Exhibit 13.0
                          Annual Report to Stockholders

<PAGE>

DutchFork Bancshares, Inc.

2003 ANNUAL REPORT

President's Message                                                           2

Business of DutchFork Bancshares, Inc.                                        3

Selected Financial and Other Data                                             4

Management's Discussion and Analysis                                          6

Report of Independent Auditor                                                17

Consolidated Balance Sheets as of September 30, 2003 and 2002                18

Consolidated Statements of Income for the Years Ended September
30, 2003 and 2002                                                            20

Consolidated Statements of Comprehensive Operations for the
Years Ended September 30, 2003 and 2002                                      22

Consolidated Statements of Changes in Stockholders' Equity for
the Years Ended September 30, 2003 and 2002                                  23

Consolidated Statements of Cash Flows for the Years Ended
September 30, 2003 and 2002                                                  24

Notes to Consolidated Financial Statements                                   26

Directors and Officers                                                       67

Corporate Information                                                        67

Stockholder Information                                                      68

Common Stock Information                                                     69

<PAGE>

Chairman's Message

To Our Stockholders:

On behalf of the Board of Directors, officers, and employees of DutchFork
Bancshares and its wholly owned subsidiary, Newberry Federal Savings Bank, it is
my privilege to present our annual report for the fiscal year ending September
2003.

Our primary mission is to promote sound growth in earnings and shareholder value
for our investors and provide the safest possible environment for customer
deposits. In 2003 we continued to fulfill our mission through exceptional
performance. The Company sustained its strong record of profitability during the
year. Net income for the year rose 37% to $3,380,930 and earnings per share grew
by 52% to $3.31. According to the latest Federal Reserve reports, we also
continue to hold the number one position in deposit market share in Newberry
County. The winning combination of strong earnings, security, and a wonderful
base of loyal customers assured our success this year.

Success is never final and we work hard every day to improve. The challenges of
increased competition and narrowing margins are significant. Our dedicated board
and associates will strive to meet them head-on with the best interests of our
shareholders in mind.

We appreciate your continuing shareholder support.

Sincerely,

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


                                       2
<PAGE>

BUSINESS OF DUTCHFORK BANCSHARES, INC.

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

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

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


                                       3
<PAGE>

SELECTED FINANCIAL AND OTHER DATA

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

<TABLE>
<CAPTION>
                                                                               At September 30,
                                                       -----------------------------------------------------------------
                                                         2003               2002               2001               2000
                                                       --------           --------           --------           --------
                                                                                (In thousands)
<S>                                                    <C>                <C>                <C>                <C>
Selected Consolidated Financial Data:
     Total assets                                      $235,053           $219,092           $249,832           $224,068
     Cash and cash equivalents                            2,654             21,131              5,065              2,835
     Loans, net                                          58,371             61,706             73,088             78,308
     Securities held-to-maturity:
         Mortgage-backed securities, net                  1,355              2,835              3,374              3,874
         Investment securities, net                          50                 50                 50              1,141
     Securities available-for-sale:
         Mortgage-backed securities, net                 18,909             64,628            111,688            105,965
         Investment securities, net                     141,852             62,210             49,561             24,772
     Deposit accounts                                   143,429            149,290            147,258            147,731
     Federal Home Loan Bank advances                     55,000             35,000             60,000             35,000
     Other borrowings                                     2,613                 --                 --              2,755
     Total equity                                        32,558             33,477             34,066             31,296
     Repossessed assets                                      --                 --                 --                 22
     Nonperforming assets and
        troubled debt restructurings                      1,100              1,135                459                185

<CAPTION>
                                                                           Year Ended September 30,
                                                       -----------------------------------------------------------------
                                                         2003               2002               2001               2000
                                                       --------           --------           --------           --------
                                                                    (In thousands, except per share amounts)
<S>                                                    <C>                <C>                <C>                <C>
Selected Consolidated Operating Data:
     Total interest income                             $ 10,986           $ 12,888           $ 16,092           $ 15,529
     Total interest expense                               4,849              6,876              9,078              9,093
                                                       --------           --------           --------           --------
         Net interest income                              6,137              6,012              7,014              6,436
     Provision for loan losses                              195                 --                241                340
                                                       --------           --------           --------           --------
         Net interest income after
            provision for loan losses                     5,942              6,012              6,773              6,096
     Noninterest income                                   4,562              2,666              4,283              1,118
     Noninterest expense                                  6,844              5,523              5,592              4,695
                                                       --------           --------           --------           --------
     Income before income taxes                           3,660              3,155              5,464              2,519
     Provision for income taxes                             279                692              2,042                890
                                                       --------           --------           --------           --------
         Net income                                    $  3,381           $  2,463           $  3,422           $  1,629
                                                       ========           ========           ========           ========

     Income per share (basic)                          $   3.31           $   2.17           $   2.46           $   1.13
                                                       ========           ========           ========           ========

     Income per share (diluted)                        $   3.13           $   2.09           $   2.44           $   1.13
                                                       ========           ========           ========           ========
</TABLE>


                                       4
<PAGE>

<TABLE>
<CAPTION>
                                                                                 At or For the Year Ended September 30,
                                                                 ------------------------------------------------------------------
                                                                    2003               2002               2001               2000
                                                                 ---------          ---------          ---------          ---------
<S>                                                                 <C>                <C>                <C>                <C>
Selected Consolidated Operating
   Ratios and Other Data (1):
Performance Ratios:
     Average yield on interest-earning assets                         5.41%              5.61%              7.22%              7.38%
     Average rate paid on interest-bearing
        liabilities                                                   2.60               3.33               4.78               4.64
     Average interest rate spread (2)                                 2.82               2.28               2.44               2.74
     Net interest margin (3)                                          3.02               2.62               3.15               3.06
     Ratio of interest-earning assets to
        interest-bearing liabilities                                108.66             111.09             117.35             107.45
     Net interest income after provision for
        loan losses to noninterest expense                           86.81             108.84             121.13             129.84
     Noninterest expense as a percent of
        average assets                                                3.07               2.26               2.44               2.12
     Return on average assets                                         1.52               1.00               1.49               0.74
     Return on average equity                                        10.24               7.59              10.06               8.13
     Ratio of average equity to average
        assets                                                       14.81              13.29              14.84               9.04
Regulatory Capital Ratios (4):
     Tangible capital ratio                                          13.68              14.76              13.38              15.27
     Core capital ratio                                              13.68              14.76              13.38              15.27
     Risk-based capital ratio                                        18.76              28.80              25.21              32.34
Asset Quality Ratios:
     Nonperforming loans and troubled
        debt restructurings as a percent
        of total loans (5)                                            1.86               1.81               0.63               0.20
     Nonperforming assets and troubled
        debt restructurings as a percent
        of total assets (6)                                           0.47               0.52               0.18               0.08
     Allowance for loan losses as a
        percent of total loans                                        0.68               0.67               0.87               0.56
     Allowance for loan losses as a
        percent of nonperforming loans
        and troubled debt restructurings (5)                         36.45              37.38             138.34             251.48
     Net loans charged-off to average
        interest-earning loans                                        0.42               0.34               0.13               0.19
Number at end of period:
     Full service offices                                                3                  3                  3                  4
     Mortgage loans                                                  1,127              1,116              1,328              3,866
     Deposit accounts                                               13,419             13,571             14,275             16,906
</TABLE>

----------
      (1)   Asset quality ratios and regulatory capital ratios are end of period
            ratios. All ratios are based on average monthly balances during the
            indicated periods.

      (2)   The average interest rate spread represents the difference between
            the weighted average yield on average interest-earning assets and
            the weighted average cost of average interest-bearing liabilities.

      (3)   The net interest margin represents net interest income as a percent
            of average interest-earning assets.

      (4)   The capital retios are the ratios for the Bank only.

      (5)   Nonperforming loans consist solely of all nonaccrual loans.

      (6)   Nonperforming assets consist of nonperforming loans, troubled debt
            restructurings, other repossessed assets and real estate owned.

<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, 2003 and 2002. 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, 2003.

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 $3.2 million to various cultural, educational
and civic organizations operating within its primary market area. The Bank's
targeted gifts have been investments in the community primarily to promote
economic growth and stability. The relative economic health of the community is
directly related to the future growth of the business. The Bank intends to
continue its tradition of local community support.

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


                                       6
<PAGE>

Forward-Looking Statements

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

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

Comparison of Financial Condition at September 30, 2003 and September 30, 2002

Total assets increased by $16 million from $219.1 million at September 30, 2002
to $235.1 million at September 30, 2003. Loans receivable decreased by $3.3
million, primarily due to repayments and payoffs due to refinancing. Loans that
were refinanced at historically low fixed interest rates have been sold into the
secondary market as part of the Bank's interest rate risk strategy. Investment
securities available-for-sale increased $79.6 million due to the purchase of
preferred stocks of $14.8 million and an increase of $72.3 million in corporate
bonds. Mortgage-backed securities held-for-investment decreased $1.5 million due
to repayments and prepayments. Mortgage-backed securities available-for-sale
decreased $45.7 million as a result of sales and purchases of other types of
securities. Management invests funds in private issues of mortgage-backed
securities to achieve higher yields and an overall shorter weighted average
maturity than may be obtained solely through investment in U.S. government
guaranteed mortgage-backed securities. The lack of a government guarantee is
partially offset by the sinking funds attributable to most private issues. A
sinking fund is a contractual obligation that requires the issuer to retire a
specified portion of the mortgage-backed securities debt each year. Deposit
accounts decreased $5.9 million from September 30, 2002 to September 30, 2003,
comprised mainly of shorter term certificates of deposit and checking accounts.
The increase of $20 million in Federal Home Loan Bank advances was due to an
additional advance of $20 million.


                                       7
<PAGE>

At September 30, 2003, total equity was $32.6 million, which included retained
earnings of $31.4 million and a $1.47 million unrealized loss. At September 30,
2002, total equity was $33.5 million. Retained earnings at September 30, 2002
were $28.1 million and the Company had $193,000 in unrealized gains, net of
taxes, on the investment securities and mortgage-backed securities portfolios
classified as available-for-sale. Because the Company has a substantial
portfolio of investment securities and mortgage-backed securities
available-for-sale, the market values of these securities fluctuate
significantly as a result of changes in market interest rates. Treasury stock
increased by $1.0 million due to the purchase of 101,332 shares of the Company's
common stock during fiscal 2003 at an average cost of $30.34 per share.

