%      $ 8,703     10.00%     $ 10,878

September 30, 1999
  Tangible capital           9.24%       $ 19,797      2.00%      $ 4,284       N/A          N/A
  Core capital               9.24%       $ 19,797      4.00%      $ 8,569      5.00%     $ 10,711
  Risk-based capital        17.39%       $ 19,945      8.00%      $ 9,174     10.00%     $ 11,467

</TABLE>


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

                                                  At September 30,
                                             2000                1999
                                           ---------          ----------
GAAP capital                               $ 31,295            $ 16,701
Investment in subsidiary                       (774)               (754)
Unrealized losses (gains) on
   available-for-sale securities              4,217               3,850
                                           --------           ----------
Core and tangible capital                    34,738              19,797
Unrealized losses (gains) on
   available-for-sale securities                 66                  64
Allowance for loan and lease losses             465                 162
Equity investments                              (88)                (78)
                                           --------           ---------
Risk-based capital                         $ 35,181            $ 19,945
                                           ========           =========


                                       43
<PAGE>





                           DutchFork Bancshares, Inc.
                                and Subsidiaries


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,
                                                                 2000                             1999
                                                     ---------------------------     --------------------------
                                                      Carrying          Fair           Carrying          Fair
                                                       Value            Value           Value            Value
                                                      -------           -----          -------           -----
<S>                                                   <C>              <C>               <C>             <C>
    Financial instruments:
          Assets:
           Cash and cash equivalents                  $ 2,835          $ 2,835         $   3,256       $   3,256
           Investments and mortgage-backed
              securities                              135,751          110,597           124,559         124,433
           Loans receivable                            78,308                             75,324          75,163
          Accrued interest receivable                   1,486            1,486             1,268           1,268
          Liabilities:
          Deposit accounts:
             Demand deposits and passbook
                 accounts                              47,295           47,295            45,166          45,166
             Certificates of deposit                  100,436          100,393            92,371          92,145
           FHLB advances                               35,000           35,000            39,240          39,240
           Other borrowings                             2,755            2,755             7,370           7,370
           Advances from borrowers for
               taxes and insurance                         61               61                60              60
</TABLE>


         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 FHLB advances and federal funds  purchased is
         estimated based on current rate for advances with similar terms.



                                       44
<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

12.      Fair Value of Financial Instruments (continued)

         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 December 31, 1999. 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

         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 year ended September 30,
         2000 and Plan assets  exceeded the present  value of  accumulated  plan
         benefits at the latest actuarial valuation date.

         In prior years, the Bank maintained a non-contributory  defined benefit
         plan  covering  employees  based on age and years of service.  Benefits
         were  based  on  length  of  service  and a  percentage  of  qualifying
         compensation.  The Bank used the service pro-rata unit credit method as
         its actuarial valuation method.



                                       45
<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

13.  Employee Benefit Plans (continued)

         The  following  table sets forth the Plan's  funded  status and amounts
         recognized in the consolidated financial statements as of September 30,
         1999:

        Accumulated benefit obligation

           Vested                                                 $   900,498

           Nonvested                                                    8,448
        Additional benefits based on estimated future salaries        504,375
                                                                  ------------
        Projected benefit obligation                                1,413,321

        Plan assets at fair value                                   1,276,438
                                                                  ------------
        Excess of projected benefit obligation over plan assets       136,883
        Unrecognized net assets at transition being amortized
           over 15.8 years                                             95,584
        Unrecognized net losses                                      (354,619)
                                                                  ------------

        Total accrued pension liability (prepaid)                 $  (122,152)
                                                                  ============

        A reconciliation of the benefit  obligation for the year ended September
30, 1999 is as follows:

        Balance, September 30, 1998                                $ 1,152,335
           Benefits                                                    (49,158)
           Service cost                                                 99,707
           Interest cost                                                68,777
           Actuarial gain                                               69,023
           Other                                                        72,637
                                                                   ------------
        Balance, September 30, 1999                                $ 1,413,321
                                                                   ============

        A  reconciliation  of the fair  value of plan  assets for the year ended
September 30, 1999 is as follows:

        Balance, September 30, 1998                                $ 1,090,122
           Return on assets                                            109,933
           Actual contribution                                         125,541
           Distribution                                                (49,158)
                                                                   ------------
        Balance, September 30, 1999                                $ 1,276,438
                                                                   ============

         At September 30, 1999, $935,701 of plan assets were on deposit with the
Bank.



