Exhibit 13


DutchFork Bancshares, Inc.

2001 ANNUAL REPORT




President's Message                                                    2

Business of the Corporation                                            3

Selected Financial and Other Data                                      4

Management's Discussion and Analysis                                   6

Report of Independent Auditor                                         15

Consolidated Balance Sheets as of September 30, 2001 and 2000         16

Consolidated Statements of Income for the Years Ended September
30, 2001 and 2000                                                     18

Consolidated Statements of Comprehensive Operations for the
Years Ended September 30, 2001 and 2000                               20

Consolidated Statements of Changes in Stockholders' Equity for
the Years Ended September 30, 2001 and 2000                           21

Consolidated Statements of Cash Flows for the Years Ended
September 30, 2001 and 2000                                           22

Notes to Consolidated Financial Statements                            24

Directors and Officers                                                56

Corporate Information                                                 56

Stockholder Information                                               57

Common Stock Information                                              58

<PAGE>




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 our annual report for the fiscal year ending
September 2001.

By any standard, 2001 was a year of enormous change in our country as we
experienced what appears to be the end of the nation's longest peacetime
business expansion and, more importantly, the tragic events that occurred in New
York and Washington, D.C. No community in the country has escaped the ripple
effects of these events. However, throughout this report you will see evidence
of an organization that has steadfastly maintained its focus on its goals of
improved earnings and commitment to quality customer service.

Throughout our history, our personnel have provided the highest level of
personal service by striving to understand the needs of our customers. This
understanding approach to the wants and needs of our community has resulted in a
superior partnership with our customers. Even in times of change, our friends
can expect and will receive our absolute quality support.

The bank's technology upgrade, discussed in last year's report, has been
successfully completed and the benefits of the upgrade have begun to be
realized. We believe customers and the bank will continue to benefit from this
positive change in operations.

We intend to continue with our primary business of serving the residential real
estate market and the banking needs of small businesses and the people of
Newberry County. This focus was sharpened by the very beneficial sale of our
office in Chapin in February. Our management and Board of Directors are
dedicated to enhancing shareholder value, serving our community, and providing a
challenging and rewarding work environment for our employees.

In our second year as a public company, we would like to express our sincerest
thanks to our customers, friends, and associates who have invested in the
company. Your Board of Directors, the officers, and staff will endeavor to
protect and reward your investment.

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 and CEO



                                       2

<PAGE>

BUSINESS OF DUTCHFORK BANCSHARES, INC.

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

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



                                       3

<PAGE>


SELECTED FINANCIAL AND OTHER DATA

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


<TABLE>
<CAPTION>

                                                                      At September 30,
                                                    --------------------------------------------------
                                                      2001          2000          1999           1998
                                                    --------      --------      --------      --------
                                                                      (In thousands)
<S>                                                 <C>           <C>           <C>           <C>
Selected Consolidated Financial Data:
        Total assets                                $249,832      $224,068      $211,151      $182,775
        Cash and cash equivalents                      5,065         2,835         3,256         4,964
        Loans, net                                    73,088        78,308        75,324        71,249
        Securities held-to-maturity:
               Mortgage-backed securities, net         3,374         3,874         4,466         6,819
               Investment securities, net                 50         1,141         1,141         1,346
        Securities available-for-sale:
               Mortgage-backed securities, net       111,688       105,965        96,885        85,152
               Investment securities, net             49,561        24,772        22,068         6,542
        Deposit accounts                             147,258       147,731       137,537       141,702
        Federal Home Loan Bank advances               60,000        35,000        39,240        20,600
        Other borrowings                                  --         2,755         7,370            --
        Total equity                                  34,066        31,296        16,701        18,771
        Repossessed assets                                --            22            14            19
        Nonperforming assets and
           troubled debt restructurings                  459           185           243           384
</TABLE>


<TABLE>
<CAPTION>
                                                                   Year Ended September 30,
                                                    -------------------------------------------------------
                                                     2001            2000            1999            1998
                                                    -------         -------         -------         -------
                                                            (In thousands, except per share amounts)
<S>                                                 <C>             <C>             <C>             <C>
Selected Consolidated Operating Data:
        Total interest income                       $16,092         $15,529         $12,490         $12,299
        Total interest expense                        9,078           9,093           7,490           7,555
                                                    -------         -------         -------         -------
               Net interest income                    7,014           6,436           5,000           4,744
        Provision for loan losses                       241             340             142              85
                                                    -------         -------         -------         -------
               Net interest income after
                  provision for loan losses           6,773           6,096           4,858           4,659
        Noninterest income                            4,283           1,118           1,155           1,536
        Noninterest expense                           5,592           4,695           4,228           4,109
                                                    -------         -------         -------         -------
        Income before income taxes                    5,464           2,519           1,785           2,086
        Provision for income taxes                    2,042             890             771             834
                                                    -------         -------         -------         -------
               Net income                           $ 3,422         $ 1,629         $ 1,014         $ 1,252
                                                    =======         =======         =======         =======

        Income per share (basic)                    $  2.46         $  1.13           $ N/A           $ N/A
                                                    =======         =======         =======         =======

        Income per share (diluted)                  $  2.44         $  1.13           $ N/A           $ N/A
                                                    =======         =======         =======         =======
</TABLE>

                                       4

<PAGE>

<TABLE>
<CAPTION>
                                                                            At or For the Year Ended September 30,
                                                               ----------------------------------------------------------------
                                                                2001               2000               1999               1998
                                                               -------            -------            -------            -------
<S>                                                            <C>                <C>                <C>                <C>
Selected Consolidated Operating
   Ratios and Other Data (1):
Performance Ratios:
        Average yield on interest-earning assets                 7.22%              7.38%              6.94%              7.12%
        Average rate paid on interest-bearing
           liabilities                                           4.78               4.64               4.50               4.73
        Average interest rate spread (2)                         2.44               2.74               2.44               2.40
        Net interest margin (3)                                  3.15               3.06               2.78               2.75
        Ratio of interest-earning assets to
           interest-bearing liabilities                        117.35             107.45             108.16             108.02
        Net interest income after provision for
           loan losses to noninterest expense                  121.13             129.84             114.91             113.38
        Noninterest expense as a percent of
           average assets                                        2.44               2.12               2.26               2.28
        Return on average assets                                 1.49               0.74               0.54               0.69
        Return on average equity                                10.06               8.13               5.43               6.79
        Ratio of average equity to average
           assets                                               14.84               9.04               9.97              10.23
Regulatory Capital Ratios:
        Tangible capital ratio                                  13.45              15.27               9.24              10.28
        Core capital ratio                                      13.45              15.27               9.24              10.28
        Risk-based capital ratio                                26.88              32.34              17.39              24.89
Asset Quality Ratios:
        Nonperforming loans and troubled
           debt restructurings as a percent
           of total loans (4)                                    0.63               0.20               0.30               0.51
        Nonperforming assets and troubled
           debt restructurings as a percent
           of total assets (5)                                   0.18               0.08               0.12               0.21
        Allowance for loan losses as a
           percent of total loans                                0.87               0.56               0.24               0.25
        Allowance for loan losses as a
           percent of nonperforming loans
           and troubled debt restructurings (4)                138.34             251.48              80.79              49.59
        Net loans charged-off to average
           interest-earning loans                                0.13               0.19               0.18               0.14
Number at end of period:
        Full service offices                                        3                  4                  4                  4
        Mortgage loans                                          1,328              3,866              3,807              3,823
        Deposit accounts                                       14,275             16,906             16,266             15,728
</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.