The decision to repurchase shares was made due to the low interest rate
environment and the belief that the repurchase of shares was the best use of
capital based upon the overall interest rate environment and current economic
conditions. The repurchase plan approved most recently was for 150,000 shares,
of which 101,332 shares have been repurchased, leaving 48,668 shares yet to be
repurchased under the plan.

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

Net income. Net income increased from $2.5 million in 2002 to $3.4 million in
2003 primarily as a result of an increase in gains on the sale of securities of
$0.7 million.

Net interest income. Net interest income increased from $6.0 million in 2002 to
$6.19 million in 2002 as a result of an increase of 0.40% in net interest
margin, partially offset by a decrease of $26.7 million in average interest
earning assets. The Bank uses interest rate floors and caps from time to time to
limit and/or reduce exposure to fluctuations in interest rates on its assets and
liabilities (i.e., to assist in the management of interest rate risk on a
short-term basis). The Bank maintains significant investments subject to
interest rate adjustment and has liabilities such as certificates of deposit
that may have maturities of six months or longer. The Bank's risk with respect
to the floors and caps is the purchase price. The utilization of derivatives
(including the purchase price of the floors and caps) resulted in the following
impacts on net income for the periods presented:

                                                        Year Ended September 30,
                                                       -------------------------
                                                          2003          2002
                                                       ----------    ----------
     Increase (decrease) in net income before tax      $ (239,866)   $ (263,828)

Total interest income. Total interest income declined from $12.9 million in 2002
to $11.0 million in 2003. This decrease was due to a 0.20% decrease in the
average yield and a $26.7 million decrease in average interest earning assets
for 2003 as compared to 2002.

Total interest expense. Total interest expense decreased from $6.9 million in
2002 to $4.8 million in 2003. This decrease was due to a $18.9 million decrease
in interest-bearing liabilities and a 0.73% decrease in the rate paid on
interest-bearing liabilities.


                                       8
<PAGE>

Provision for Loan Losses. The provision for loan losses increased from $0 in
2002 to $195,000 in 2003, primarily due to charge-offs continuing at the higher
rate as experienced in 2002, creating the need to increase the allowance for
losses to a level deemed satisfactory by management which was approximately the
same level as carried at September 30, 2002. The provision was determined by the
level of the allowance needed for loan losses based upon management's analysis
of the current quality of the loan portfolio including historical trends,
significant problem loans, current market value of real estate or other
collateral and certain economic and other factors affecting loans and real
estate or collateral securing these loans.

Residential mortgage loans increased from $23,235,000 at September 30, 2002 to
$25,193,000 at September 30, 2003 and consumer loans decreased from $10,346,000
at September 30, 2002 to $7,065,000 at September 30, 2003. Management's analysis
indicates that the overall loan loss reserve needed to be maintained at the
September 30, 2003 level.

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

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

The third factor in the evaluation process is the unallocated allowance which
considers factors including industry, borrower or collateral concentrations;
changes in lending policies and underwriting; current loan volumes; experience
of lending staff; current general economic conditions; fraud risk; and risk
inherent in the loss estimation process of loan pools.


                                       9
<PAGE>

Noninterest income. Noninterest income increased by $1.9 million for the year
ended September 30, 2003, primarily due to an increase in the gain on sale of
securities of $727,000 and a gain of the disposition of land in the amount of
$1,080,000. 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. The gain on the disposition of land was a
nonmonetary transaction whereby the Company transferred land with an appraised
value of $1,500,000 to two local not-for-profit organizations for $420,000. The
gain of $1,080,000 on this transaction is also recorded as an expense under
noninterest expense.

Noninterest expense. Noninterest expense totaled $6.7 million for the year ended
September 30, 2003 compared to $5.5 million for the same period in 2002. Changes
in noninterest expense resulted primarily from a $1.1 million increase in
contributions, of which the substantial majority was the $1,080,000 gain on the
disposition of land discussed under noninterest income.

Provision for Income Taxes. The provision for income taxes decreased between
2002 and 2003 even though net income before taxes increased primarily due to the
overall lower effective rate due to the dividend exclusion on the greater
amounts of preferred stocks held in 2003, and the benefits from the contribution
deduction in the nonmonetary transaction for the disposition of the land.


                                       10
<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, 2003                    2003                                2002
                                     ---------------------    ------------------------------------   ------------------------------
                                                                                           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)             $ 58,371       6.88%    $ 59,488      $  4,017        6.75%    $ 67,138    $  4,953     7.38%
     Mortgage-backed securities (2)     20,264       4.78       48,885         3,239        6.63      114,666       5,617     4.90
     Investment securities (3)         143,207       8.15       79,365         3,495        4.40       40,659       2,106     5.18
     Interest-bearing deposits             970       3.30        1,923            32        1.66          816          23     2.82
     Federal funds sold                                         10,148           126        1.24        5,389         135     2.51
     Other                                                       3,173            78        2.46        1,011          54     5.34
                                      --------                --------      --------                 --------    --------
         Total interest-earning
            assets                     222,812       4.93      202,982        10,987        5.41      229,679      12,888     5.61
     Noninterest-earning assets         12,241                  20,023                                 14,431
                                      --------                --------                               --------
         Total assets                 $235,053                $223,005                               $244,110
                                      ========                ========                               ========

Interest-bearing liabilities:
     Deposit accounts                 $143,429       1.95     $149,646         2,800        1.87     $147,879       4,225     2.86
     Federal Home Loan Bank
        advances                        55,000       3.72       36,500         2,048        5.61       57,917       2,630     4.54
     Other borrowings                    2,613         --          653                        --          952          21     1.97
                                      --------                --------      --------                 --------    --------
         Total interest-bearing
            liabilities                201,042       2.41%     186,799         4,848        2.60%     206,748       6,876     3.33%
     Noninterest-bearing
        liabilities                      1,453                   3,180                                  4,924
                                      --------                --------                               --------
         Total liabilities             202,495                 189,979                                211,672
     Total retained earnings            32,558                  33,026                                 32,438
                                      --------                --------                               --------
         Total liabilities and
            retained earnings         $235,053                $223,005                               $244,110
                                      ========                ========                               ========

Net interest-earning assets           $ 21,770                $ 16,183                               $ 22,931
Net interest income/interest
   rate spread (4)                                   2.52%                  $  6,139        2.82%                $  6,012     2.28%
Net interest margin as a
   percentage of interest-
   earning assets                                    2.76%                                  3.02%                             2.62%
Ratio of interest-earning
   assets to interest-bearing
   liabilities                                     110.83%                                108.66%                           111.09%
</TABLE>

----------
(1)   Balances are net of deferred loan origination costs, undisbursed proceeds
      of construction loans in process, and include nonaccrual loans.

(2)   Includes mortgage-backed securities available-for-sale and
      held-to-maturity.

(3)   Includes investment securities available-for-sale and held-to-maturity.

(4)   Net interest rate spread represents the difference between the weighted
      average yield on interest-earning assets and the weighted average cost of
      interest-bearing liabilities.

(5)   Net interest margin represents net interest income as a percentage of
      average interest-earning assets.


                                       11
<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, 2003             Year Ended September 30, 2002
                                                     Compared to                               Compared to
                                            Year Ended September 30, 2002             Year Ended September 30, 2001
                                         -----------------------------------       -----------------------------------
                                          Rate          Volume         Net          Rate         Volume          Net
                                         -------       -------       -------       -------       -------       -------
                                                                     (Dollars in thousands)
<S>                                      <C>           <C>           <C>           <C>           <C>           <C>
Interest-earning assets:
     Loans                               $  (399)      $  (537)      $  (936)      $  (838)      $  (426)      $(1,264)
     Mortgage-backed securities (1)        3,792        (6,170)       (2,378)          655           190           845
     Investment securities (1)              (259)        1,648         1,389        (3,969)        1,490        (2,479)
     Interest-earning deposits with
        banks                                 (4)           13             9           (31)            3           (28)
     Other borrowings                        (79)           70            (9)         (210)          165           (45)
     Other                                   (11)           35            24           (64)         (169)         (233)
                                         -------       -------       -------       -------       -------       -------
         Total interest-earning
            assets                         3,040        (4,941)       (1,901)       (4,457)        1,253        (3,204)

Interest-bearing liabilities:
     Deposit accounts                     (1,476)           51        (1,425)       (2,771)          367        (2,404)
     Federal Home Loan Bank
        advances                            (443)         (139)         (582)          112           133           245
     Federal funds borrowed                   35           (55)          (20)           33           (76)          (43)
                                         -------       -------       -------       -------       -------       -------
         Total interest-bearing
            liabilities                   (1,884)         (143)       (2,027)       (2,626)          424        (2,202)
                                         -------       -------       -------       -------       -------       -------
Increase (decrease) in net interest
   income                                $ 4,924       $(4,798)      $   126       $(1,831)      $   829       $(1,002)
                                         =======       =======       =======       =======       =======       =======
</TABLE>

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


                                       12
<PAGE>

Asset and Liability Management

The Bank is particularly subject to interest rate risk because a large
percentage of the Bank's interest-earning assets have longer maturities than the
maturities of the Bank's interest-bearing liabilities, which reduces the Bank's
income as interest rates rise. In addition, the Bank's capital levels can
fluctuate with changes in market interest rates as a result of market value
change on its investment in long-term fixed rate U.S. Government agency
securities, various equity securities, certain deep discounted, fixed-rate
collateralized mortgage obligations and long-term zero coupon bonds. At
September 30, 2003, the Bank held $162.1 million in fixed and adjustable rate
securities, or 68.9% of its total assets.

The Bank has sought to reduce the exposure of its earnings 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.


