SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)

Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[X] Preliminary proxy statement
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

DARLINGTON COUNTY BANCSHARES, INC.
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(Name of Registrant as Specified in its Charter)

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(Name of Person(s) Filing Proxy Statement, if Other Than Registrant)

Payment of filing fee (Check the appropriate box):
[ ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.

(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[X] Fee paid previously with preliminary materials:
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[X] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.

(1) Amount previously paid:
$32.27
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(2) Form, Schedule or Registration Statement no.:
Schedule 13E-3
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(3) Filing Party:
Darlington County Bancshares, Inc.
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(4) Date Filed:
September 1, 2004
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Preliminary
Copy
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DARLINGTON COUNTY BANCSHARES, INC.
202 Cashua Street
Darlington, South Carolina 29532

____________, 2004

Dear Shareholder:

You are cordially invited to attend a special meeting of shareholders,
which will be held at __________, on __________, 2004, at Darlington County
Bank, 202 Cashua Street, Darlington, South Carolina. I hope that you will be
able to attend the meeting, and I look forward to seeing you.

The principal purpose of the special meeting is for shareholders to vote on
an Agreement and Plan of Reorganization (the "Plan") that is designed to take
Darlington private by reducing its number of shareholders of record below 300.
Once Darlington is a private company, it will realize significant cost savings
resulting from the termination of its reporting obligations under the Securities
Exchange Act of 1934.

The Plan provides for the merger of Darlington Interim Corporation
("Interim") with and into Darlington, with Darlington surviving the merger (the
"Reorganization"). Interim is a new South Carolina corporation formed solely to
effect the Reorganization. If the Plan is approved by our shareholders,
shareholders owning fewer than 100 shares of Darlington common stock as of the
date of the special shareholders' meeting will receive $31.00 in cash for each
share that they own on the effective date of the Reorganization. All other
shares will remain outstanding and be unaffected by the Reorganization.

We plan to effect the Reorganization by filing articles of merger as soon
as possible after we obtain shareholder approval of the Plan. The date of the
shareholders' meeting will serve as the record date for determining the
ownership of shares for purposes of the Reorganization.

The board of directors has established ____________, 2004 as the record
date for determining shareholders who are entitled to notice of the special
meeting and to vote on the matters presented at the meeting. Whether or not you
plan to attend the special meeting, please complete, sign and date the proxy
card and return it in the envelope provided in time for it to be received by
__________, 2004. If you attend the meeting, you may vote in person, even if
you have previously returned your proxy card.

The board of directors has unanimously determined that the Plan is fair to
Darlington's unaffiliated shareholders, and has voted unanimously in favor of
the Plan. On behalf of the board of directors, I urge you to vote FOR approval
of the Plan.

Sincerely,

/s/ Henry M. Funderburk, III
President and Chief Executive Officer

DARLINGTON COUNTY BANCSHARES, INC.
202 Cashua Street
Darlington, South Carolina 29532

NOTICE OF THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD __________, 2004

A special meeting of shareholders of Darlington County Bancshares, Inc.
will be held on __________, 2004, at Darlington County Bank, 202 Cashua Street,
Darlington, South Carolina, for the following purposes:

(1) To vote on an Agreement and Plan of Reorganization (the "Plan")
providing for the merger of Darlington Interim Corporation with and
into Darlington, with Darlington surviving the merger and the holders
of fewer than 100 shares of Darlington common stock receiving $31.00
in cash in exchange for each of their shares of such stock. The text
of the Plan is set forth in Appendix A to the enclosed Proxy
-----------
Statement.

(2) To vote on the adjournment of the special meeting to another time and
date if such action is necessary for the board of directors to solicit
additional proxies or attendance at the meeting.

(3) To transact any other business as may properly come before the meeting
or any adjournment of the meeting.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
APPROVAL OF THE PLAN AND FOR THE POTENTIAL ADJOURNMENT OF THE MEETING.