                                       5

<PAGE>


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

General

The following is management's analysis of the Company's consolidated financial
condition and consolidated results of operations as of and for the years ended
September 30, 2001 and 2000. This discussion is designed to provide a more
comprehensive review of the operating results and financial position than could
be obtained from an examination of the consolidated financial statements alone.
This analysis should be read in conjunction with the consolidated financial
statements and related footnotes and the selected financial data included
elsewhere in this report.

The Bank provides financial services from its three banking locations in
Newberry County, South Carolina. The Bank's principal business is attracting
deposits from the general public and using these funds to originate loans and
invest in mortgage-backed and other securities. The Bank also maintains a
significant investment securities portfolio primarily because of the low loan
demand in its primary market area. The Bank's results of operations depend
primarily on net interest income, which is the difference between the interest
income earned on interest-earning assets, such as loans and securities, and the
interest expense on interest-bearing liabilities, such as deposits and
borrowings. The Bank also earns non-interest income primarily from gains on
sales of securities and service charges and other fees earned on deposit
accounts and loans. The Bank's non-interest expenses primarily consist of
employee compensation and benefits, occupancy expense, advertising and other
operating expenses. Results of operations are also affected by general economic
and competitive conditions, particularly changes in market interest rates,
government policies and regulations. The Bank exceeded all of its regulatory
capital requirements at September 30, 2001.

In addition to serving the financial service needs of consumers within its
primary market area, the Bank has demonstrated its commitment to its local
communities through philanthropy. Since 1990, it has made monetary gifts and
donations totaling approximately $2.0 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.


                                       6

<PAGE>


Forward-Looking Statements

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

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

Comparison of Financial Condition at September 30, 2001 and September 30, 2000

Total assets increased by $25.7 million from $224.1 million at September 30,
2000 to $249.8 million at September 30, 2001. Loans receivable decreased by $5.2
million, primarily due to loans sold to fund the deposits transferred as part of
the Chapin branch sale. Investment securities available for sale increased $24.8
million due to the purchase of preferred stocks of $33.8 million and the sale of
other securities. Mortgage-backed securities held-for-investment decreased
$501,000 due to repayments and prepayments. Mortgage-backed securities
available-for-sale increased $5.7 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 decreased $473,000 from September 30, 2000 to September 30,
2001, comprised mainly of shorter term certificates of deposit and checking
accounts. The increase of $25 million in Federal Home Loan Bank advances was
utilized to fund various investments.

At September 30, 2000, total equity was $31.3 million, which included retained
earnings of $22.2 million and a $4.2 million unrealized loss. At September 30,
2001, total equity was $34.1 million, an increase of $2.8 million. Retained
earnings at September 30, 2001 were $25.6 million and the Company recorded an
$87,000 unrealized gain, net of taxes, on the investment securities and
mortgage-backed securities portfolios classified as available-for-sale. Because
the Company has a substantial portfolio of investment securities and
mortgage-backed securities available-for-sale, the market values of these
securities fluctuates significantly as a result of changes in market interest
rates.

                                       7

<PAGE>


Comparison of Operating Results for the Years Ended September 30, 2001 and 2000

Net income. Net income increased from $1.6 million in 2000 to $3.4 million in
2001 primarily as a result of a $1.8 million gain on the sale of the Chapin
branch and an increase of $1.2 million in gains on the sale of securities.

Net interest income. Net interest income increased from $6.4 million in 2000 to
$7.0 million in 2001 primarily as a result of an increase in interest earning
assets of $563,000.

Provision for Loan Losses. The provision for loan losses decreased from $340,000
in 2000 to $241,000 in 2001. This was based upon the lower level of charge-offs
and the overall reserve level. Management believes the allowance is adequate at
September 30, 2001. However, no assurances can be given that the allowance for
loan losses will not be increased in the future.

Noninterest income. Noninterest income increased by $3.2 million for the year
ended September 30, 2001, primarily due to an increase in net gains on the sale
of securities of $1.2 million and a $1.8 million gain on the sale of the Chapin
branch. The Bank manages its unrealized gains and losses through a continuing
attempt to match maturities of assets and liabilities while seeking to maintain
a profit margin. On a quarterly basis, the Bank conducts a detailed review of
its interest rate risk exposure and the effects on capital of any restructuring
of the portfolio that might be deemed appropriate. As part of this process, the
Bank takes advantage of opportunities to shorten asset maturities and has taken
steps to increase the percent of adjustable-rate mortgage-backed securities. In
addition, the Bank attempts to extend the maturity of liabilities when borrowing
money and occasionally uses interest rate swaps to limit the effects of market
interest rate fluctuations. See Notes 1 and 14 to the consolidated financial
statements.

Noninterest expense. Noninterest expense totaled $5.6 million for the year ended
September 30, 2001 compared to $4.7 million for the same period in 2000. The
increase of $897,000 resulted from a $663,000 increase in compensation and
benefits, a $139,000 increase in other expense, a $101,000 increase in supplies
and printing and a $429,000 increase in professional expenses, all partially
offset by decreases of $124,000 in furniture and equipment, $117,000 in
insurance and related costs and $166,000 in contributions. The increase in
compensation and benefits resulted from normal increases in salaries, along with
additional employees associated with the conversion to an in-house data
processing system and costs associated with the Company's ESOP and Incentive
Compensation Plan. The increase in supplies and printing was associated with the
new in-house data processing system. The increase in professional expenses was
due to additional legal and accounting costs as a public company and fees
related to the conversion to the new in-house data processing system.

Provision for Income Taxes. The provision for income taxes increased between
2000 and 2001 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, 2001                2001                              2000
                                         ---------------------     ----------------------------     ----------------------------
                                                                                        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)             $ 73,088       7.99%      $ 72,347  $  6,217    8.59%      $ 76,438   $  6,182    8.09%
        Mortgage-backed securities (2)    111,688       4.63        110,401     4,772    4.32        107,362      7,288    6.79
        Investment securities (3)          45,612       6.79         32,898     4,585   13.94         21,157      1,623    7.67
        Interest-bearing deposits             397       3.00            767        51    6.65          1,335         72    5.39
        Federal funds sold                     --         --          3,020       180    5.96          1,322         67    5.07
        Other                               3,998       6.45          3,441       287    8.34          2,889        297   10.28
                                         --------                  --------  --------               --------   --------
               Total interest-earning
                  assets                  234,783       5.80        222,874    16,092    7.22        210,503     15,529    7.38
        Noninterest-earning assets         15,049                     6,479                           10,927
                                         --------                  --------                         --------
               Total assets              $249,832                  $229,353                        $ 221,430
                                         ========                  ========                        =========