                                       13
<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, 2003, 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          $ 22,902       $   (8,706)              (28)%             10.27%          (291) bp
               200            25,632           (5,975)              (19)              11.21           (197) bp
               100            28,950           (2,657)               (8)              12.34            (84) bp
            Static            31,607                                                  13.18
              (100)           28,532           (3,075)              (10)              11.91           (126) 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, 2003, it is estimated that a sudden 200
basis point increase in interest rates would decrease the Bank's net portfolio
value by $6.0 million, or 19% at that date. The Net Portfolio Value ratio of
11.21% as indicated in the above table at 200 basis points rate shock satisfied
the 4% requirement imposed by the Office of Thrift Supervision in connection
with its approval of the Conversion.

Liquidity and Capital Resources

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

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


                                       14
<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, 2003, cash and short-term
investments totaled $2.7 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, 2003, the Bank had
outstanding advances of $55 million. On that date, the Bank had the ability to
borrow an additional $27 million from the Federal Home Loan Bank of Atlanta.

At September 30, 2003, the Bank had outstanding commitments to originate loans
of $1,401,000, of which $508,000 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, 2003,
totaled $79 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, 2003, the Bank was in compliance
with all applicable capital requirements so as to be considered
"well-capitalized". See Note 11 to the consolidated financial statements.


                                       15
<PAGE>

Off-Balance Sheet Arrangements

For a discussion of the Company's off-balance sheet arrangements, see Footnote
10, "Commitments" and Footnote 14, "Interest Rate Risk" to the audited financial
statements in the annual report to stockholders.

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.


                                       16

<PAGE>


                          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, 2003 and 2002, and the
related consolidated statements of income, comprehensive operations, changes in
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audits.

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

In my opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of DutchFork
Bancshares, Inc. and Subsidiaries at September 30, 2003 and 2002 and the results
of its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles in the United States of America.


/s/ Clifton D. Bodiford, CPA
----------------------------
October 23, 2003
Columbia, South Carolina


                                       17
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                     At September 30,
                                                                2003                2002
                                                            ------------        ------------
<S>                                                         <C>                 <C>
Assets
Cash and cash equivalents (Notes 1, 2
   and 12)                                                  $  2,653,640        $ 21,130,629
Investments and mortgage-backed securities
  (Notes 1, 3, 7 and 12):
     Available-for-sale:
         Investments (cost of $143,998,688 and
           $61,497,869 at September 30, 2003
           and 2002 respectively)                            141,851,562          62,209,846
         Mortgage-backed securities (cost of
           $19,117,095 and $65,015,723 at
           September 30, 2003 and 2002
           respectively)                                      18,908,681          64,627,627
     Held-to-maturity:
         Investments (fair value of
           $50,000 and $50,000 at
           September 30, 2003 and 2002
           respectively)                                          50,000              50,000
         Mortgage-backed securities (fair
           value of $1,368,324 and $2,879,938
           at September 30, 2003 and 2002
           respectively)                                       1,355,226           2,835,439
Loans receivable (Notes 1, 4, 7, 10, and 12)                  58,371,056          61,705,696
Premises, furniture and equipment, net (Notes
   1 and 5)                                                    3,179,428           3,786,005
Accrued interest receivable:
     Loans and mortgage-backed securities
        (Note 1)                                                 346,945             371,221
     Investments and other property                              690,454             489,164
Prepaid assets                                                   408,299             574,318
Prepaid income tax                                               518,585                  --
Deferred tax asset (Notes 1 and 9)                               936,622             580,152
Other (Note 21)                                                5,782,861             731,992
                                                            ------------        ------------
Total assets                                                $235,053,359        $219,092,089
                                                            ============        ============
</TABLE>


                                       18
<PAGE>

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

<TABLE>
<CAPTION>
                                                                       At September 30,
                                                                  2003                2002
                                                              -------------       -------------
<S>                                                           <C>                 <C>
Liabilities and stockholders' equity
Liabilities:
     Deposit accounts (Note 6, 12 and
        14)                                                   $ 143,429,056       $ 149,290,222
     Federal Home Loan Bank advances
        (Notes 7 and 12)                                         55,000,000          35,000,000
     Advances from borrowers for taxes
        and insurance                                                62,316              58,955
     Federal funds purchased                                      2,613,022                  --
     Accrued income taxes payable                                   317,382             174,707
     Accrued expenses                                               748,729             665,935
     Accrued interest payable                                       234,581             381,900
     Other                                                           90,502              43,001
                                                              -------------       -------------
Total liabilities                                               202,495,588         185,614,720
                                                              -------------       -------------

Commitments and contingencies (Note 10)

Stockholders' equity:
     Preferred stock, $.01 par value, 500,000 shares
        authorized and unissued                                          --                  --
     Common stock, $.01 par value,
        4,000,000 shares authorized, 1,560,550 issued at
        September 30, 2003 and 2002                                  15,605              15,605
     Additional paid-in capital                                  15,022,479          14,785,443
     Retained earnings, substantially restricted
        (Notes 9 and 11)                                         31,446,192          28,065,262
     Accumulated other comprehensive income (loss)               (1,470,979)            193,388
     Treasury stock (432,709 and 331,377 shares at
        September 30, 2003 and 2002, respectively)              (10,543,034)         (7,468,233)
     Unearned 2001 Stock-Based Incentive Plan shares
        (43,073 and 51,187 shares at September 30, 2003
        and 2002, respectively)                                    (809,608)           (962,070)
     Unearned Employee Stock Ownership Plan (97,804
        and 106,124 shares at September 30, 2003 and
        2002, respectively)                                      (1,102,884)         (1,152,026)
                                                              -------------       -------------
Total stockholders' equity                                       32,557,771          33,477,369
                                                              -------------       -------------
Total liabilities and stockholders' equity                    $ 235,053,359       $ 219,092,089
                                                              =============       =============
</TABLE>

See accompanying notes.


                                       19
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries
                        Consolidated Statements of Income

<TABLE>
<CAPTION>
                                                                         Year Ended
                                                                        September 30,
                                                                    2003              2002
                                                                 -----------      -----------
<S>                                                              <C>              <C>
Interest income:
     Loans receivable (Notes 1 and 4)                            $ 4,016,615      $ 4,952,598
     Investments (Notes 1 and 3)                                   3,620,626        2,111,381
     Mortgage-backed and related securities (Notes 1 and 3)        3,238,970        5,617,426
     Other interest-earning assets                                   110,006          206,269
                                                                 -----------      -----------
         Total interest income                                    10,986,217       12,887,674
                                                                 -----------      -----------

Interest expense:
     Interest expense on deposit accounts (Note 6)                 2,800,453        4,224,980
     Federal Home Loan Bank advances (Note 7)                      2,048,001        2,629,901
     Other borrowings purchased                                          187           21,303
                                                                 -----------      -----------
         Total interest expense                                    4,848,641        6,876,184
                                                                 -----------      -----------

Net interest income                                                6,137,576        6,011,490
     Provision for loan losses (Notes 1 and 4)                       195,000               --
                                                                 -----------      -----------

     Net interest income after provision for loan losses           5,942,576        6,011,490
                                                                 -----------      -----------

Noninterest income:
     Gain on sale of securities, net                               2,465,339        1,738,830
     Gain on disposition of assets (Note 23)                       1,080,479               --
     Loan origination and commitment fees (Note 1)                   178,415          138,217
     Gain on sale of loans                                            76,581           79,623
     Loan servicing fees                                               4,112            6,232
     Bank service charges                                            566,931          543,668
     Loan late charges                                                62,689           53,751
     Other                                                           127,797          105,190
                                                                 -----------      -----------
         Total noninterest income                                  4,562,343        2,665,511
                                                                 -----------      -----------
</TABLE>


                                       20
<PAGE>

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

                                                            Year Ended
                                                           September 30,
                                                       2003              2002
                                                    ----------        ----------
Noninterest expense:
     Compensation and benefits                       3,182,354         3,066,758
     Occupancy, furniture and equipment                493,003           514,547
     SAIF deposit insurance premium                     24,562            25,499
     Professional fees                                 281,981           293,751
     Telephone and postage                             166,730           198,110
     Insurance and related costs                        52,177            30,494
     Marketing                                          82,095           111,711
     Data processing                                   209,500           166,140
     Supplies and printing                              80,429           126,078
     OTS assessments                                    61,234            61,665
     Meetings                                            8,677            14,862
     Bank service charges                               32,402            79,620
     Loan expenses                                     103,116            47,661
     Transaction account charges                       164,809            56,481
     Automated teller system                            29,138            29,817
     Contributions (Note 23)                         1,140,444            11,409
     Other                                             732,512           688,669
                                                    ----------        ----------
         Total noninterest expense                   6,845,163         5,523,272
                                                    ----------        ----------

     Income before income taxes                      3,659,756         3,153,729

Provision for income taxes (Note 9)                    278,826           690,964
                                                    ----------        ----------

Net income                                          $3,380,930        $2,462,765
                                                    ==========        ==========

Net income per share (basic)                        $     3.31        $     2.17
                                                    ==========        ==========

Net income per share (diluted)                      $     3.13        $     2.09
                                                    ==========        ==========

See accompanying notes.


                                       21
<PAGE>

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

<TABLE>
<CAPTION>
                                                              Year Ended September 30,
                                                              2003               2002
                                                           -----------       -----------
<S>                                                        <C>               <C>
Net income                                                 $ 3,380,930       $ 2,462,765

Other comprehensive income, net of tax:
     Unrealized gains arising during the period,
        net of tax effect of $(1,015,052) and $83,756
        for the years ended September 30, 2003
        and 2002, respectively                              (1,664,367)          105,997
                                                           -----------       -----------

Comprehensive income                                       $ 1,716,563       $ 2,568,762
                                                           ===========       ===========
</TABLE>

See accompanying notes.