                                       46
<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

13.  Employee Benefit Plans (continued)

         Pension  expense for the year ended  September  30, 1999  included  the
following components:

Service cost - benefits earned during period        $  99,707
Interest cost on projected benefit obligation          68,614
Expected return on plan assets                       (109,933)
Amortization of transition asset                      (16,374)
 Recognized net actuarial gain                         69,033
                                                     --------

Total pension expense                               $ 111,047
                                                    =========

         The discount  rate and rate of increase in future salary levels used in
         determining  the  actuarial  present  value  of the  projected  benefit
         obligation  shown in the  preceding  table were 5.5% and 4.0% for 1999.
         The expected  long-term  rate of return on assets was 5.5% for the year
         ended September 30, 1999.

         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 3% of  earned  compensation  consisting  of
         regular wages and overtime  payments.  The Bank's  contributions to the
         401(k) plan were $74,271 and $30,412 for the years ended  September 30,
         2000 and 1999, respectively.

         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' 1999 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.


                                       47
<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

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.

         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.

         At September 30, 2000, 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 5.87%  expiring on September 29, 2002 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 $150  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
             ---------------    ---------------     --------   ---------------
              May 16, 2001        $100 million       7.50%     1-month LIBOR
              March 14, 2001      $  25 million      7.00%     1-month LIBOR
              February 1, 2001    $  25 million      7.25%     1-month LIBOR


                                       48
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

14.   Interest Rate Risk (continued)

         Any   payments   received   under  the   agreements,   net  of  premium
         amortization,  will be 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, 2000,  the  unamortized  premium  related to the interest
         rate agreements amounted to approximately $192,000,  which approximated
         the fair value.  The Bank has not  received  any  payments  under these
         agreements.

         At September  30,  1999,  the Bank had limited its exposure to interest
         rate risk  through  agreements  to receive  quarterly  payments  in the
         London InterBank  offered rate exceeds 8% rate interest  payments.  The
         notional  principal  amounts of  interest-rate  swaps  outstanding were
         $10,000,000 for each of the periods,  with original terms of two years.
         The net cost was $16,800 for a two-year period,  and has been amortized
         against  income.  The Bank has not received  any  payments  under these
         agreements.

15.   Accounting Changes

         Accounting for Derivative Instruments and Hedging Activities. Statement
         of Financial  Accounting  Standards No. 133  "Accounting for Derivative
         Instruments  and Hedging  Activities,"  addresses  the  accounting  for
         derivative   instruments,   including  certain  derivative  instruments
         embedded in other contracts and hedging activities. As recently amended
         by Statement of Financial Standards No. 137, the statement is effective
         for all fiscal  quarters of all fiscal years  beginning  after June 15,
         2000.  On  that  date,  hedging  relationships  shall  be  designed  in
         accordance with the statement. Earlier application is encouraged but is
         permitted only at the beginning of any fiscal quarter that begins after
         issuance of the statement.  Earlier  application of selected provisions
         of the statement is not permitted.  The statement  shall not be applied
         retroactively to financial  statements of prior periods.  The statement
         is not expected to have a material  adverse impact on the  consolidated
         financial position or results of operations of the Company.

         Employers'   Disclosures   about  Pensions  and  Other   Postretirement
         Benefits.   Statement  of  Financial   Accounting  Standards  No.  132,
         Employers' Disclosure about Pension and Other Postretirement  Benefits,
         revises  disclosures  about pension and other  post-retirement  benefit
         plans.  These  disclosures  are  effective  for years  beginning  after
         December 15, 1997 and were made for the year ended September 30, 1999.



                                       49
<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries


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.

         The Board of Directors  has adopted  various stock option and incentive
         plans, some of which are subject to ratification by shareholders.

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
         (the "OTS")  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
         OTS  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 OTS.



                                       50
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

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.

         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 $12,717 for the year ended  September  30, 2000. The ESOP shares as
         of September 30, 2000 were as follows:

                  Allocated shares                                    1,038
                  Unreleased shares                                 123,806
                                                                    -------
                                                                    124,844

                  Fair value of unreleased shares
                     at September 30, 2000                      $ 1,516,624
                                                                ============

19.   Net Income Per Share

         Basic  income per share is based upon the  weighted  average  number of
         common  shares of 1,435,706  outstanding  during the periods  presented
         (assuming that the shares issued in the conversion were outstanding for
         the entire period).  For 2000, there were no dilutive  potential common
         shares outstanding during the period.  Income per share for all periods
         presented conforms to SFAS 128.



                                       51
<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

20.   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 its bank subsidiary, for the period indicated.