Interest-bearing liabilities:
        Deposit accounts                 $147,258       3.91       $140,532     6,629    4.72       $150,921      6,846    4.54
        Federal Home Loan Bank
           advances                        60,000       4.44         47,500     2,385    5.02         35,292      2,099    5.95
        Other borrowings                       --         --          1,891        64    3.38          9,694        148    1.53
                                         --------                  --------   -------               --------   --------
               Total interest-bearing
                  liabilities             207,258       4.06%       189,923     9,078    4.78%       195,907      9,093    4.64%
        Noninterest-bearing
           liabilities                      8,508                     5,402                            5,496
                                         --------                  --------                         --------
               Total liabilities          215,766                   195,325                          201,403
        Total retained earnings            34,066                    34,028                           20,027
                                         --------                  --------                         --------
               Total liabilities and
                  retained earnings      $249,832                  $229,353                         $221,430
                                         ========                  ========                         ========

Net interest-earning assets              $ 22,670                  $ 32,951                         $ 14,596
Net interest income/interest
   rate spread (4)                                      1.74%      $  7,014              2.44%      $  6,436               2.74%
Net interest margin as a
   percentage of interest-
   earning assets                                       2.22%                            3.15%                             3.06%
Ratio of interest-earning
   assets to interest-bearing
   liabilities                                        113.28%                          117.35%                            107.45%
</TABLE>

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

(1) Balances are net of deferred loan origination costs, undisbursed proceeds of
    construction loans in process, and include nonaccrual loans.
(2) Includes mortgage-backed securities available-for-sale and held-to-maturity.
(3) Includes investment securities available-for-sale and held-to-maturity on a
    tax-equivalent basis.
(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, 2001            Year Ended September 30, 2000
                                                        Compared to                              Compared to
                                               Year Ended September 30, 2000            Year Ended September 30, 1999
                                            -----------------------------------       -----------------------------------
                                             Rate          Volume         Net           Rate        Volume          Net
                                            -------       -------       -------       -------       -------       -------
                                                                        (Dollars in thousands)
<S>                                         <C>           <C>           <C>           <C>           <C>           <C>
Interest-earning assets:
        Loans                               $   243       $  (208)      $    35       $   172       $   230       $   402
        Mortgage-backed securities (1)       (2,729)          213        (2,516)          468         1,112         1,580
        Investment securities (1)             1,764         1,198         2,962           238           847         1,085
        Interest-earning deposits with
           banks                                 25           (46)          (21)            7           (30)          (23)
        Other borrowings                       (394)          507           113           (25)           (9)          (34)
        Other                                    (4)           (6)          (10)           21             8            29
                                            -------       -------       -------       -------       -------       -------
               Total interest-earning
                  assets                     (1,095)        1,658           563           881         2,158         3,039

Interest-bearing liabilities:
        Deposit accounts                        299          (516)         (217)          346           510           856
        Federal Home Loan Bank
           advances                             845          (559)          286          (102)          763           661
        Federal funds borrowed                   69          (153)          (84)            6            80            86
                                            -------       -------       -------       -------       -------       -------
               Total interest-bearing
                  liabilities                 1,213        (1,228)          (15)          250         1,353         1,603
                                            -------       -------       -------       -------       -------       -------
Increase (decrease) in net interest
   income                                   $(2,308)      $ 2,886       $   578       $   631       $   805       $ 1,436
                                            =======       =======       =======       =======       =======       =======

</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, 2001, the Bank
held $31.4 million of these securities, or 13.0% 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.

                                       11

<PAGE>


The Bank primarily utilizes an interest rate risk report prepared by the Office
of Thrift Supervision to review its level of interest rate risk. The following
table, which was prepared by the Office of Thrift Supervision, presents the
changes in the Bank's net portfolio value at September 30, 2001, that would
occur upon an immediate change in interest rates based on Office of Thrift
Supervision assumptions, but without effect to any steps that management might
take to counteract that change. Net portfolio value is the present value of
expected cash flows from assets, liabilities and off-balance sheet contracts. A
higher net portfolio value ratio indicates a lower level of interest rate risk.

<TABLE>
<CAPTION>
                                                                   Net Portfolio Value as a % of
                                                                            Present
                                                                         Value of Assets
          Change in                                                -----------------------------
        Interest Rates             Net Portfolio Value             Net Portfolio
        In Basis Points  --------------------------------------        Value
         (Rate Shock)      Amount         Change       % Change        Ratio          Change (1)
         ------------      ------         ------       --------        -----          ----------
           <S>           <C>          <C>               <C>            <C>             <C>
              300        $ 16,579     $ (15,330)        (48)%           7.60%          (560) bp
              200          18,682       (13,227)        (41)            8.37           (482) bp
              100          27,419        (4,490)        (14)           11.69           (151) bp
           Static          31,909                                      13.20
             (100)         28,274        (3,635)        (11)           11.72           (148) bp
             (200)         26,031        (5,878)        (18)           10.73           (247) bp

</TABLE>

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

(1) Expressed in basis points.


As presented in the above table, based on the assumptions by the Office of
Thrift Supervision as of September 30, 2001, it is estimated that a sudden 200
basis point increase in interest rates would decrease the Bank's net portfolio
value by $13.2 million, or 41% at that date. The Net Portfolio Value ratio of
8.37% as indicated in the above table at 200 basis points rate shock satisfied
the 4% requirement imposed by the Office of Thrift Supervision in connection
with its approval of the Conversion.

Liquidity and Capital Resources

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

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, 2001, cash and short-term
investments totaled $5.1 million. The Bank has other sources of liquidity if a
need for additional funds arises, including securities maturing within one year
and the repayment of loans. The Bank may also sell securities
available-for-sale, and use federal funds purchased and Federal Home Loan Bank
of Atlanta advances as sources of funds. At September 30, 2001, the Bank had the
ability to borrow an additional $59.8 million from the Federal Home Loan Bank of
Atlanta. On that date, the Bank had outstanding advances of $60.0 million.

At September 30, 2001, the Bank had outstanding commitments to originate loans
of $443,000, $245,114 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, 2001,
totaled $94.0 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, 2001, Newberry Federal was in
compliance with all applicable capital requirements. See Note 11 to the
consolidated financial statements.

                                       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 were 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, 2001 and 2000, and the
related consolidated statements of income, comprehensive operations, changes in
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audits.

I conducted the audits in accordance with generally accepted auditing standards
in the United States. 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, 2001 and 2000 and the results
of its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles in the United States.


                                                         /s/ Clifton D. Bodiford
                                                         -----------------------
                                                         Clifton D. Bodiford


November 2, 2001

                                       15

<PAGE>


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

                                                                At September 30,
                                                             2001              2000
                                                         ------------      ------------
<S>                                                      <C>               <C>
Assets
Cash and cash equivalents (Notes 1, 2
   and 12)                                               $  5,065,459      $  2,834,538
Investments and mortgage-backed securities
  (Notes 1, 3, 7 and 12):
        Available-for-sale:
               Investments (cost of $49,340,193 and
                 $27,429,604 at September 30, 2001
                 and 2000 respectively)                    49,560,617        24,772,470
               Mortgage-backed securities (cost of
                 $111,774,654 and $110,102,612 at
                 September 30, 2001 and 2000
                 respectively)                            111,688,476       105,965,236
        Held-to-maturity:
               Investments (fair value of
                 $50,0000 and $1,141,000 at
                 September 30, 2001 and 2000
                 respectively)                                 50,000         1,141,000
               Mortgage-backed securities (fair
                 value of $3,379,484 and $3,493,114
                 at September 30, 2001 and 2000
                 respectively)                              3,373,893         3,874,486
Loans receivable (Notes 1, 4, 7, 10, and 12)               73,087,925        78,307,565
Repossessed assets                                                 --            22,246
Premises, furniture and equipment, net (Notes
   1 and 5)                                                 3,997,932         3,600,824
Accrued interest receivable:
        Loans and mortgage-backed securities
           (Note 1)                                           555,574           560,940
        Investments and other property                        506,155           925,279
Prepaid assets                                                486,219           351,971
Prepaid income tax and tax refunds
   receivable                                                      --            43,600
Deferred tax asset (Notes 1 and 9)                            710,450           566,355
Other                                                         749,202         1,101,479
                                                         ------------      ------------
Total assets                                             $249,831,902      $224,067,989
                                                         ============      ============
</TABLE>