                                       22
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                       Accumulated
                                                                                                          Other
                                  Number of                          Additional         Retained      Comprehensive
                                    Shares         Common Stock   Paid-in Capital       Earnings      Income (Loss)
                                 ------------      ------------     ------------      ------------    -------------
<S>                                 <C>            <C>              <C>               <C>              <C>
Balance at September
   30, 2001                         1,321,128      $     15,605     $ 14,585,071      $ 25,602,497     $     87,391
Net income                                 --                --               --         2,462,765               --
Release of 13,848
   ESOP shares                             --                --          226,220                --               --
Shares issued for
   incentive plan                      11,235                --          (26,430)               --               --
Options exercised                       7,803                --          (47,305)               --               --
Purchase of treasury
  stock                              (162,180)               --               --                --               --
Tax benefit from stock
   options                                 --                --           47,887                --               --
Change in net unrealized
   depreciation on
   investments available
   for sale (net of deferred
   and current income
   taxes of $83,756)                       --                --               --                --          105,997
                                 ------------      ------------     ------------      ------------     ------------
Balance at September
   30, 2002                         1,177,986            15,605       14,785,443        28,065,262          193,388
Net income                                 --                --               --         3,380,930               --
Release of 8,320 ESOP
   shares                                  --                --          212,084                --               --
Shares issued for
   incentive plan                       8,114                --           24,952                --               --
Purchase of treasury
   stock                             (101,332)               --               --                --               --
Change in net unrealized
   depreciation on
   investments available
   for sale (net of deferred
   and current income
   taxes of $1,015,052)                    --                --               --                --       (1,664,367)
                                 ------------      ------------     ------------      ------------     ------------
Balance at September
   30, 2003                         1,084,768      $     15,605     $ 15,022,479      $ 31,446,192     $ (1,470,979)
                                 ============      ============     ============      ============     ============

<CAPTION>

                                                                        Employee Stock         Total
                                                                           Ownership       Stockholders'
                                    Treasury Stock    Incentive Plan       Plan Loan          Equity
                                    -------------     -------------     --------------     -------------
<S>                                  <C>               <C>               <C>               <C>
Balance at September
   30, 2001                          $ (3,851,845)     $ (1,173,175)     $ (1,199,722)     $ 34,065,822
Net income                                     --                --                --         2,462,765
Release of 13,848
   ESOP shares                                 --                --            47,696           273,916
Shares issued for
   incentive plan                              --           211,105                --           184,675
Options exercised                         175,567                --                --           128,262
Purchase of treasury
  stock                                (3,791,955)               --                --        (3,791,955)
Tax benefit from stock
   options                                     --                --                --            47,887
Change in net unrealized
   depreciation on
   investments available
   for sale (net of deferred
   and current income
   taxes of $83,756)                           --                --                --           105,997
                                     ------------      ------------      ------------      ------------
Balance at September
   30, 2002                            (7,468,233)         (962,070)       (1,152,026)       33,477,369
Net income                                     --                --                --         3,380,930
Release of 8,320 ESOP
   shares                                      --                --            49,142           261,226
Shares issued for
   incentive plan                              --           152,462                --           177,414
Purchase of treasury
   stock                               (3,074,801)               --                --        (3,074,801)
Change in net unrealized
   depreciation on
   investments available
   for sale (net of deferred
   and current income
   taxes of $1,015,052)                        --                --                --        (1,664,367)
                                     ------------      ------------      ------------      ------------
Balance at September
   30, 2003                          $(10,543,034)     $   (809,608)     $ (1,102,884)     $ 32,557,771
                                     ============      ============      ============      ============
</TABLE>

See accompanying notes.


                                       23
<PAGE>

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

<TABLE>
<CAPTION>
                                                                Year Ended September 30,
                                                               2003                2002
                                                            ------------      ------------
<S>                                                         <C>               <C>
Operating Activities

Net income                                                  $  3,380,930      $  2,462,765
Adjustments to reconcile net income to net cash
   provided (used) by operating activities:
     Depreciation                                                306,321           312,661
     Provision for losses                                        195,000                --
     Incentive plan shares issued                                177,414           184,675
     (Gain) on sales of investments and mortgage-
         backed securities                                    (2,465,339)       (1,738,830)
     Net (gain) on sales on loans                                (76,581)          (79,623)
     (Decrease) in deferred loan origination fees                 (5,234)          (13,150)
     Amortization of (discounts) on investments,
        mortgage-backed securities and loans                    (145,724)         (488,405)
     (Increase) decrease in accrued interest receivable         (177,014)          201,344
     (Increase) in prepaid and other assets                     (900,435)          (70,889)
     (Increase) decrease in deferred tax asset                  (356,470)           46,659
     (Decrease) in accrued interest payable                     (147,319)         (334,540)
     (Decrease) in accounts payable and accrued
         expenses                                                (20,069)       (4,854,687)
     Increase (decrease) in other liabilities                  1,306,091        (1,929,070)
     Origination of loans held for sale                      (12,336,930)       (7,780,691)
     Proceeds from sales of trading securities                18,207,707        14,429,631
     Purchases of trading securities                         (18,059,488)      (14,541,042)
     Proceeds from sales of loans held for sale               12,539,311         7,850,314
                                                            ------------      ------------
Net cash provided (used) by operating activities               1,422,171        (6,342,878)
                                                            ------------      ------------
</TABLE>


                                       24
<PAGE>

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

<TABLE>
<CAPTION>
                                                              Year Ended September 30,
                                                             2003                2002
                                                         -------------      -------------
<S>                                                      <C>                <C>
Investing Activities

Investment in bank-owned life insurance                     (4,503,000)                --
Principal payments on mortgage-backed securities            58,331,747        111,233,979
Purchases of available-for-sale securities                (238,966,534)      (214,362,400)
Proceeds from sales of available-for-sale securities       147,977,655        140,606,777
Net decrease in loans receivable                             3,435,592         11,405,379
Purchases of premises, furniture and equipment                (116,262)          (100,734)
                                                         -------------      -------------
Net cash provided (used) by investing activities           (33,840,802)        48,783,001
                                                         -------------      -------------

Financing Activities

Net  increase (decrease) in deposit accounts                (5,861,166)         2,032,318
Proceeds from Federal Home Loan Bank advances               20,000,000                 --
Payments on Federal Home Loan Bank advances and
   other borrowings                                                 --        (25,000,000)
Proceeds from other borrowings                             206,134,975         48,625,000
Repayments of other borrowings                            (203,521,953)       (48,625,000)
Release of ESOP shares                                         261,226            273,916
Exercise of stock options                                           --            128,262
Purchase of treasury stock                                  (3,074,801)        (3,791,955)
Increase (decrease) in advances from borrowers for
   taxes and insurance                                           3,361            (17,494)
                                                         -------------      -------------
Net cash provided (used) by financing activities            13,941,642        (26,374,953)
                                                         -------------      -------------
Net increase (decrease) in cash and cash equivalents       (18,476,989)        16,065,170
Cash and cash equivalents at beginning of year              21,130,629          5,065,459
                                                         -------------      -------------
Cash and cash equivalents at end of year                 $   2,653,640      $  21,130,629
                                                         =============      =============

Supplemental Disclosures of Cash Flow Information:

Cash paid during the year for:
      Interest                                           $   5,465,122      $   7,974,524
      Taxes                                              $          --      $   2,772,638
      Gain on disposition of land                        $   1,080,479                 --
</TABLE>

See accompanying notes.


                                       25
<PAGE>

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

                     Years Ended September 30, 2003 and 2002

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.


                                       26
<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.


                                       27
<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.


                                       28
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

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

      (k) Financial Instruments

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

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

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

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

      Derivatives Used for Risk Management. The Bank has adopted SFAS No. 133,
      Accounting for Derivative Instruments and Hedging Activities (as amended
      by SFAS No. 138 and SFAS No. 149, which amended SFAS No. 133), which
      establishes accounting and reporting standards for derivatives and hedging
      activities.

      Under SFAS 133, 138 and 149, the Bank may designate a derivative as either
      a hedge of the fair value of a recognized fixed rate asset or liability or
      an unrecognized firm commitment ("fair value" hedge), or a hedge of a
      forecasted transaction or of the variability of future cash flows of a
      floating rate asset or liability ("cash flow" hedge). All derivatives are
      recorded as assets or liabilities on the balance sheet at their respective
      fair values with unrealized gains and losses recorded either in
      comprehensive income or in the results of operations, depending on the
      purpose for which the derivative is held.


                                       29
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

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

      (k) Financial Instruments (continued)

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

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

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

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


                                       30
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

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

      (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.

      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.


                                       31
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

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

      (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.

      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 2003 amounts have been reclassified to conform with 2002
      classifications.

      (o) Marketing Expenses

      The Bank expenses the cost of marketing as incurred. Marketing expenses
      totaled $82,095 and $111,711 for the years ended September 30, 2003 and
      2002, 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.


                                       32
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

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

      (q) Comprehensive Income

      Accounting principles generally require that recognized revenue, expenses,
      gains and losses be included in net income. Although certain changes in
      assets and liabilities, such as unrealized gains and losses on securities
      available for sale, are reported as a separate component of the equity
      section of the balance sheet, such items, along with net income, are
      components of comprehensive income. Currently the Company's only component
      of Comprehensive Income (Loss) is its unrealized gains (losses) on
      securities available for sale.

      (r) Transfers of Financial Assets

      Transfers of financial assets are accounted for as sales, when control
      over the assets has been surrendered. Control over transferred assets is
      deemed to be surrendered when (1) the assets have been isolated from the
      Company, (2) the transferee obtains the right (free of conditions that
      constrain it from taking advantage of that right) to pledge or exchange
      the transferred assets and (3) the Company does not maintain effective
      control over the transferred assets through an agreement to repurchase
      them before their maturity.