Darlington's shareholders are entitled to statutory dissenters' rights
under the Plan. If Darlington's shareholders approve the Plan, shareholders who
elect to dissent from approval of the Plan are entitled to receive the "fair
value" of their shares of common stock if they comply with the provisions of
Section 33-13 of the South Carolina Business Corporation Act regarding the
rights of dissenting shareholders. We have attached a copy of Section 33-13 of
the South Carolina Business Corporation Act as AppendixB to the accompanying
---------
Proxy Statement.

The board of directors has set the close of business on __________, 2004,
as the record date for determining the shareholders who are entitled to notice
of, and to vote at, the meeting or any adjournment of the meeting.

We hope that you will be able to attend the meeting. We ask, however,
whether or not you plan to attend the meeting, that you mark, date, sign, and
return the enclosed form of proxy as soon as possible. Promptly returning your
form of proxy will help ensure the greatest number of shareholders are present
whether in person or by proxy.

If you attend the meeting in person, you may revoke your proxy at the
meeting and vote your shares in person. You may revoke your proxy at any time
before the proxy is exercised.

By Order of the Board of Directors,

/s/ Henry M. Funderburk, III
President and Chief Executive Officer

____________, 2004

DARLINGTON COUNTY BANCSHARES, INC.
202 Cashua Street
Darlington, South Carolina 29532

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PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON __________, 2004

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The board of directors of Darlington County Bancshares, Inc. ("Darlington"
or the "Company") has determined that it is in the best interests of Darlington
and its shareholders to effect a reorganization that will permit Darlington to
become a private company by reducing its number of shareholders of record below
300. Once private, Darlington will realize significant cost savings by
terminating the registration of its common stock under the Securities Exchange
Act of 1934, as amended (the "Securities Exchange Act"), and its related
reporting obligations.

The Plan provides for the merger of Darlington Interim Corporation
("Interim") with and into Darlington, with Darlington surviving the merger.
Interim is a new South Carolina corporation formed solely to effect the
Reorganization. In the Reorganization, shareholders owning fewer than 100
shares of Darlington common stock of record will receive $31.00 in cash for each
share that they own on the effective date of the Reorganization. All other
shares will remain outstanding and be unaffected by the Reorganization. Because
the purpose of Reorganization is to reduce the number of shareholders of record
below 300, the Plan permits our board of directors to increase the 100-share
threshold prior to the date of the special shareholders' meeting to the extent
necessary to ensure that the number of record shareholders will be less than 300
upon effectiveness of the Reorganization. If such action is necessary, we will
notify our shareholders through a supplement to this Proxy Statement and will
postpone the special shareholders' meeting to the extent necessary to allow
shareholders to consider such action and change their votes if they so desire.

This Proxy Statement provides you with detailed information about the
proposed Reorganization. We encourage you to read this entire document
carefully.

The board of directors has determined that the Plan is fair to Darlington's
unaffiliated shareholders. Additionally, all of the directors, including those
who are not employees of Darlington, have unanimously approved the Plan. The
Reorganization cannot be completed, however, unless the Plan is approved by the
holders of two-thirds of the votes entitled to be cast on the Plan. The current
directors and executive officers of Darlington beneficially own approximately
14% of the outstanding shares and have indicated that they intend to vote their
shares in favor of the Plan.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE RECAPITALIZATION PLAN OR THE
TRANSACTIONS CONTEMPLATED THEREBY OR DETERMINED IF THIS PROXY STATEMENT IS
TRUTHFUL OR COMPLETE. THE COMMISSION HAS NOT PASSED UPON THE FAIRNESS OR MERITS
OF THE PLAN OR THE TRANSACTIONS CONTEMPLATED THEREBY NOR UPON THE ACCURACY OR
ADEQUACY OF THE INFORMATION CONTAINED IN THIS PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE DATE OF THIS PROXY STATEMENT IS ____________, 2004. WE FIRST MAILED
THIS PROXY STATEMENT TO THE SHAREHOLDERS OF DARLINGTON ON OR ABOUT THAT DATE.

IMPORTANT NOTICES

Our common stock is not a deposit or bank account and is not insured by the
Federal Deposit Insurance Corporation or any other governmental agency.