                                       16

<PAGE>


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


<TABLE>
<CAPTION>
                                                                     At September 30,
                                                                 2001                2000
                                                             -------------       -------------
<S>                                                          <C>                 <C>
Liabilities and stockholders' equity
Liabilities:
        Deposit accounts (Note 6, 12 and
           14)                                               $ 147,257,904       $ 147,730,669
        Federal Home Loan Bank advances
           (Notes 7 and 12)                                     60,000,000          35,000,000
        Other borrowings                                                --           2,755,000
        Advances from borrowers for taxes
           and insurance                                            76,449              60,727
        Accrued income taxes payable                             2,389,519             838,707
        Accounts payable - securities                            4,854,687           4,785,938
        Accounts payable                                                --              21,837
        Accrued expenses                                           454,844             655,789
        Accrued interest payable                                   716,440             860,231
        Other                                                       16,237              63,576
                                                             -------------       -------------
Total liabilities                                              215,766,080         192,772,474
                                                             -------------       -------------

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, 1,320,628
           and 1,560,550 issued and outstanding at
           September 30, 2001 and 2000, respectively                15,605              15,605
        Additional paid-in capital                              14,585,071          14,554,183
        Retained earnings, substantially restricted
           (Notes 9 and 11)                                     25,602,497          22,180,461
        Accumulated other comprehensive income (loss)               87,391          (4,216,676)
        Treasury stock (177,500 shares)                         (3,851,845)                 --
        Unearned 2001 Stock-Based Incentive Plan shares         (1,173,175)                 --
           (62,422 shares)
        Unearned Employee Stock Ownership Plan shares           (1,199,722)         (1,238,058)
                                                             -------------       -------------
Total stockholders' equity                                      34,065,822          31,295,515
                                                             -------------       -------------
Total liabilities and stockholders' equity                   $ 249,831,902       $ 224,067,989
                                                             =============       =============
</TABLE>

See accompanying notes.

                                       17

<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries
                        Consolidated Statements of Income

<TABLE>
<CAPTION>
                                                                           Year Ended
                                                                           September 30,
                                                                       2001             2000
                                                                    -----------      -----------
<S>                                                                 <C>              <C>
Interest income:
        Loans receivable (Notes 1 and 4)                            $ 6,217,245      $ 6,182,496
        Investments (Notes 1 and 3)                                   4,771,709        1,694,566
        Mortgage-backed and related securities (Notes 1 and 3)        4,584,951        7,287,872
        Other interest-earning assets                                   518,328          364,017
                                                                    -----------      -----------
               Total interest income                                 16,092,233       15,528,951
                                                                    -----------      -----------

Interest expense:
        Interest expense on deposit accounts (Note 6)                 6,628,430        6,846,302
        Federal Home Loan Bank advances (Note 7)                      2,385,467        2,099,061
        Other borrowings purchased                                       63,827          147,425
                                                                    -----------      -----------
               Total interest expense                                 9,077,724        9,092,788
                                                                    -----------      -----------

Net interest income                                                   7,014,509        6,436,163
        Provision for loan losses (Notes 1 and 4)                       241,000          340,000
                                                                    -----------      -----------
        Net interest income after provision for loan losses           6,773,509        6,096,163
                                                                    -----------      -----------

Noninterest income:
        Gain (loss) on sale of securities, net                        1,282,363           94,465
        Gain on sale of branch (Note 20)                              1,828,762               --
        Loan origination and commitment fees (Note 1)                   137,324          107,014
        Gain on loan servicing                                          150,186               --
        Loan servicing fees                                              25,276           76,179
        Bank service charges                                            656,980          671,132
        Loan late charges                                                50,625           55,628
        Other                                                           151,251          114,077
                                                                    -----------      -----------
               Total noninterest income                               4,282,767        1,118,495
                                                                    -----------      -----------
</TABLE>

See accompanying notes.
                                       18

<PAGE>


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


                                                      Year Ended
                                                     September 30,
                                                 2001            2000
                                              ----------      ----------
Noninterest expense:
        Compensation and benefits              2,738,776       2,075,739
        Occupancy                                295,663         298,270
        SAIF deposit insurance premium            28,478          43,351
        Foreclosed real estate expenses               --           1,611
        Furniture and equipment                  308,573         432,583
        Professional fees                        638,332         209,632
        Telephone and postage                    209,709         167,180
        Insurance and related costs               39,481         156,453
        Marketing                                117,886         163,830
        Data processing                          292,212         328,143
        Supplies and printing                    183,103          81,908
        OTS assessments                           55,938          51,090
        Meetings                                  42,651          52,174
        Bank service charges                      42,047          39,579
        Loan expenses                             49,857          52,902
        Transaction account charges               82,039          39,895
        Automated teller system                   26,442          33,700
        Contributions                            148,981         314,801
        Other                                    291,762         152,321
                                              ----------      ----------
               Total noninterest expense       5,591,930       4,695,162
                                              ----------      ----------

        Income before income taxes             5,464,346       2,519,496

Provision for income taxes                     2,042,310         890,310
                                              ----------      ----------

Net income                                    $3,422,036      $1,629,186
                                              ==========      ==========

Net income per share (basic)                  $     2.46      $     1.13
                                              ==========      ==========

Net income per share (diluted)                $     2.44      $     1.13
                                              ==========      ==========


See accompanying notes.

                                       19

<PAGE>


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



                                                     Year Ended September 30,
                                                      2001             2000
                                                  -----------      -----------

Net income                                        $ 3,422,036      $ 1,629,186

Other comprehensive income (loss), net of tax:
  Unrealized gains (losses) arising during the
     period, net of tax effect of $2,624,595 and
     $(223,875) for the years ended September
     30, 2001 and 2000, respectively                4,304,067         (366,205)
                                                  -----------      -----------

Comprehensive income                              $ 7,726,103      $ 1,262,981
                                                  ===========      ===========







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    Treasury Stock   Incentive Plan   Paid-in Capital    Earnings
                              ------------     ------------    --------------   --------------   ---------------  ------------
<S>                              <C>           <C>              <C>              <C>              <C>             <C>
Balance at September
   30, 1999                             --     $         --     $         --     $         --     $         --    $ 20,551,275
Issuance of common
   stock in public
   offering                      1,560,550           15,605               --               --       14,551,848              --
Release of 1,038
   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
Release of 3,834
   ESOP shares                          --               --               --               --           30,888              --
Purchase of shares
   for incentive plan              (62,422)              --               --       (1,173,175)              --              --
Purchase of treasury
   stock                          (177,500)              --       (3,851,845)              --               --              --
Net income                              --               --               --               --               --       3,422,036
Change in net
   unrealized
   depreciation on
   investments
   available for sale (net
   of deferred and current
   income taxes of
   $ 2,624,595)                         --               --               --               --               --              --
                              ------------     ------------     ------------     ------------     ------------    ------------
Balance at September
   30, 2001                      1,320,628     $     15,605     $ (3,851,845)    $ (1,173,175)    $ 14,585,071    $ 25,602,497
                              ============     ============     ============     ============     ============    ============