2.    Cash and Cash Equivalents

      Cash and cash equivalents are as follows:

                                                          At September 30,
                                                         2003            2002
                                                     -----------     -----------
      Cash and due from banks                        $ 1,683,334     $ 3,843,983
      Interest bearing deposits                          970,306      17,286,646
                                                     -----------     -----------
                                                     $ 2,653,640     $21,130,629
                                                     ===========     ===========


                                       33
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

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, 2003
                                      ---------------------------------------------------------------
                                                          Gross             Gross
                                        Amortized       Unrealized       Unrealized          Fair
                                          Cost             Gains            Losses           Value
                                      ------------     ------------     ------------     ------------
<S>                                   <C>              <C>                               <C>
Bonds and notes:
  US government and agency
     securities                       $ 11,798,879     $                $     20,340     $ 11,778,539
  Corporate bonds                       22,086,746            7,021          946,501       21,147,266
                                      ------------     ------------     ------------     ------------
    Total bonds and notes               33,885,625            7,021          966,841       32,925,805
                                      ------------     ------------     ------------     ------------
Equity securities:
  Mutual funds                             982,212               --          113,335          868,877
  Preferred stock                      106,309,766          612,582        1,814,418      105,107,930
  Stock in Federal Home Loan Bank        2,750,000               --               --        2,750,000
  Other                                     71,085          127,865               --          198,950
                                      ------------     ------------     ------------     ------------
    Total equity securities            110,113,063          740,447        1,927,753      108,925,757
                                      ------------     ------------     ------------     ------------
Total investments                     $143,998,688     $    747,468     $  2,894,594     $141,851,562
                                      ============     ============     ============     ============

Mortgage-backed securities:
  Government guaranteed               $ 19,117,095     $  1,043,337     $  1,251,751     $ 18,908,681
                                      ------------     ------------     ------------     ------------
Total mortgage-backed securities      $ 19,117,095     $  1,043,337     $  1,251,751     $ 18,908,681
                                      ============     ============     ============     ============
</TABLE>


                                       34
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

3.    Investments and Mortgage-Backed Securities (continued)

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

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

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, 2003
                                -------------------------------------------------------
                                                  Gross         Gross
                                 Amortized     Unrealized     Unrealized       Fair
                                   Cost           Gains         Losses         Value
                                ----------     ----------     ----------     ----------
Equity securities:
<S>                             <C>            <C>            <C>            <C>
     Other                      $   50,000     $       --     $       --     $   50,000
                                ----------     ----------     ----------     ----------

Mortgage-backed securities:
     Government guaranteed       1,355,226         13,375            277      1,368,324
                                ----------     ----------     ----------     ----------
                                $1,405,226     $   13,375     $      277     $1,418,324
                                ==========     ==========     ==========     ==========

<CAPTION>
                                                 At September 30, 2002
                                -------------------------------------------------------
                                                  Gross         Gross
                                 Amortized     Unrealized     Unrealized       Fair
                                   Cost           Gains         Losses         Value
                                ----------     ----------     ----------     ----------
<S>                             <C>            <C>            <C>            <C>
Equity securities:
     Other                      $   50,000     $       --     $       --     $   50,000
                                ----------     ----------     ----------     ----------

Mortgage-backed securities:
     Government guaranteed       2,835,439         44,499             --      2,879,938
                                ----------     ----------     ----------     ----------
                                $2,885,439     $   44,499     $       --     $2,929,938
                                ==========     ==========     ==========     ==========
</TABLE>


                                       35
<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, 2003, investments with a book value of approximately
      $1,121,000 were pledged as collateral for various deposits, and
      investments with a book value of $13,264,020 were pledged as collateral on
      Federal Home Loan Bank advances. At September 30, 2002, investments with a
      book value of approximately $8,879,000 were pledged as collateral on
      various deposits, and investments with a book value of $35,473,475 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 $2,544,934 and $79,595, respectively
      for the year ended September 30, 2003. For the year ended September 30,
      2002, gross realized gains were $1,743,006 and realized losses were
      $4,176.

      Mortgage-backed securities are deemed to be due in the final year of
      maturity. The scheduled maturities of securities were as follows:

<TABLE>
<CAPTION>
                                                        At September 30, 2003
                                     ------------------------------------------------------------
                                     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        $        --     $        --     $10,778,384      $10,778,383
      Due from one to five years              --              --       6,239,225        5,925,745
      Due from five to ten years              --              --         487,699          480,391
      Due after ten years              1,355,226       1,368,324      35,497,412       34,649,967
                                     -----------     -----------     -----------      -----------
                                     $ 1,355,226     $ 1,368,324     $53,002,720      $51,834,486
                                     ===========     ===========     ===========      ===========

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


                                       36
<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 $2,750,000 at
      September 30, 2003.


                                       37
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

4.    Loans Receivable

      Loans receivable consisted of the following:

                                                           At September 30,
                                                        2003             2002
                                                     -----------     -----------
      Commercial real estate                         $10,966,123     $11,317,431
      Commercial-other                                 8,719,151       8,475,251
      Real estate construction                           811,000       3,493,438
      Residential mortgage - 1-4 family               25,192,999      23,235,465
      Second mortgage loans, home equity
         loans and lines of credit                     5,671,360       5,134,424
      Multi-family                                       812,001         879,028
      Consumer loans                                   7,064,593      10,345,765
                                                     -----------     -----------
                                                      59,237,227      62,880,802
                                                     -----------     -----------
      Less:
      Allowance for losses                               400,892         424,322
      Loans in process                                   464,996         745,270
      Deferred loan origination fees, net                    283           5,514
                                                     -----------     -----------
                                                         866,171       1,175,106
                                                     -----------     -----------
      Loans receivable, net                          $58,371,056     $61,705,696
                                                     ===========     ===========

      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, 2003 and 2002 included $151,200 and
      $277,000 of loans held for sale, respectively.

      Mortgage loans include $472,048 and $583,000 representing participating
      interests in loans originated and serviced by other financial institutions
      as of September 30, 2003 and 2002, respectively.

      Non-accrual loans are as follows:

                                                            At September 30,
                                                          2003           2002
                                                       ----------     ----------
      Non-accrual loans                                $  549,573     $  770,880
                                                       ==========     ==========
      Interest income which would
         have been recognized under
         original terms                                $   30,455     $   70,813
      Interest income recognized                           17,660         56,458
                                                       ----------     ----------
      Interest income not recognized                   $   12,795     $   14,355
                                                       ==========     ==========


                                       38
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

4.    Loans Receivable (continued)

      Mortgage loans at September 30, 2003 and 2002 are net of participations
      and whole loans sold and serviced for others in the amounts of $958,335
      and $1,805,349, 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 $5,574 and $17,032 at September 30, 2003 and 2002, respectively.

      Changes in the allowance for losses are summarized as follows:

                                                  Year Ended       Year Ended
                                                 September 30,    September 30,
                                                     2003             2002
                                                 -------------    -------------
      Beginning balance                            $ 424,322        $ 634,518
      Provision for losses                           195,000               --
      Charge-offs                                   (251,880)        (235,103)
      Recoveries                                      33,450           24,907
                                                   ---------        ---------
      Ending balance                               $ 400,892        $ 424,322
                                                   =========        =========

      Restructured loans totaled approximately $173,082 and $364,134 at
      September 30, 2003 and 2002, 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,
                                                     2003             2002
                                                 -------------    -------------
      Balance, beginning of period                 $ 426,106        $ 547,707
      New loans                                       52,296           18,401
      Repayments (net of advances)                   (25,571)        (140,002)
                                                   ---------        ---------
      Balance, end of period                       $ 452,831        $ 426,106
                                                   =========        =========


                                       39
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

5.    Premises, Furniture, and Equipment

      Premises, furniture and equipment are summarized as follows:

                                                         At September 30,
                                                        2003             2002
                                                     ----------       ----------

      Land                                           $  859,231       $1,275,748
      Buildings and improvements                      2,717,172        2,717,172
      Furniture and equipment                         1,585,072        1,468,810
                                                     ----------       ----------
                                                      5,161,475        5,461,730
      Less accumulated depreciation                   1,982,047        1,675,725
                                                     ----------       ----------

      Premises, furniture and
            equipment, net                           $3,179,428       $3,786,005
                                                     ==========       ==========

      Depreciation expense for the years ended September 30, 2003 and 2002 was
      $306,321 and $312,661, respectively.

6.    Deposit Accounts

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

                                                        At September 30,
                                                     2003              2002
                                                 ------------      ------------
      NOW and money market:
         0.00% to 1.00%                          $ 33,592,634      $ 31,330,549
                                                 ------------      ------------
      Savings: 0.25% to 0.75%                      18,978,211        17,592,590
                                                 ------------      ------------
      Certificates of deposit:
         0.00% to 2.00%                            61,427,725        12,459,560
         2.01% to 4.00%                            26,186,690        79,198,855
         4.01% to 5.00%                             2,528,348         5,828,005
         5.01% to 6.00%                               582,107         1,531,593
         6.01% to 7.00%                                21,078         1,207,633
         7.01% to 8.00%                               112,263           141,437
                                                 ------------      ------------
      Total certificates of
         deposit                                   90,858,211       100,367,083
                                                 ------------      ------------
      Total deposit accounts                     $143,429,056      $149,290,222
                                                 ============      ============

      Weighted average interest rate
         of NOW and money market
         accounts                                        0.36%             0.85%
                                                         ====              ====

      The aggregate amount of short-term CD's with a minimum denomination of
      $100,000 was approximately $31.8 million and $34.6 million at September
      30, 2003 and 2002, respectively. Non-interest bearing deposits were not
      material at September 30, 2003 and 2002. Deposits in excess of $100,000
      are not insured. The Bank did not have any brokered deposits.


                                       40
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

6.    Deposit Accounts (continued)

      The scheduled maturities of certificates of deposit at September 30, 2003
      are as follows:

        2004                                                   $78,600,621
        2005                                                     8,652,126
        2006                                                     2,258,911
        2007                                                       883,403
        2008                                                       454,352
        Thereafter                                                   8,798
                                                               -----------
      Total certificates of deposit                            $90,858,211
                                                               ===========

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 $34,803,000 and investments with
      a book value of $58,533,958 collateralized the advances at September 30,
      2003. At September 30, 2002, loans of $24,837,647 and investments of
      $35,473,475 collateralized these advances.

      Advances from the FHLB consisted of the following:

                                                          At September 30,
                                                      2003               2002
                                                   -----------      -----------
      Contractual Maturity
      Within one year- adjustable rate             $20,000,000      $        --
      2008-fixed rate                               10,000,000       10,000,000
      2010-fixed rate                               25,000,000       25,000,000
                                                   -----------      -----------
                                                   $55,000,000      $35,000,000
                                                   ===========      ===========
      Weighted average rate                               4.10%            5.73%
                                                          ====             ====


                                       41
<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,
                                                     2003              2002
                                                  -----------      -----------
      Average balance during the period           $ 1,034,658      $   952,184
      Average interest rate during the period            4.84%            1.97%
      Average interest rate at end of period               --               --
      Maximum month end balances                  $24,520,000      $19,335,000

      At September 30, 2003, the Company had a $12.5 million unsecured credit
      facility with a third party financial institution. At September 30, 2003,
      there was no outstanding balance under this credit facility.