We have not authorized any person to give any information or to make any
representations other than the information and statements included in this Proxy
Statement. You should not rely on any other information. The information
contained in this Proxy Statement is correct only as of the date of this Proxy
Statement, regardless of the date it is delivered or when the Reorganization is
effected. By accepting receipt of this Proxy Statement, you agree not to permit
any reproduction or distribution of its contents in whole or in part.

We will update this Proxy Statement to reflect any factors or events
arising after its date that individually or together represent a material change
in the information included in this document.

You should not construe the contents of this Proxy Statement or any
communication from Darlington, whether written or oral, as legal, tax,
accounting or other expert advice. You should consult with your own counsel,
accountant or other professional advisor, as appropriate.

We make forward-looking statements in this Proxy Statement that are subject
to risks and uncertainties. Forward-looking statements include information
about possible or assumed future results of the operations or our performance
after the Reorganization is accomplished. When we use words such as "believes,"
"anticipates," "expects," "intends," "targeted," and similar expressions, we are
making forward-looking statements that are subject to risks and uncertainties.
Various future events or factors may cause our results of operations or
performance to differ materially from those expressed in our forward-looking
statements. These factors include:

(1) changes in economic conditions, both nationally and in our primary
market area;

(2) changes in governmental monetary and fiscal policies, as well as
legislative and regulatory changes;

(3) the effect of changes in interest rates on the level and composition
of deposits, loan demand, and the values of loan collateral,
securities and interest rate protection agreements;

(4) the effects of competition from other financial service providers
operating in our primary market area and elsewhere; and

(5) the failure of assumptions underlying the establishment of reserves
for possible loan losses and estimations of values of collateral and
various financial assets and liabilities.

The words "we, "our," and "us," as used in this Proxy Statement, refer to
Darlington and its wholly owned subsidiaries, collectively, unless the context
indicates otherwise.

TABLE OF CONTENTS

Page

SUMMARY TERM SHEET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

QUESTIONS AND ANSWERS ABOUT THE MEETING. . . . . . . . . . . . . . . . . . . . . 5

SPECIAL FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Purpose of the Reorganization. . . . . . . . . . . . . . . . . . . . . . . . . 8
Alternatives Considered. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
BACKGROUND OF THE REORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . 10
Reasons for the Reorganization . . . . . . . . . . . . . . . . . . . . . . . . 11
Potential Disadvantages of the Reorganization. . . . . . . . . . . . . . . . . 13
Effects of the Reorganization on Darlington. . . . . . . . . . . . . . . . . . 13
Effects of the Reorganization on Affiliates. . . . . . . . . . . . . . . . . . 14
Effects of the Reorganization on Shareholders Generally. . . . . . . . . . . . 15
Federal Income Tax Consequences of the Reorganization. . . . . . . . . . . . . 17
Pro Forma Effect of the Reorganization . . . . . . . . . . . . . . . . . . . . 20
Selected Historical and Pro Forma Consolidated Financial Data. . . . . . . . . 20
Recommendation of the Board of Directors; Fairness of the Reorganization . . . 20
Affiliates' Determination of Fairness of the Reorganization. . . . . . . . . . 25
Determination by Interim and Other Filing Persons. . . . . . . . . . . . . . . 26
Opinion of Independent Financial Advisor . . . . . . . . . . . . . . . . . . . 26

INFORMATION REGARDING THE SPECIAL MEETING OF SHAREHOLDERS. . . . . . . . . . . . 33

Time and Place of Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Record Date and Mailing Date . . . . . . . . . . . . . . . . . . . . . . . . . 33
Number of Shares Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . 33
Purpose of Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Procedures for Voting by Proxy . . . . . . . . . . . . . . . . . . . . . . . . 33
Requirements for Shareholder Approval. . . . . . . . . . . . . . . . . . . . . 34
Solicitation of Proxies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

DESCRIPTION OF THE PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

The Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Source of Funds and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 38
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