<CAPTION>
                                                 Accumulated
                              Employee Stock        Other           Total
                                Ownership       Comprehensive   Stockholders'
                                Plan Loan       Income (Loss)       Equity
                               ------------     ------------     ------------
<S>                            <C>              <C>              <C>
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 1,038
   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
Release of 3,834
   ESOP shares                       38,336               --           69,224
Purchase of shares
   for incentive plan                    --               --       (1,173,175)
Purchase of treasury
   stock                                 --               --       (3,851,845)
Net income                               --               --        3,422,036
Change in net
   unrealized
   depreciation on
   investments
   available for sale (net
   of deferred and current
   income taxes of
   $ 2,624,595)                          --        4,304,067        4,304,067
                               ------------     ------------     ------------
Balance at September
   30, 2001                    $ (1,199,722)    $     87,391     $ 34,065,822
                               ============     ============     ============
</TABLE>


See accompanying notes

                                       21

<PAGE>


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

<TABLE>
<CAPTION>
                                                                      Year Ended September 30,
                                                                      2001               2000
                                                                   -----------       -----------
<S>                                                                <C>               <C>
Operating Activities

Net income                                                         $ 3,422,036       $ 1,629,186
Adjustments to reconcile net income to net cash
   provided (used) by operating activities:
        Depreciation                                                   275,240           249,605
        Provision for losses                                           241,000           340,000
        (Gain) loss on sales of investments and mortgage-
               backed securities                                    (1,282,363)           94,465
        Net loss on sales on loans                                          --             1,447
        Net loss on sales of foreclosed real estate                         --            22,697
        Increase (decrease) in deferred loan origination fees          (85,248)            4,289
        Amortization of premiums (discounts) on investments,
           mortgage-backed securities and loans                     (1,438,624)       (1,107,839)
        Decrease (increase) in accrued interest receivable             424,490          (217,938)
        Decrease in prepaid and other assets                           261,629         1,114,095
        (Increase) decrease in deferred tax asset                     (144,095)          102,814
        Increase (decrease) in accrued interest payable               (143,791)          337,004
        Increase (decrease) in accounts payable and accrued
               expenses                                                (21,837)       (4,136,288)
        Increase (decrease) in other liabilities                    (1,322,160)          800,769
        Origination of loans held for sale                          (2,301,775)       (1,147,134)
        Proceeds from sales of trading securities                    1,002,340                --
        Purchases of trading securities                             (1,000,000)               --
        Proceeds from sales of loans held for sale                   2,034,775         1,679,951
                                                                   -----------       -----------
Net cash (used) by operating activities                                (78,383)         (232,877)
                                                                   -----------       -----------
</TABLE>

                                       22

<PAGE>


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

<TABLE>
<CAPTION>
                                                                   Year Ended September 30,
                                                                   2001               2000
                                                              -------------       -------------
<S>                                                            <C>                  <C>
Investing Activities

Principal payments on mortgage-backed securities                 55,339,376          14,215,053
Proceeds from maturities of securities                            1,091,000                  --
Purchases of available-for-sale securities                     (216,141,558)        (50,546,358)
Proceeds from sales of available-for-sale securities            140,438,790          25,560,858
Net (increase) decrease in loans receivable                       5,330,888          (3,914,511)
Proceeds from sales of repossessed assets                            22,246              22,000
Proceeds from sales of premises, furniture and equipment            302,785                  --
Purchases of premises, furniture and equipment                     (975,133)           (194,077)
                                                              -------------       -------------
Net cash (used) by investing activities                         (14,591,606)        (14,857,035)
                                                              -------------       -------------

Financing Activities

Net  increase (decrease) in deposit accounts                       (472,765)         10,193,258
Proceeds from Federal Home Loan Bank advances                    25,000,000           8,500,000
Payments on Federal Home Loan Bank advances and
   other borrowings                                                      --         (12,740,000)
Proceeds from other borrowings                                   28,753,749          38,870,000
Repayments of other borrowings                                  (31,440,000)        (43,485,000)
Issuance of stock in public offering                                     --          13,319,013
Release of ESOP shares                                               69,224              10,382
Purchase of treasury stock                                       (3,851,845)                 --
Unallocated incentive plan                                       (1,173,175)                 --
Increase in advances from borrowers for
   taxes and insurance                                               15,722                 744
                                                              -------------       -------------
Net cash provided by financing activities                        16,900,910          14,668,397
                                                              -------------       -------------
Net increase (decrease) in cash and cash equivalents              2,230,921            (421,515)
Cash and cash equivalents at beginning of year                    2,834,538           3,256,053
                                                              -------------       -------------
Cash and cash equivalents at end of year                      $   5,065,459       $   2,834,538
                                                              =============       =============

Supplemental Disclosures of Cash Flow Information:

Cash paid (received) during the year for:
         Interest                                             $   9,221,515       $   9,429,792
         Taxes                                                $   3,184,908       $  (1,464,659)
</TABLE>

See accompanying notes.

                                       23

<PAGE>

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

                     Years Ended September 30, 2001 and 2000

1.  Organization and Summary of Significant Accounting Policies

     Organization

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

     Summary of Significant Accounting Policies

     (a) Principles of Consolidation

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

     (b) Cash Equivalents

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

     (c) Trading Securities

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

     (d) Securities Held to Maturity

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


                                       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 2000 amounts have been reclassified to conform with 2001
     classifications.

     (o) Marketing Expenses

     The Bank expenses the cost of marketing as incurred. Marketing expenses
     totaled $117,111 and $163,830 for the years ended September 30, 2001 and
     2000, 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,
                                                       2001            2000
                                                    ----------      ----------
               Cash and due from banks              $4,668,431      $2,426,782
               Interest bearing deposits               397,028         407,756
                                                    ----------      ----------
                                                    $5,065,459      $2,834,538
                                                    ==========      ==========

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

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


                                       30


<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

3.  Investments and Mortgage-Backed Securities (continued)

<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>


    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, 2001
                                   ----------------------------------------------------------
                                                     Gross           Gross
                                    Amortized      Unrealized      Unrealized         Fair
                                      Cost           Gains           Losses           Value
                                   ----------      ----------      ----------      ----------
<S>                                <C>             <C>             <C>             <C>
    Other                          $   50,000      $       --      $       --      $   50,000
                                   ----------      ----------      ----------      ----------

Mortgage-backed securities:
        Government guaranteed       3,373,893          27,408          21,817       3,379,484
                                   ----------      ----------      ----------      ----------
                                   $3,423,893      $   27,408      $   21,817      $3,429,484
                                   ==========      ==========      ==========      ==========
</TABLE>

<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>

                                       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, 2001, investments with a book value of approximately
     $12,725,000 were pledged as collateral for various deposits, and
     investments with a book value of $34,841,382 were pledged as collateral on
     Federal Home Loan Bank advances. At September 30, 2000, investments with a
     book value of approximately $15,335,000 were pledged as collateral on
     various deposits, and investments with a book value of $5,889,922 were
     pledged as collateral on Federal Home Loan Bank advances.