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,
                                                           2003           2002
                                                        ---------      ---------
      Current                                           $ 635,296      $ 560,666
      Deferred                                           (356,470)       130,298
                                                        ---------      ---------
                                                        $ 278,826      $ 690,964
                                                        =========      =========


                                       42
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

9.    Income Taxes (continued)

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

                                                    Year Ended September 30,
                                                      2003             2002
                                                  -----------       -----------

      Tax at federal income tax rate              $ 1,244,317       $ 1,072,268
      Increase (decrease) resulting from:
         Effect of nontaxable dividends              (809,850)         (462,297)
         Non-cash contributions                      (264,384)               --
         State income tax expense, net
            of federal tax benefit                     36,752            48,146
         Other, net                                    71,991            32,847
                                                  -----------       -----------
      Total                                       $   278,826       $   690,964
                                                  ===========       ===========

      Effective tax rate                                 7.62%             21.9%
                                                         ====              ====

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

<TABLE>
<CAPTION>
                                                                        2003             2002
                                                                    -----------      -----------
<S>                                                                 <C>              <C>
      Deferred tax assets:
         Differences between book and tax basis of bad debt
            reserves                                                $   118,479      $   147,839
         Differences between book and tax basis of investments          500,210          599,258
         Nondeductible contributions                                    435,934               --
         Deferred compensation for Directors                             76,000           76,000
         Supplemental executive retirement plan                          39,088               --
         Stock incentive compensation plan                              103,468          104,822
         Other                                                           55,016           13,285
                                                                    -----------      -----------
      Total deferred tax assets                                       1,328,195          941,204
         Valuation allowance                                                 --               --
                                                                    -----------      -----------
         Net deferred tax assets                                      1,328,195          941,204
                                                                    -----------      -----------
      Deferred tax liabilities:
         Differences between book and tax basis of Federal Home
            Loan Bank stock                                            (112,692)        (112,692)
         Deferred gain on sale of branch real estate                    (70,683)         (70,683)
         Differences between book and tax basis of property            (208,198)        (177,677)
                                                                    -----------      -----------
      Total deferred tax liabilities                                   (391,573)        (361,052)
                                                                    -----------      -----------
      Net deferred tax asset                                        $   936,622      $   580,152
                                                                    ===========      ===========
</TABLE>


                                       43
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

9.    Income Taxes (continued)

      During the years ended September 30, 2003 and 2002, income taxes
      (benefits) of $(1,015,552) and $83,756, respectively, were allocated to
      the change in retained earnings for the tax effects of unrealized gains
      and losses on assets available for sale.

      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. 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.


                                       44
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

10.   Commitments (continued)

      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.

      Most of the Bank's business activity is with customers in South Carolina.
      As of September 30, 2003 and 2002, 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, 2003   September 30, 2002
                                         ------------------   ------------------
              Variable rate                   $893,000             $198,000
              Fixed rate (at 2.81%)            508,250              100,600

      Lines of credit extended to borrowers amounted to approximately
      $21,609,098, of which $9,616,406 was undisbursed at September 30, 2003.

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.


                                       45
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

11.   Regulatory Capital Requirements (continued)

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

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

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

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


                                       46
<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, 2003
Newberry Federal Savings Bank
  Tangible capital                         13.68%       $ 32,398      2.00%    $   4,738        N/A          N/A
  Core capital                             13.68%       $ 32,398      4.00%    $   9,476      5.00%     $ 11,845
  Risk-based capital                       18.76%       $ 32,679      8.00%    $  13,815     10.00%     $ 17,269

September 30, 2002
Newberry Federal Savings Bank
  Tangible capital                         14.76%       $ 32,251      2.00%    $   4,369        N/A          N/A
  Core capital                             14.76%       $ 32,251      4.00%    $   8,738      5.00%     $ 10,923
  Risk-based capital                       28.44%       $ 32,658      8.00%    $   9,072     10.00%     $ 11,341
</TABLE>


                                       47
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

11.   Regulatory Capital Requirements (continued)

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

                                                            (in thousands)
                                                            At September 30,
                                                           2003          2002
                                                         --------      --------
GAAP capital                                             $ 30,965      $ 32,868
Investment in subsidiary                                      (34)         (424)
Unrealized losses (gains) on
  available-for-sale securities                             1,467          (193)
                                                         --------      --------
Core and tangible capital                                  32,398        32,251
Unrealized losses (gains) on
  available-for-sale securities                                --           103
Allowance for loan and lease losses                           401           424
Equity investments                                           (120)         (120)
                                                         --------      --------
Risk-based capital                                       $ 32,679      $ 32,658
                                                         ========      ========

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,
                                                   2003                       2002
                                           ---------------------     ---------------------
                                           Carrying      Fair        Carrying       Fair
                                            Value        Value        Value        Value
                                           --------     --------     --------     --------
<S>                                        <C>          <C>          <C>          <C>
Financial instruments:
      Assets:
       Cash and cash equivalents           $  2,654     $  2,654     $ 21,131     $ 21,131
       Investments and mortgage-backed
          securities                        162,165      162,178      129,723      129,767
       Loans receivable                      58,371       58,414       61,706       62,060
      Accrued interest receivable             1,037        1,037          860          860
      Liabilities:
      Deposit accounts:
         Demand deposits and passbook
             accounts                        52,571       52,571       48,924       48,924
         Certificates of deposit             90,858       91,646      100,367      100,735
       FHLB advances                         55,000       59,600       35,000       35,000
       Other borrowings                       2,613        2,613           --           --
       Advances from borrowers for
           taxes and insurance                   62           62           59           59
</TABLE>


                                       48
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

12.   Fair Value of Financial Instruments (continued)

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

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

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

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

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

      The information presented is based on pertinent information available to
      management as of September 30, 2003. 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 $138,702 and $213,027 for the years ended September 30, 2003,
      and 2002, respectively.


                                       49
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

13.   Employee Benefit Plans (continued)

      Stock-Based Compensation Plan

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

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

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

      The options will enable the recipient to purchase stock at the exercise
      price above. The options vest over five years following the date of grant
      and are exercisable for up to 10 years. During the year ended September
      30, 2002, options for 7,803 shares were exercised by the estate of a
      deceased director. No options were exercised during the year ended
      September 30, 2003.


                                       50
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

13.   Employee Benefit Plans (continued)

      Stock option transactions for the years ended September 30, 2003 and 2003
      are summarized as follows:

                                                                    Weighted
                                                                     Average
                                                      Shares      Exercise Price
                                                      ------      --------------
      Outstanding, October 1, 2001                   109,240         $16.4375
           Granted                                        --               --
           Exercised                                  (7,803)         16.4375
                                                    --------

      Outstanding, October 1, 2002                   101,437          16.4375
           Granted                                        --               --
           Exercised                                      --               --
                                                    --------

      Outstanding, September 30, 2003                101,437         $16.4375
                                                    ========         ========

      Exercisable at September 30, 2003              101,437         $16.4375
                                                    ========         ========

      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
      $140,438 and $240,412 for the year ended September 30, 2003 and 2002,
      respectively.

      On February 20, 2002, 11,235 shares of the restricted stock awards were
      issued with a value of $184,675 at the grant date and on February 20,
      2003, 8,114 shares were issued with a value of $133,374 at the grant date.

      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.


                                       51
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

13.   Employee Benefit Plans (continued)

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

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

                                                   Year Ended September 30,
                                                  ---------------------------
                                                     2003             2002
                                                  -----------     -----------
      Net income, pro-forma                       $ 3,022,655     $ 2,104,490
      Basic earnings/loss per common share,
         pro-forma                                $      2.95     $      1.86
      Diluted earnings/loss per common share,
         pro-forma                                $      2.79     $      1.79

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

      401(k) Plan

      The Bank also maintains an Employee Savings Plan for all employees,
      qualified under Section 401(k) of the Internal Revenue Code. The Bank
      matches 100% of the first 5% of earned compensation consisting of regular
      wages and overtime payments. The Bank's contributions to the 401(k) plan
      were $71,561 and $67,218 for the years ended September 30, 2003 and 2002,
      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 are renewable annually. The agreements
      provide for a base salary (to be reviewed annually) and certain other
      fringe benefits.


                                       52
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

13.   Employee Benefit Plans (continued)

      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' 2002 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 $1.7
      million.

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

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

14.   Interest Rate Risk

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

      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.


                                       53
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

14.   Interest Rate Risk (continued)

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

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

      At September 30, 2003, the Bank had entered into an interest rate floor
      agreement with a notional amount of $25 million with an interest rate
      floor on the 1-month LIBOR of 2.50% expiring on October 9, 2003 to protect
      the rate paid on certain borrowings from the Federal Home Loan Bank. In
      addition, the Bank has entered into interest rate cap agreements to
      protect assets and liabilities from the negative effects in the event of
      an increasing rate environment. The total notional amount of all the
      interest rate cap agreements is $110 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 18, 2005        $ 25 million          7.00%       1-month LIBOR
          November 15, 2004     $ 40 million          3.50%       1-month LIBOR
          November 15, 2004     $ 20 million          3.00%       1-month LIBOR
          March 18, 2005        $ 25 million          7.00%       1-month LIBOR

      Payments received under the agreements are treated as an adjustment of
      interest income or expense. The Bank's exposure to credit risk is limited
      to the ability of the counterparty to make potential future payments to
      the Bank that are required pursuant to the agreements. The Bank's exposure
      to market risk of loss is limited to the market value of the floors and
      caps. At September 30, 2003 and 2002, the market value of the floors and
      cap related to the interest rate agreements amounted to $96,000 and
      $286,000, respectively. The Bank received payments under these agreements
      of $282,282 and $129,294 in the years ended September 30, 2003 and 2002,
      respectively. Expense related to these agreements was $522,168 and
      $381,122 for the years ended September 30, 2003 and 2002, respectively.
      Any gain or loss on the value of these contracts is recognized in earnings
      on a current basis.