                           DutchFork Bancshares, Inc.
                             Condensed Balance Sheet

                               September 30, 2000

         Assets:
              Investment in subsidiary                          $ 31,175,954
              Accounts receivable from subsidiary                    128,965
                                                               -------------
                  Total assets                                  $ 31,304,919
                                                                ============

         Liabilities and Stockholders' Equity:
              Accounts payable                                  $     11,739
                                                               -------------
              Capital stock                                           15,605
              Additional paid-in capital                          14,551,848
              Retained earnings                                   22,180,461
              Accumulated other comprehensive (loss)              (4,216,676)
              Employee Stock Ownership Plan                       (1,238,058)
                                                               --------------
                  Total liabilities and stockholders' equity    $ 31,304,919
                                                                ============


                           DutchFork Bancshares, Inc.
                        Condensed Statement of Operations
                          Year Ended September 30, 2000

         Income:
              Interest                                          $     28,269
              Equity in undistributed earnings of subsidiary       1,612,656
                                                                ------------
                  Total income                                     1,640,925
                                                                ------------

         Expenses:
              Other expense                                              719
              Income tax                                              11,020
                                                               -------------
                  Total expenses                                      11,739
                                                               -------------
         Net income                                            $   1,629,186
                                                               =============


                                       52
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

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

<TABLE>
<CAPTION>
                           DutchFork Bancshares, Inc.
                        Condensed Statement of Cash Flows
                          Year Ended September 30, 2000
<S>                                                                         <C>
         Operating activities:
              Net income                                                    $  1,629,186
              Adjustments to reconcile net income to net cash provided by:

                  Equity in undistributed income of subsidiary                (1,612,656)
                  (Increase) in other assets                                    (128,664)
                  Increase in other liabilities                                   11,739
                                                                              -----------
                      Total cash provided by operations                         (100,395)
                                                                             ------------

         Financing activities:
              Net proceeds from sale of stock                                 13,319,013
              Capital contributions to subsidiary                            (13,229,000)
              Principal collected from Employee Stock Ownership Plan              10,382
                                                                            ------------
                      Total cash provided by financing activities                100,395
                                                                             -----------

         Net increase in cash and cash equivalents                                    --
         Cash and cash equivalents at beginning of year                               --
                                                                        ----------------
         Cash and cash equivalents at end of year                       $             --
                                                                        ================
</TABLE>


                                       53
<PAGE>

<TABLE>
<CAPTION>



                             DIRECTORS AND OFFICERS
<S>                                               <C>
OFFICERS                                        DIRECTORS

DutchFork Bancshares, Inc.                        DutchFork Bancshares, Inc. and
                                                  Newberry Federal Savings Bank

J. Thomas Johnson
President and Chief Executive Officer             J. Thomas Johnson
                                                  President and Chief Executive Officer
Steve P. Sligh                                       of Company, Chairman of the Board
Executive Vice President, Treasurer                  and Chief Executive Officer of the
   and Chief Financial Officer                       Bank

Robert E. Livingston, III                         Steve P. Sligh
Corporate Secretary                               Executive Vice President and Chief
                                                     Financial Officer of Company,
Newberry Federal Savings Bank                        and President and Treasurer of
                                                     the Bank

J. Thomas Johnson
Chairman of the Board and Chief                   Robert E. Livingston, III
   Executive Officer                              Ophthalmologist

Steve P. Sligh                                    James E. Wiseman
President and Treasurer                           Retired Dentist

Robert E. Livingston, III                         Robert W. Owen
Corporate Secretary                               Retired Pharmacist and Business Owner

                                                  Keitt Purcell
                                                  Retired Owner of Insurance Agency

                                                  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
127 Amicks Ferry Road                             Columbia, South Carolina 29204
Chapin, South Carolina 29036

101 N. Wheeler Street
Prosperity, South Carolina 29127
</TABLE>



                                       54
<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 8, 2001, 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).

COMMON STOCK INFORMATION

The  Company's  common stock is traded on the Nasdaq  SmallCap  Market under the
symbol "DFBS".  As of September 30, 2000,  there were 1,560,550 shares of common
stock outstanding  (including  unreleased Employee Stock Ownership Plan ("ESOP")
shares of 123,806) and 532 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.
The Company's  common stock began  trading on July 6, 2000.  The Company did not
pay any dividends during the year ended September 30, 2000. This information was
provided by Bloomberg Professional.

                                                Fiscal 2000
                                  High             Low            Dividends
                              -----------      -----------        ---------

First Quarter                        N/A              N/A             N/A
Second Quarter                       N/A              N/A             N/A
Third Quarter                        N/A              N/A             N/A
Fourth Quarter                $   13 3/8       $  9 15/16        $     --