     Gross realized gains and gross realized losses on sales of
     available-for-sale securities were $1,334,443 and $52,080, respectively for
     the year ended September 30, 2001. For the year ended September 30, 2000,
     gross realized gains were $108,975 and realized losses were $14,510.

     The scheduled maturities of securities (other than equity securities) were
     as follows:

<TABLE>
<CAPTION>

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

<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>


                                       32

<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

3. Investments and Mortgage-Backed Securities (continued)

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

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

     The Bank, as a member of the Federal Home Loan Bank of Atlanta, is required
     to acquire and hold shares of capital stock in the Federal Home Loan Bank
     of Atlanta in an amount equal to the greater of (i) 1.0% of the aggregate
     outstanding principal amount of residential mortgage loans, home purchase
     contracts and similar obligations at the beginning of each year, or (ii)
     1/20th of its advances (borrowings) from the Federal Home Loan Bank of
     Atlanta. The Bank is in compliance with this requirement with an investment
     in Federal Home Loan Bank of Atlanta stock of $3,000,000 at September 30,
     2001.


                                       33

<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

4. Loans Receivable

     Loans receivable consisted of the following:
                                                        At September 30,
                                                     2001             2000
                                                 -----------      -----------
     Commercial real estate                      $ 8,869,421      $12,496,883
     Commercial-other                              8,669,174          819,653
     Real estate construction                      2,277,765        1,302,142
     Residential mortgage - 1-4 family            44,620,542       53,986,866
     Multi-family                                     47,462           50,687
     Consumer loans                               13,356,343       14,126,949
                                                 -----------      -----------
                                                  77,840,707       82,783,180
                                                 -----------      -----------
     Less:
     Allowance for losses                            634,518          465,244
     Loans in process                              4,099,600        3,906,459
     Deferred loan origination fees, net              18,664          103,912
                                                 -----------      -----------
                                                   4,752,782        4,475,615
                                                 -----------      -----------
     Loans receivable, net                       $73,087,925      $78,307,565
                                                 ===========      ===========

     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, 2001 included $267,000 of loans held for
     sale, and at September 30, 2000, no loans were held for sale.

     Mortgage loans include $700,000 and $900,000 representing participating
     interests in loans originated and serviced by other financial institutions
     as of September 30, 2001 and 2000, respectively.

     Non-accrual loans are as follows:


                                            At September 30,
                                           2001          2000
                                         --------      --------
     Non-accrual loans                   $148,727      $132,800
                                         ========      ========
     Interest income which would
        have been recognized under
        original terms                   $ 11,898      $ 12,200
     Interest income recognized             8,879         4,677
                                         --------      --------
     Interest income not recognized      $  3,019      $  7,523
                                         ========      ========


                                       34

<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

4. Loans Receivable (continued)

     Mortgage loans at September 30, 2001 and 2000 are net of participations and
     whole loans sold and serviced for others in the amounts of  $2,603,986  and
     $20,414,107, 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
     $25,577 and $57,252 at September 30, 2001 and 2000, respectively.

     Changes in the allowance for losses are summarized as follows:

                                          Year Ended         Year Ended
                                         September 30,      September 30,
                                             2001               2000
                                          ---------          ---------
     Beginning balance                    $ 465,244          $ 184,170
     Provision for losses                   241,000            340,000
     Charge-offs                            (94,807)          (149,851)
     Recoveries                              23,081             90,925
                                          ---------          ---------
     Ending balance                       $ 634,518          $ 465,244
                                          =========          ==========

Restructured loans totaled approximately $310,043 and $29,614 at September 30,
2001 and 2000, 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,
                                             2001               2000
                                          ---------          ---------
     Balance, beginning of period         $ 588,597          $ 564,678
     New loans                               25,929             89,102
     Repayments (net of advances)           (66,819)           (65,183)
                                          ---------          ---------
     Balance, end of period               $ 547,707          $ 588,597
                                          =========          =========




                                       35

<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

5. Premises, Furniture, and Equipment

     Premises, furniture and equipment are summarized as follows:

                                                     At September 30,
                                                2001                 2000
                                           --------------       --------------
     Land                                  $    1,263,280       $    1,121,845
     Buildings and improvements                 2,717,172            2,853,402
     Furniture and equipment                    1,380,544            1,180,642
                                           --------------       --------------
                                                5,360,996            5,155,889
     Less accumulated depreciation              1,363,064            1,555,065
                                           --------------       --------------

     Premises, furniture and
     equipment, net                        $    3,997,932       $    3,600,824
                                           ==============       ==============

     Depreciation  expense for the years ended  September  30, 2001 and 2000 was
     $275,240 and $249,605, respectively.

6.  Deposit Accounts

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

                                                 At September 30,
                                             2001               2000
                                         ------------       ------------
     NOW and money market:
        0.00% to 3.00%                   $ 31,999,162       $ 30,997,535
                                         ------------       ------------
     Savings: 0.27% to 2.50%               14,643,095         16,297,257
                                         ------------       ------------
     Certificates of deposit:
        2.01% to 4.00%                     20,868,843            407,953
        4.01% to 5.00%                     38,606,732          3,196,443
        5.01% to 6.00%                     31,193,454         49,465,999
        6.01% to 7.00%                      9,434,070         47,365,482
        7.01% to 8.00%                        512,548                 --
                                         ------------       ------------
     Total certificates of
        deposit                           100,615,647        100,435,877
                                         ------------       ------------
     Total deposit accounts              $147,257,904       $147,730,669
                                         ============       ============

     Weighted average interest rate
        of NOW and money market
        accounts                                 1.24%              2.24%
                                         ============       ============

     The aggregate  amount of  short-term  CD's with a minimum  denomination  of
     $100,000 was approximately $30.3 million and $24.5 million at September 30,
     2001  and  2000,  respectively.  Non-interest  bearing  deposits  were  not
     material at September 30, 2001 and 2000. 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, 2001
     are as follows:


           2002                                 $ 93,804,896
           2003                                    4,708,548
           2004                                    1,695,652
           2005                                      133,248
           2006                                      271,287
     Thereafter                                        2,016
                                                ------------
     Total certificates of deposit              $100,615,647
                                                ============

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 $35,134,720 and investments of $34,841,382
     collateralized the advances at September 30, 2001. At September 30, 2000,
     loans of $40,971,386 and investments of $5,889,922 collateralized these
     advances.