                                       54
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

15.   Stockholders' Equity and Dividend Restrictions

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

16.   Conversion From Mutual to Stock

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

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

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.


                                       55
<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 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 $261,226 and $273,916 for the
      years ended September 30, 2003 and 2002, respectively. The ESOP shares as
      of September 30, 2003 were as follows:

            Allocated shares                              27,040
            Unreleased shares                             97,804
                                                      ----------
                                                         124,844
                                                      ==========
            Fair value of unreleased shares
               at September 30, 2003                  $3,569,846
                                                      ==========


                                       56
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

19.   Net Income Per Share

      Earnings per share is based upon the weighted average number of shares
      outstanding excluding ESOP shares not released and incentive plan shares
      not released. The following reconciles the numerator and denominator of
      the basic and diluted earnings per share computation:

<TABLE>
<CAPTION>
                                                          Year Ended September 30,
                                                          -------------------------
                                                             2003           2002
                                                          ----------     ----------
<S>                                                       <C>            <C>
      Basic EPS computation:
           Numerator                                      $3,380,930     $2,462,765

           Denominator:
               Weighted average common shares
                  outstanding                              1,022,804      1,133,702
                                                          ----------     ----------

           Basic EPS                                      $     3.31     $     2.17
                                                          ==========     ==========

      Diluted EPS computation:
           Numerator                                      $3,380,930     $2,462,765

           Denominator:
               Weighted average common shares
                   outstanding                             1,022,804      1,133,702
              Dilutive securities:
               Stock options - treasury stock method          46,244         32,095
               Incentive plan - treasury stock method         12,534         10,857
                                                          ----------     ----------
                                                           1,081,582      1,176,654
                                                          ----------     ----------

           Diluted EPS                                    $     3.13     $     2.09
                                                          ==========     ==========
</TABLE>

      The average market prices used in calculating the assumed number of shares
      issued for the years ended September 30, 2003 and 2002 were $30.21 and
      $23.30 per share, respectively.


                                       57
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

20.   Supplemental Executive Retirement Plan

      The Company has a Supplemental Executive Retirement Plan to provide for
      supplemental benefits with respect to the employee stock ownership plan
      benefits otherwise limited by other provisions of the Internal Revenue
      Code. Specifically, the plan provides benefits to eligible individuals
      designated by the board of directors of the Company that cannot be
      provided under the employee stock ownership plan as a result of the
      limitations imposed by the Internal Revenue Code, but that would have been
      provided under the employee stock ownership plan but for such limitations.
      An individual's benefits under the supplemental executive retirement plan
      will generally become payable at the same time benefits become payable
      under the employee stock ownership plan.

      In addition to providing for benefits lost under tax-qualified plans as a
      result of limitations imposed by the Code, the supplemental executive
      retirement plan also makes-up lost employee stock ownership plan benefits
      to designated individuals in connection with the participant's retirement
      or upon a change in control prior to the complete scheduled repayment of
      the employee stock ownership plan loan. Generally, upon a participant's
      retirement or a change in control of the Company prior to complete
      repayment of the employee stock ownership plan loan, this provision
      provides the covered individual with a benefit equal to what the
      individual would have received under the employee stock ownership plan and
      the supplemental executive retirement plan had he remained employed
      throughout the schedule term of the employee stock ownership plan loan
      less the benefits actually provided under the employee stock ownership
      plan on behalf of such individual. An individual's benefits under the
      supplemental executive retirement plan becomes payable upon the
      participant's retirement or upon change in control of the Company.

      Expenses under the plan were $26,823 and $62,692 for the years ended
      September 30, 2003 and 2002, respectively. No amounts have been accrued
      for the costs of this plan related to a change in control.

21.   Bank-Owned Life Insurance

      The Company provides certain fringe benefits to employees, officers and
      directors that are funded through various single premium life insurance
      policies. Cash surrender values included in other assets at September 30,
      2003 are as follows:

               Salary continuation plan        $1,313,613
               Director retirement plan         1,528,620
               Officer supplemental life        1,886,599
               Split-dollar executive life        611,384
                                               ----------
                                               $5,340,216
                                               ==========


                                       58
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

21.   Bank-Owned Life Insurance (continued)

      The plans anticipate that the Company will maintain the insurance
      throughout the life of each insured person. In the event of a change in
      control of the Company, certain benefits vest, requiring an adjustment to
      the liability for the benefit carried on the books of the Company. No
      amounts have been accrued for the costs related to a change in control for
      the various plans funded through bank-owned life insurance.

      Salary Continuation Plan

      In October 2002 the company adopted a Salary Continuation Plan. Benefits
      are payable to two key individuals upon attainment of age 63 in monthly
      installments of $2,500 each for seventeen years. For the year ended
      September 30, 2003, the net cash surrender value increases accrued on the
      policies with a combined single premium of $1,250,000 were $63,613.
      Expenses accrued for the anticipated benefits were $47,675, based upon an
      interest rate of 8%.

      Director Retirement Plan

      In October 2002, the Company adopted a Director Retirement Plan. Each
      director is entitled to an annual $18,000 retirement benefit following
      attainment of age 70 or the end of the 5th full plan year, whichever is
      later. For the year ended September 30, 2003, the net cash surrender value
      increases accrued on the policies with a combined single premium of
      $1,458,000 were $70,620. Expenses accrued for the anticipated benefits
      were $57,604, based upon an interest rate of 8%.

      Officer Supplemental Life

      The Company provides supplemental life insurance to certain officers. No
      expense is accrued relative to this benefit, as the life insurance covers
      the anticipated pay-out.

      Split-Dollar Insurance

      Policies of $1,650,000 each are maintained on two executives, of which
      $1,100,000 of the insurance will be available to the estate of the insured
      executive. The Company will receive the remainder, thereby recovering its
      investment in the policy.


                                       59
<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>
                                                                        September 30,
                                                                  2003              2002
                                                              ------------      ------------
<S>                                                           <C>               <C>
      Assets:
           Cash and short-term investments                    $    768,253      $  4,094,341
           Investment in subsidiary                             30,994,939        29,257,009
           Accounts receivable from subsidiary                     789,579            78,432
           Other                                                     5,000            47,887
                                                              ------------      ------------
               Total assets                                   $ 32,557,771      $ 33,477,669
                                                              ============      ============

      Liabilities and Stockholders' Equity:
           Capital stock                                            15,605            15,605
           Additional paid-in capital                           15,022,479        14,785,743
           Retained earnings                                    31,446,192        28,065,262
           Accumulated other comprehensive (loss)               (1,470,979)          193,388
           Unearned 2001 Stock-Based Incentive Plan               (809,608)         (962,070)
           Treasury stock                                      (10,543,034)       (7,468,233)
           Employee Stock Ownership Plan                        (1,102,884)       (1,152,026)
                                                              ------------      ------------
               Total stockholders' equity                       32,557,771        33,477,669
                                                              ------------      ------------

               Total liabilities and stockholders' equity     $ 32,557,771      $ 33,477,669
                                                              ============      ============
</TABLE>


                                       60
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

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

                           DutchFork Bancshares, Inc.
                       Condensed Statements of Operations

<TABLE>
<CAPTION>
                                                               Year Ended September 30,
                                                              -------------------------
                                                                 2003           2002
                                                              ----------     ----------
<S>                                                           <C>            <C>
      Income:
           Interest                                           $  107,734     $  125,041
           Equity in undistributed earnings of subsidiary      3,501,393      2,549,489
                                                              ----------     ----------
               Total income                                    3,609,127      2,674,530
                                                              ----------     ----------

      Expenses:
           Filing fees                                        $   10,025     $    6,525
           Printing fees                                           9,873         10,543
           Registrar and transfer fees                             6,432          7,750
           Supervisory                                             6,625             --
           Professional fees                                     161,400        143,048
           Other expense                                           6,633          5,307
           Income tax                                             27,209         38,592
                                                              ----------     ----------
               Total expenses                                    228,197        211,765
                                                              ----------     ----------

      Net income                                              $3,380,930     $2,462,765
                                                              ==========     ==========
</TABLE>


                                       61
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

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

                           DutchFork Bancshares, Inc.
                       Condensed Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                            September 30,
                                                                   ----------------------------
                                                                      2003             2002
                                                                   -----------      -----------
<S>                                                                <C>              <C>
      Operating activities:
           Net income                                              $ 3,380,930      $ 2,462,765
           Adjustments to reconcile net income to net
              cash provided by:
               Incentive Plan shares issued                            177,414               --
               (Increase) decrease in investment of subsidiary      (3,402,297)       3,293,013
               (Increase) decrease in other assets                    (668,260)          95,749
               Increase (decrease) in other liabilities                     --         (418,983)
                                                                   -----------      -----------
                   Total cash provided by operations                  (512,213)       5,432,544
                                                                   -----------      -----------

      Financing activities:
           Purchase of treasury stock                               (3,074,801)      (3,791,955)
           Release of ESOP shares                                      260,926          273,916
           Exercise of stock options                                        --          128,262
                                                                   -----------      -----------
                   Total cash provided by financing activities      (2,813,875)      (3,389,777)
                                                                   -----------      -----------

      Net increase in cash and cash equivalents                     (3,326,088)       2,042,767
      Cash and cash equivalents at beginning of year                 4,094,341        2,051,574
                                                                   -----------      -----------
      Cash and cash equivalents at end of year                     $   768,253      $ 4,094,341
                                                                   ===========      ===========
</TABLE>

      During the year ended September 30, 2003 and 2002, the Bank paid dividends
      of $3,800,000 and $2,200,000, respectively, to DutchFork Bancshares, Inc.

23.   Disposition of Land

      During the year ended September 30, 2003, the Company sold to two local
      not-for-profit organizations land with an appraised value of $1,500,000 at
      book value of $420,000. The excess of value over cost of $1,080,000 was
      recognized as income and recorded as a contribution.