INFORMATION ABOUT DARLINGTON AND ITS AFFILIATES. . . . . . . . . . . . . . . . . 42

Directors and Executive Officers . . . . . . . . . . . . . . . . . . . . . . . 42
Stock Ownership by Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . 43
Recent Affiliate Transactions in Darlington Stock. . . . . . . . . . . . . . . 44
Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Market for Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Description of Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . 45
Dividend Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Shareholder Proposals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

SELECTED HISTORICAL FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . 48

PRO FORMA CONSOLIDATED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . 50

WHERE YOU CAN FIND MORE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 55

APPENDIX A AGREEMENT AND PLAN OF REORGANIZATION. . . . . . . . . . . . . . . . A-1

APPENDIX B SECTION 33-13 OF THE SOUTH CAROLINA BUSINESS CORPORATION ACT. . . . B-1

APPENDIX C OPINION OF TRIANGLE CAPITAL PARTNERS, LLC . . . . . . . . . . . . . C-1

APPENDIX D FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2004. . . . . . . . . . . . . . . D-1

APPENDIX E FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2003 . . . . . . . . . . . . . . . E-1

SUMMARY TERM SHEET

The following is a summary of the material terms of the Plan. This summary
is qualified in its entirety by reference to the more detailed information
appearing elsewhere in or accompanying this Proxy Statement, including the
financial information and appendices. We urge you to review the entire Proxy
Statement and accompanying materials carefully.

- STRUCTURE OF THE REORGANIZATION: The Plan provides for the merger of
Darlington Interim Corporation ("Interim") with and into Darlington,
with Darlington surviving the merger. Interim is a new South Carolina
corporation formed solely to effect the Reorganization. In the
Reorganization, shareholders owning fewer than 100 shares of
Darlington common stock of record as of the date of the special
shareholders' meeting will receive $31.00 in cash for each share that
they hold on the effective date of the Reorganization. All other
shares will remain outstanding and be unaffected by the
Reorganization.

Because the purpose of Reorganization is to reduce the number of
shareholders of record below 300, the Plan permits our board of
directors to increase the 100-share threshold prior to the date of the
special shareholders' meeting to the extent necessary to ensure that
the number of record shareholders will be less than 300 upon
effectiveness of the Reorganization. If such action is necessary, we
will notify our shareholders through a supplement to this Proxy
Statement and will postpone the special shareholders' meeting to the
extent necessary to allow shareholders to consider such action and
change their votes if they so desire.

- DETERMINATION OF SHARES HELD OF RECORD: A shareholder who owns fewer
than 100 shares of Darlington common stock "of record" will receive
$31.00 per share in cash in the Reorganization, while a record holder
of 100 shares of more will be unaffected. A shareholder "of record" is
the shareholder whose name is listed on the front of the stock
certificate, regardless of who ultimately has the power to vote or
transfer the shares. For example, four separate certificates issued to
a shareholder individually, as a joint tenant with someone else, as
trustee, and in an IRA represent shares held by four different record
holders, even though a single shareholder might control the voting or
transfer of all of the shares. Because SEC rules require that we count
"record holders" for purposes of determining our reporting
obligations, the Plan is based on the number of shares held of record
without regard to the ultimate control of the shares. As a result, a
single shareholder with 100 or more shares held in various accounts
could receive cash in the Reorganization for all of his or her shares
if those accounts individually hold fewer than 100 shares. To avoid
this, the shareholder would need to consolidate his or her ownership
into a single certificate representing 100 or more shares. The
acquisition of additional shares prior to the effective date of the
Reorganization is also permitted.

- EFFECTS OF THE REORGANIZATION ON SHAREHOLDERS. See "Special
Factors-Effects of the Reorganization on Affiliates" and "-Effects of
the Reorganization on Shareholders Generally" on pages __ and __ for
additional information about the effects of the Reorganization on
shareholders, including:

For shareholders who retain their shares in the Reorganization:

- decreased liquidity in our common stock;
- decreased access to information about our company;
- a reduction in book value and an increase in earnings per
share as described in "Effects of the Reorganization on our
Company" below; and
- a slight increase in their percentage ownership of our
common stock.