     Advances from the FHLB consisted of the following:

                                                 At September 30,
                                              2001               2000
                                           -----------       -----------
     Contractual Maturity
     Within one year- adjustable rate      $25,000,000       $        --
     2008-fixed rate                        10,000,000        10,000,000
     2010-fixed rate                        25,000,000        25,000,000
                                           -----------       -----------
                                           $60,000,000       $35,000,000
                                           ===========       ===========
     Weighted average rate                        4.44%             5.73%
                                           ===========       ===========


                                       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,
                                                     2001            2000
                                                  ----------      -----------
     Average balance during the period            $1,034,658       $3,517,000
     Average interest rate during the period            4.84%            6.00%
     Average interest rate at end of period               --             6.90%
     Maximum month end balances                   $3,490,000       $7,170,000

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,
                                                   2001              2000
                                                -----------       -----------
     Current                                    $ 2,186,405       $   772,440
     Deferred                                      (144,095)          117,870
                                                -----------       -----------
                                                $ 2,042,310       $   890,310
                                                ===========       ===========

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

                                                     Year Ended September 30,
                                                      2001             2000
                                                   ----------       ----------

     Tax at federal
        income tax rate                            $1,857,878       $  856,629
     Increase (decrease)
        resulting from:
        State income tax
           expense, net of
           federal tax benefit                        180,323               --
        Other, net                                      4,109           33,681
                                                   ----------       ----------
     Total                                         $2,042,310       $  890,310
                                                   ==========       ==========

     Effective tax rate                                  37.4%            35.3%
                                                   ==========       ==========


                                       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>
                                                                        2001             2000
                                                                    -----------       -----------
<S>                                                                 <C>               <C>
     Deferred tax assets:
        Differences between book and tax basis of bad debt
           reserves                                                 $   223,913       $   159,589
        Differences between book and tax basis of investments           603,963           603,978
        Deferred compensation for Directors                              91,200           101,717
        Stock incentive compensation plan                               128,862                --
        Other                                                            15,142             2,018
                                                                    -----------       -----------
     Total deferred tax assets                                        1,063,080           867,302
        Valuation allowance                                                  --                --
                                                                    -----------       -----------

        Net deferred tax assets                                       1,063,080           867,302
                                                                    -----------       -----------
     Deferred tax liabilities:
        Differences between book and tax pension expense                (36,948)          (55,948)
        Differences between book and tax basis of Federal Home
           Loan Bank stock                                             (112,692)         (112,692)
        Deferred gain on sale of branch real estate                     (70,683)               --
        Differences between book and tax basis of property             (132,307)         (132,307)
                                                                    -----------       -----------
     Total deferred tax liabilities                                    (352,630)         (300,947)
                                                                    -----------       -----------
     Net deferred tax asset                                         $   710,450       $   566,355
                                                                    ===========       ===========
</TABLE>

     During the years ended September 30, 2001 and 2000, income taxes (benefits)
     of $2,624,595 and $(223,875), 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, 2001 and 2000, 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, 2001     September 30, 2000
                                      ------------------     ------------------
     Variable rate                        $ 198,000               $ 212,400
     Fixed rate (ranging
        from 6.15 to 10.5%)                 245,114                 470,539

     Lines of credit extended to borrowers amounted to approximately $8,840,845,
     of which $4,446,728 was undisbursed at September 30, 2001.

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 November 30, 2000, 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.

                                       42

<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

11. Regulatory Capital Requirements (continued)

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

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

<TABLE>
<CAPTION>
                                                                         To Be Well
                                                                        Capitalized
                                                       Minimum           For Prompt
                                                     For Capital         Corrective
                                                      Adequacy             Action
                                   Actual             Purposes           Provisions
                              ----------------     --------------     ----------------
                              Ratio     Amount     Ratio   Amount     Ratio     Amount
                              -----     ------     -----   ------     -----     ------
                                           (dollars in thousands)
     <S>                      <C>      <C>         <C>     <C>        <C>      <C>
     September 30, 2001
       Tangible capital       13.45%   $33,540     2.00%   $ 4,986      N/A        N/A
       Core capital           13.45%   $33,540     4.00%   $ 9,972     5.00%   $12,465
       Risk-based capital     26.88%   $34,102     8.00%   $10,148    10.00%   $12,686

     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
</TABLE>


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

                                                  At September 30,
                                                2001           2000
                                              --------       --------
     GAAP capital                             $ 34,066       $ 31,295
     Investment in subsidiary                     (438)          (774)
     Unrealized losses (gains) on
        available-for-sale securities              (88)         4,217
                                              --------       --------
     Core and tangible capital                  33,540         34,738
     Unrealized losses (gains) on
        available-for-sale securities               48             66
     Allowance for loan and lease losses           634            465
     Equity investments                           (120)           (88)
                                              --------       --------
     Risk-based capital                       $ 34,102       $ 35,181
                                              ========       ========


                                       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,
                                                          2001                        2000
                                                 ----------------------     -----------------------
                                                 Carrying       Fair        Carrying        Fair
                                                   Value        Value         Value         Value
                                                 --------      --------      --------      --------
<S>                                              <C>           <C>           <C>           <C>
     Financial instruments:
           Assets:
            Cash and cash equivalents            $  5,065      $  5,065      $  2,835      $  2,835
            Investments and mortgage-backed
               securities                         164,673       164,679       135,753       135,371
            Loans receivable                       73,088        76,714        78,308        78,245
           Accrued interest receivable              1,062         1,062         1,486         1,486
           Liabilities:
           Deposit accounts:
              Demand deposits and passbook
                  accounts                         46,642        46,642        47,295        47,295
              Certificates of deposit             100,617        99,861       100,436       100,393
          FHLB advances                            60,000        60,000        35,000        35,000
          Other borrowings                             --            --         2,755         2,755
          Advances from borrowers for
                taxes and insurance                    76            76            61            61
</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 Federal Home Loan Bank 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 September 30, 2001. Although management is not aware of
     any factors, other than changes in interest rates, that would significantly
     affect the estimated fair values, the current estimated fair value of these
     instruments may have changed significantly since then.

13. Employee Benefit Plans

     Pension Plan

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

     Stock-Based Compensation Plan

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

                                       45

<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

13. Employee Benefit Plans (continued)

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

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

     The options will enable the recipient to purchase stock at the exercise
     price above. The options vest over five years following the date of grant
     and are exercisable for up to 10 years.

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

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

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

                                       46

<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

13. Employee Benefit Plans (continued)


     The following summarizes pro-forma data in accordance with SFAS 123:

                                                    Year Ended September 30,
                                               --------------------------------
                                                    2001               2000
                                               -------------      -------------
     Net income (loss), pro-forma              $   3,203,191      $   1,629,186
     Basic earnings/loss per common share,
        pro-forma                              $        2.30      $        1.13
     Diluted earnings/loss per common share,
        pro-forma                              $        2.28      $        1.13

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

     401(k) Plan

     The Bank also maintains an Employee Savings Plan for all employees,
     qualified under Section 401(k) of the Internal Revenue Code. The Bank
     matches 100% of the first 3% of earned compensation consisting of regular
     wages and overtime payments. The Bank's contributions to the 401(k) plan
     were $154,607 and $74,271 for the years ended September 30, 2001 and 2000,
     respectively.

     Other

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

     Under the employment agreements, if voluntary or involuntary termination
     follows a change in control of the Bank or DutchFork Bancshares, Inc., the
     executives or, if they die, their beneficiaries, would be entitled to a
     severance payment equal three times the average of the five preceding
     taxable years' annual compensation. If a change in control occurred, the
     total amount of payments due under the agreements, based on the executives'
     2000 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 $1.4 million.

                                       47

<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

13. Employee Benefit Plans (continued)

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

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

14. Interest Rate Risk

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

     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.