                                       62
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

24.   Recent Accounting Pronouncements

      In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
      Assets. No. 142 requires that goodwill and other intangible assets that
      have indefinite lives are to no longer be amortized but should be
      evaluated as least annually for impairment. No. 142 is effective for
      fiscal years beginning after December 15, 2001. The adoption of this
      standard did not have an effect on the financial position or operations of
      the Company.

      In July 2001, the FASB issued SFAS No. 143, Accounting for Asset
      Retirement Obligations. No. 143 requires that the fair value of a
      liability for an asset retirement obligation be recognized in the period
      in which it is incurred if a reasonable estimate can be made, and that the
      associated asset retirement costs be capitalized as part of the carrying
      amount of the long-lived asset. No. 143 was adopted by the Company for its
      fiscal year beginning October 1, 2002. The adoption of this standard did
      not have an effect on the financial position or operations of the Company.

      In August 2001, the FASB issued SFAS No. 144, Accounting for Impairment or
      Disposition of Long-Lived Assets. SFAS No. 144 requires that one
      accounting model be used for long-lived assets to be disposed of by sale,
      whether previously held and used or newly acquired, and by broadening the
      presentation of discounted operations to include primarily all disposable
      transactions. It further establishes criteria to determine when a
      long-lived asset is held for sale and establishes measurement criteria at
      the asset's or group of assets' lower of unamortized cost or fair value at
      the date the asset is reclassified as held and used. SFAS No. 144 was
      adopted by the Company upon its required effective date, for its fiscal
      year ended September 30, 2003. The adoption of this standard did not have
      an effect on the financial position of operations of the Company.

      FASB Technical Bulletin No. 01-1 deferred until 2002 application of the
      isolation standards of FASB SFAS No. 140 as applied to financial
      institutions. FASB SFAS No. 140, Accounting for Transfers and Servicing of
      Financial Assets and Extinguishments of Liabilities, provides accounting
      and reporting standards for transfers of financial assets and
      extinguishments of liabilities based on a financial components approach
      that focuses on retention or surrender of control of such assets and
      liabilities. The Statement also requires the reclassification of financial
      assets pledged as collateral under certain circumstances. FASB SFAS No.
      140 was effective for transfer and servicing of financial assets and
      extinguishment of liabilities occurring after March 31, 2001, and
      effective for recognition and reclassification of collateral and for
      disclosures relating to securitization transactions and collateral for
      fiscal years ending after December 31, 2000. The adoption of FASB SFAS No.
      140 in 2001 and the deferral allowed by FASB Technical Bulletin No. 01-1
      has not had any material effect on the financial position or operations of
      the Company.


                                       63
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

25.   Recent Accounting Pronouncements (continued)

      FASB SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64,
      Amendment of FASB Statement No. 13 and Technical Corrections, addresses
      financial accounting and reporting for extinguishment of debt and for
      certain lease modifications that have economic effects similar to
      sale-leaseback transactions. This Statement requires that gains and losses
      from debt extinguishments that are part of an entity's recurring
      operations not be accounted for as extraordinary items. Furthermore, gains
      and losses from debt extinguishments that are not part of an entity's
      recurring operations are required to be evaluated using the criteria in
      Accounting Principals Board Opinion No. 30, Reporting the Results of
      Operations - Reporting the Effect of Disposal of a Segment of a Business,
      and Extraordinary, Unusual and Infrequently Occurring Events and
      Transactions to determine whether extraordinary treatment is warranted for
      those transactions. The provisions of this Statement related to debt
      extinguishments are required to be applied in fiscal years beginning after
      May 15, 2002, with early application encouraged. Restatement is required
      for amounts that previously were classified as extraordinary, but that do
      not meet the criteria in Opinion No. 30 for extraordinary treatment. The
      Statement's other provisions were required to be applied either to
      transactions occurring after May 15, 2002 or for financial statements
      issued on or after May 15, 2002, with early application encouraged. The
      adoption of SFAS No.145 as of October 1, 2002 did not have an effect on
      the financial position or operations of the Company.

      FASB SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
      Activities, addresses financial accounting and reporting for costs
      associated with exit or disposal activities. This Statement requires that
      a liability for a cost associated with an exit or disposal activity be
      recognized at its fair value when the liability is incurred, rather than
      the previous recognition of a liability at the date that an entity
      committed to an exit plan. The provisions of this Statement are effective
      for exit or disposal activities initiated after December 31, 2002, with
      early application encouraged. The adoption of SFAS No. 146 is not expected
      to have an effect on the financial position or operations of the Company.


                                       64
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

26.   Recent Accounting Pronouncements (continued)

      SFAS No. 147, Acquisitions of Certain Financial Institutions, addresses
      the financial accounting and reporting for the acquisition of all or part
      of a financial institution, and provides guidance on accounting for the
      impairment or disposal of acquired long-term customer-relationship
      intangible assets. This Statement requires that acquisitions of all or
      part of a financial institution that meet the definition of a business
      combination be accounted for by the purchase method in accordance with
      SFAS No. 141, Business Combinations. Acquisitions that do not qualify as
      business combinations are to be accounted for in accordance with
      paragraphs 4-8 of Statement No. 141. This Statement also makes the
      provisions of SFAS No. 144, Accounting for the Impairment or Disposal of
      Long-Lived Assets, applicable to long-term customer-relationship
      intangible assets recognized in the acquisition of a financial
      institution. The provisions of this Statement were generally effective as
      of October 1, 2002, with earlier application permitted. The adoption of
      this standard did not have a material effect on the financial position or
      operations of the Company.

      SFAS No. 148, Accounting for Stock-Based Compensation - Transition and
      Disclosure, amends SFAS No. 123 to provide alternative methods of
      transition for entities that voluntarily change to the fair value method
      of accounting for stock-based employee compensation. It also amends the
      disclosure provisions of that Statement to require prominent disclosure
      about the effects on reported net income of an entity's accounting policy
      decisions with respect to stock-based compensation. The provisions of this
      Statement related to transition provisions and disclosure requirements
      were effective for financial statements for fiscal years ending after
      December 15, 2002. Adoption of this Statement as of December 15, 2002 did
      not have any material effect on the financial position or operations of
      the Company for the years ended September 30, 2003 and 2002, not is it
      expected to have any such effects on the Company's future financial
      position or results of operations.

      SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and
      Hedging Activities, amends Statement No. 133 by requiring that contracts
      with comparable characteristics be accounted for similarly and is
      effective for contracts entered into or modified after June 30, 2003. The
      adoption of this standard did not have an effect on the financial position
      or operations of the Company.


                                       65
<PAGE>

                           DutchFork Bancshares, Inc.
                                and Subsidiaries

27.   Recent Accounting Pronouncements (continued)

      SFAS No. 150, Accounting for Certain Financial Instruments with
      Characteristics of Both Liabilities and Equity, establishes standards for
      how an issuer classifies and measures certain financial instruments with
      characteristics of both liabilities and equity. It requires that an issuer
      classify a financial instrument that is within its scope as a liability
      (or an asset in some circumstances). Many of those instruments were
      previously classified as equity. This statement is effective for financial
      instruments entered into or modified after May 31, 2003. This statement is
      not expected to have a material effect on the financial position or
      results of operations of the Company.

      The American Institute of Certified Public Accountants ("AICPA") Accouting
      Standards Executive Committee ("AcSEC") issued Statement of Position
      ("SOP") 01-6, Accounting for Certain Entities That Lend to or Finance the
      Activities of Others, that reconciles existing differences in the
      accounting and financial reporting guidance in the AICPA Audit and
      Accounting Guides for banks, credit unions and thrifts. The SOP is
      effective for fiscal years beginning after Decembert 15, 2001. The
      adoption of this SOP had no material effect on the financial position or
      operations of the Corporation.

      The FASB issued its Interpretation 45 ("FIN 45"), Guarantor's Accounting
      and Disclosure Requirements for Guarantees, Including Indirect Guarantees
      of Indebtedness of Others, which addresses a guarantor's measurement and
      recognition of its liabilities under certain guarantee transactions at
      inception and provides for new disclosures regarding the nature and extent
      of such guarantees. The disclosure requirements are effective for interim
      and annual financial statements ending after December 15, 2002. FIN 45's
      initial recognition and measurement provisions are effective
      prospectively; that is, for guarantees issued or modified on or after
      January 1, 2003. The adoption of the disclosure provisions of this
      Interpretation as of December 31, 2002 had no material effect on the
      financial statements of the Company. Furthermore, the adoption of the
      Interpretation's measurement and recognition provisions as of January 1,
      2003 is not expected to have any material adverse or beneficial effects on
      the financial position and operations of the Company.


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<PAGE>

                             DIRECTORS AND OFFICERS

OFFICERS                                   DIRECTORS

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

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

                              CORPORATE INFORMATION

MAIN OFFICE                                SPECIAL COUNSEL

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

BRANCH LOCATIONS                           INDEPENDENT AUDITORS

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

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<PAGE>

STOCKHOLDER INFORMATION

The Annual Meeting of Stockholders will be held at Newberry Federal's
Training/Meeting Room located at 1735 Wilson Road (entrance facing Alex Avenue),
Newberry, South Carolina, on February 5, 2004 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).


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<PAGE>

COMMON STOCK INFORMATION

The Company's common stock is traded on the Nasdaq SmallCap Market under the
symbol "DFBS". As of September 30, 2003, there were 1,127,841 shares of common
stock outstanding (including unreleased Employee Stock Ownership Plan ("ESOP")
shares of 97,804, and unearned stock-based incentive plan shares of 43,073) and
423 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 2003 and 2002. These prices reflect inter-dealer prices without
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, 2003
and 2002. The Company's ability to pay dividends depends primarily on the
ability of the Bank to pay dividends to the Company. See Notes 11 and 17 for
information regarding the Bank's dividend-paying ability. This information was
provided by Bloomberg Professional.

                                                    High                 Low
                                                  --------            --------
Fiscal 2003
First Quarter                                     $ 27.490            $ 25.850
Second Quarter                                    $ 30.130            $ 27.250
Third Quarter                                     $ 34.760            $ 29.000
Fourth Quarter                                    $ 36.500            $ 31.240

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


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