For shareholders receiving cash in the Reorganization:

- receipt of $31.00 per share in cash;
- loss of their equity and voting interest in our company;
- federal income tax liability for any cash received in the
Reorganization; and
- liquidation of a relatively illiquid ownership interest in
our company without incurring brokerage costs.

Additional effects on affiliated shareholders (directors, executive
officers and 10% shareholders):

- elimination of individual reporting obligations under
federal securities laws;
- elimination of a "safe harbor" for dispositions of their
shares under federal securities laws; and
- slight consolidation of management ownership (from
approximately 14.25% to 14.73% of shares outstanding).

- EFFECTS OF THE REORGANIZATION ON OUR COMPANY:

- our number of record shareholders, measured as of June 30, 2004,
will be reduced from approximately 487 to approximately 278 and
the number of outstanding shares of Darlington common stock will
decrease from approximately 158,000 to approximately 152,795,
resulting in a slight decrease in the number of shares that will
be available for purchase and sale in the market;

- we will be entitled to terminate the registration of our common
stock under the Securities Exchange Act of 1934, as amended,
which will mean that we will no longer be required to file
reports with the Securities and Exchange Commission (the "SEC")
or be classified as a public company;

- the book value per share of Darlington common stock as of June
30, 2004 on a historical basis will be reduced by approximately
2.7%, from approximately $23.93 on a historical basis to
approximately $23.29 on a pro forma basis;

- our earnings per share as of December 31, 2003 on a historical
basis will increase by approximately 1.9%, from approximately
$1.61 to $1.64 on a pro forma basis, with earnings per share as
of June 30, 2004 on a historical basis increasing by
approximately 2.6%, from approximately $1.14 to $1.17 on a pro
forma basis;

- the percentage ownership of Darlington common stock beneficially
owned by its executive officers and directors as a group will
increase slightly from approximately 14.25% to 14.73%; and

- our capital will be reduced, including a decrease in Tier I
capital as of June 30, 2004, from approximately $3.78 million on
a historical basis to approximately $3.56 million on a pro forma
basis.

See page __ for a more detailed description of these effects.

- REASONS FOR THE REORGANIZATION: Our principal reasons for effecting
the Reorganization are:

- the cost savings of approximately $100,000 per year that we
expect to experience as a result of the deregistration of our
common stock under the Securities Exchange Act of 1934, as
amended, and the anticipated decrease in expenses relating to
servicing a relatively large number of shareholders holding small
positions in our common stock; and

- our belief that our shareholders have not benefited
proportionately from the costs relating to the registration of
our common stock, principally as a result of the thin trading
market for our stock.

See page __ for more detailed information.

- FAIRNESS OF THE REORGANIZATION: We believe that the Reorganization is
fair to, and in the best interest of, our unaffiliated shareholders.
The board of directors has unanimously approved the Plan and the
transactions contemplated thereby. The board's opinion is based on
several factors, which are summarized beginning on page __. These
factors include:

- Historical Market Prices of the Darlington Common Stock: Our
stock is not listed on an exchange, and there is not an organized
trading market for our common stock. To our knowledge, the
trading prices for our common stock during the past two years
have ranged from $23.39 to $25.75 per share. We have never
repurchased any shares of our common stock. The price per share
to be paid in the Reorganization represents a 28% premium over
the last known trading price for our common stock prior to our
announcement of the Reorganization and the average trading price
for our common stock for 2004.

- Earnings Multiple: The price per share that will be paid in the
Reorganization reflects a multiple of 19.25 times Darlington's
earnings per share for the year ended December 31, 2003 and 13.6
times its annualized earnings per share for the six months ended
June 30, 2004.

- Premium to Book Value: The price per share to be paid in the
Reorganization reflects a multiple of 1.30 times Darlington's
June 30, 2004 book value per share, representing a 30% premium.

- Report and Opinion of Independent Financial Advisor: Triangle
Capital Partners, an independent financial advisor to the board
of directors, has delivered a report that a range of $26.00 to
$31.00 per share represents the range of fair value of the
Darlington common stock to be exchanged for cash in the
Reorganization and its opinion that the price of $31.00 per share
to be paid in the Reorganization is fair, from a financial point
of view, to Darlington's shareholders. See "Opinion of
Independent Financial Advisor" on page __ for more information
relating to the report and related financial analyses.