                                       48

<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

14. Interest Rate Risk (continued)

     At September 30, 2001, 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 4.25% 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 $125 million. The agreements provide for a payment
     to the Bank to pay the difference between the cap rate of interest and the
     market rate of interest. The agreements are summarized as follows:

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

     Payments received under the agreements, net of premium amortization, are
     treated as an adjustment of interest income or expense. The Bank's exposure
     to credit risk is limited to the ability of the counterparty to make
     potential future payments to the Bank that are required pursuant to the
     agreements. The Bank's exposure to market risk of loss is limited to the
     amount of the unamortized premium. At September 30, 2001 and 2000, the
     unamortized premium related to the interest rate agreements amounted to
     approximately $317,000 and $192,000, respectively, which approximated the
     fair value. The Bank received payments under these agreements of $26,355
     and $0 in the years ended September 30, 2001 and 2000, respectively.

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.

                                       49

<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

15. Accounting Changes (continued)

     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.

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.

17. Liquidation Account

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

                                       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 $69,224 and $12,717 for the
     years ended September 30, 2001 and 2000, respectively. The ESOP shares as
     of September 30, 2001 were as follows:


     Allocated shares                          4,872
     Unreleased shares                       119,972
                                          ----------
                                             124,844
                                          ==========

     Fair value of unreleased shares
        at September 30, 2001             $2,423,434
                                          ==========



                                       51

<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

19. Net Income Per Share

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

<TABLE>
<CAPTION>
                                                                 Year Ended September 30,
                                                               --------------------------
                                                                  2001            2000
                                                               ----------      ----------
<S>                                                            <C>             <C>
     Basic EPS computation:
            Numerator                                          $3,422,036      $1,629,186

            Denominator:
                   Common shares outstanding                    1,389,972       1,435,706
                                                               ----------      ----------

            Basic EPS                                          $     2.46      $     1.13
                                                               ==========      ==========

     Diluted EPS computation:
            Numerator                                          $3,422,036      $1,629,186

            Denominator:
                   Common shares outstanding                    1,389,972       1,435,706
               Dilutive securities:
                   Stock options - treasury stock method           10,051
                   Incentive plan - treasury stock method           4,020
                                                               ----------      ----------
                                                                1,404,043       1,435,706
                                                               ----------      ----------

            Diluted EPS                                        $     2.44      $     1.13
                                                               ==========      ==========
</TABLE>


     The average market price used in calculating the assumed number of shares
     issued for the years ended September 30, 2001 was $19.53 per share.

20. Sale of Branch

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

21. Loan Servicing Sold

     During the year ended September 30, 2001, the Company sold approximately
     $16,000,000 of loan servicing rights at a gain of approximately $150,185.

                                       52

<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

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

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


                           DutchFork Bancshares, Inc.
                            Condensed Balance Sheets
<TABLE>
<CAPTION>

                                                                    Year Ended September 30,
                                                                -------------------------------
                                                                    2001               2000
                                                                ------------       ------------
<S>                                                             <C>                <C>
     Assets:
            Cash and short-term investments                     $  2,051,574       $         --
            Investment in subsidiary                              32,443,723         31,175,954
            Accounts receivable from ESOP                             38,652            128,965
            Other                                                    135,529                 --
                                                                ------------       ------------
                   Total assets                                 $ 34,669,478       $ 31,304,919
                                                                ============       ============

     Liabilities and Stockholders' Equity:
            Bank overdraft                                      $    603,658       $         --
            Accounts payable                                              --             11,739
                                                                ------------       ------------
                   Total liabilities                                 603,658             11,739
                                                                ------------       ------------

            Capital stock                                             15,605             15,605
            Additional paid-in capital                            14,585,071         14,551,848
            Retained earnings                                     25,602,497         22,180,461
            Accumulated other comprehensive (loss)                    87,389         (4,216,676)
            Unearned 2001 Stock-Based Incentive Plan shares       (1,173,175)                --
            Treasury stock                                        (3,851,845)                --
            Employee Stock Ownership Plan                         (1,199,722)        (1,238,058)
                                                                ------------       ------------
                   Total stockholders' equity                     34,065,820         31,293,180
                                                                ------------       ------------

                   Total liabilities and stockholders' equity   $ 34,669,478       $ 31,304,919
                                                                ============       ============

</TABLE>

                                       53

<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries


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


<TABLE>
<CAPTION>

                           DutchFork Bancshares, Inc.
                       Condensed Statements of Operations

                                                              Year Ended September 30,
                                                            --------------------------
                                                               2001            2000
                                                            ----------      ----------
     <S>                                                    <C>             <C>
     Income:
            Interest                                        $  143,172      $   28,269
            Equity in undistributed earnings of subsidiary   3,441,198       1,612,656
                                                            ----------      ----------
                   Total income                              3,584,370       1,640,925
                                                            ----------      ----------

     Expenses:
            Filing fees                                     $   13,729      $       --
            Printing fees                                       10,403              --
            Registrar and transfer fees                          7,998              --
            Proxy fees                                           4,917              --
            Professional fees                                  100,126              --
            Other expense                                        5,126             719
            Income tax                                          20,035          11,020
                                                            ----------      ----------
                   Total expenses                              162,334          11,739
                                                             ----------      ----------

      Net income                                             $3,422,036      $1,629,186
                                                             ==========      ==========
</TABLE>

                                       54

<PAGE>


                           DutchFork Bancshares, Inc.
                                and Subsidiaries

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

<TABLE>
<CAPTION>

                           DutchFork Bancshares, Inc.
                       Condensed Statements of Cash Flows

                                                                            September 30,
                                                                   -------------------------------
                                                                        2001               2000
                                                                   ------------       ------------
<S>                                                                <C>                <C>
Operating activities:
       Net income                                                  $  3,422,036       $  1,629,186
       Adjustments to reconcile net income to net
          cash provided by:
              Equity in undistributed income of subsidiary            3,036,297         (1,612,656)
              (Increase) in other assets                                (45,217)          (128,664)
              Increase in other liabilities and bank overdraft          591,919             11,739
                                                                   ------------       ------------
                     Total cash provided by operations                7,005,035           (100,395)
                                                                   ------------       ------------

Financing activities:
       Net proceeds from sale of stock                                       --         13,319,013
       Purchase of treasury stock                                    (3,851,845)                --
       Capital contributions to subsidiary                                   --        (13,229,000)
       Purchase of stock for Incentive Plan                          (1,173,175)                --
       Principal collected from Employee Stock
          Ownership Plan                                                 71,559             10,382
                                                                   ------------       ------------
                     Total cash provided by financing activities     (4,953,461)           100,395
                                                                   ------------       ------------

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


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


                                       55

<PAGE>


                             DIRECTORS AND OFFICERS


OFFICERS                             DIRECTORS

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

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

                              CORPORATE INFORMATION


MAIN OFFICE                               SPECIAL COUNSEL

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

BRANCH LOCATIONS                          INDEPENDENT AUDITORS

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

                                       56

<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 6, 2002 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).

                                       57

<PAGE>


COMMON STOCK INFORMATION

The Company's common stock is traded on the Nasdaq SmallCap Market under the
symbol "DFBS". As of September 30, 2001, there were 1,320,628 shares of common
stock outstanding (including unreleased Employee Stock Ownership Plan ("ESOP")
shares of 119,972) and 459 stockholders, excluding persons or entities who hold
stock in nominee or "street name".

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



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

Fiscal 2000
-----------
Fourth Quarter           $ 13.375         $   9.938



                                       58