- EFFECTIVENESS OF THE REORGANIZATION: The Reorganization will not be
effected unless and until Darlington's shareholders approve the
Reorganization. Assuming these events occur, and as shortly thereafter
as is practicable, Darlington will file articles of merger with the
South Carolina Secretary of State and thereby effect the
Reorganization and that we will incur approximately $62,000 in
transaction expenses. We anticipate that the Reorganization will be
effected in the fourth quarter of 2004. See page __ for more detailed
information.

- FINANCING FOR THE REORGANIZATION: We estimate that approximately
$161,355 will be required to pay for the shares of Darlington common
stock exchanged for cash in the Reorganization. We intend to finance
the Reorganization with available cash. At June 30, 2004, we had
approximately $4.1 million in cash and cash equivalents.

- DISSENTERS' RIGHTS: Shareholders are entitled to dissenters' rights in
connection with the approval of the Plan. See page __ and AppendixB
for -------- additional information.

QUESTIONS AND ANSWERS ABOUT THE MEETING

Q: WHY DID YOU SEND ME THIS PROXY STATEMENT?

A: We sent you this Proxy Statement and the enclosed proxy card because our
board of directors is soliciting your votes for use at our special meeting
of shareholders.

This Proxy Statement summarizes information that you need to know in order
to cast an informed vote at the meeting. However, you do not need to attend
the meeting to vote your shares. Instead, you may simply complete, sign and
return the enclosed proxy card.

We first sent this Proxy Statement, notice of special meeting and the
enclosed proxy card on or about ____________, 2004 to all shareholders
entitled to vote. The record date for those entitled to vote is __________,
2004. On that date, there were __________ shares of our common stock
outstanding. Shareholders are entitled to one vote for each share of common
stock held as of the record date.

Q: WHAT IS THE TIME AND PLACE OF THE SPECIAL MEETING?

A: The special meeting will be held on __________, 2004, at Darlington County
Bank, 202 Cashua Street, Darlington, South Carolina, at _____ a.m./p.m.

Q: WHO MAY BE PRESENT AT THE SPECIAL MEETING AND WHO MAY VOTE?

A: All holders of our common stock may attend the special meeting in person.
However, only holders of our common stock of record as of __________, 2004
may cast their votes in person or by proxy at the special meeting.

Q: WHAT IS THE VOTE REQUIRED?

A: The proposal to approve the Plan must receive the affirmative vote of the
holders of two-thirds of the votes entitled to be cast on the Plan, while
the proposal regarding the potential adjournment of the special meeting
must receive more affirmative votes than negative votes in order to be
approved. If you do not vote your shares, either in person or by proxy, or
if you abstain from voting on the proposal, it has the same effect as if
you voted against the proposal to approve the Plan, but will not affect the
adjournment proposal. In addition, if your shares are held in a brokerage
account and you do not instruct your broker on how to vote on the proposal,
your broker will not be able to vote for you. This will have the same
effect as a vote against the proposal to approve the Plan, but will not
affect the adjournment proposal.

Q: WHAT IS THE RECOMMENDATION OF OUR BOARD OF DIRECTORS REGARDING THE
PROPOSALS?

A: Our board of directors has determined that the Plan is fair to our
unaffiliated shareholders and that it is advisable and in the best
interests of Darlington and its shareholders as a whole. Our board of
directors has therefore unanimously approved the Plan and all transactions
contemplated thereby and recommends that you vote "FOR" approval of the
Plan and "FOR" approval of the adjournment proposal at the special meeting.

Q: WHAT DO I NEED TO DO NOW?

A: Please sign, date, and complete your proxy card and promptly return it in
the enclosed, self-addressed, prepaid envelope so that your shares can be
represented at the special meeting.

Q: MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?

A: Yes. Just send by mail a written revocation or a new, later-dated,
completed and signed proxy card before the special meeting or attend the
special meeting and vote in person. You may not change your vote by
facsimile or telephone.

Q: WHAT IF I DON'T RETURN A PROXY CARD OR VOTE MY SHARES IN PERSON AT THE
SPECIAL MEETING?

A: If you don't return your proxy card or vote your shares in person at the
special meeting, each of those shares will be treated as a non-vote and
will have the same effect as a vote against approval of the Plan.

Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?

A: Your broker will vote your shares for you ONLY if you instruct your broker
how to vote for you. Your broker will mail information to you that will
explain how to give these instructions.

Q: WILL MY SHARES HELD IN "STREET NAME" OR ANOTHER FORM OF RECORD OWNERSHIP BE
COMBINED FOR VOTING PURPOSES WITH SHARES I HOLD OF RECORD?

A: No. Because any shares you may hold in street name will be deemed to be
held by a different shareholder than any shares you hold of record, any
shares so held will not be combined for voting purposes with shares you
hold of record. Similarly, if you own shares in various registered forms,
such as jointly with your spouse, as trustee of a trust or as custodian for
a minor, you will receive, and will need to sign and return, a separate
proxy card for those shares because they are held in a different form of
record ownership. Shares held by a corporation or business entity must be
voted by an authorized officer of the entity, and shares held in an IRA
must be voted under the rules governing the account.

Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?

A: No. After the Reorganization is completed, we will send instructions on how
to receive any cash payments that you may be entitled to receive.

Q: Will I have dissenters' rights in connection with the Reorganization?

A: Yes. Please see page __ and Appendix B for a discussion of dissenters'
----------
rights in connection with the Reorganization.

Q: WHAT IF I HAVE QUESTIONS ABOUT REORGANIZATION OR THE VOTING PROCESS?

A: Please direct any questions about the Reorganization or the voting process
to our President, Henry M. Funderburk, III, Darlington County Bank, 202
Cashua Street, Darlington, South Carolina 29532, telephone (843) 395-1956.

SPECIAL FACTORS

PURPOSE OF THE REORGANIZATION

The primary purpose of the Reorganization is to enable us to terminate the
registration of our common stock under Section 12(g) of the Securities Exchange
Act, which will result in the elimination of the expenses related to our
disclosure and reporting requirements under the Act. As a secondary matter, it
is likely to decrease the administrative expense we incur in servicing a large
number of record shareholders who own relatively small numbers of shares.

Darlington is one of the smallest banks in South Carolina, and is the
smallest bank in South Carolina that files reports with the SEC under Section
12(g) of the Exchange Act. At June 30, 2004, Darlington had one office with $32
million in deposits and $3.7 million in shareholders' equity. Approximately 97%
of its outstanding shares as of that date were held by fewer than 300
shareholders. As a result, there is a limited market for Darlington's shares and
the board of directors believes there is little likelihood that a more active
market will develop. However, because we have more than 300 shareholders of
record and our common stock is registered under Section 12(g) of the Securities
Exchange Act, we are required to comply with the disclosure and reporting
requirements under the Securities Exchange Act and the Sarbanes-Oxley Act of
2004 (the "Sarbanes-Oxley Act"). These requirements include preparing and filing
current and periodic reports with the SEC regarding our business, financial
condition, board of directors and management team and having these reports
reviewed by outside counsel and independent auditors. We expect a significant
increase in the cost of remaining a public company as a result of the additional
requirements prescribed by Section 404 of the Sarbanes-Oxley Act, which will
require documentation, testing and auditing of our internal controls and is
expected to place a significant burden on small companies' management teams,
given their limited resources to fulfill this compliance obligation.

The cost of complying with all of these requirements is substantial,
representing an estimated annual direct and indirect cost to us of approximately
$100,000, which does not reflect an anticipated one-time consulting expense of
approximately $40,000 relating to our initial preparation of the internal
controls report described above. In light of this expense and the lack of an
organized trading market for Darlington's common stock, the board of directors
believes Darlington receives little relative benefit from being registered under
the Securities Exchange Act. We also incur printing, postage, data entry, stock
transfer and other administrative expenses related to servicing shareholders who
are record holders of relatively small numbers of shares.

In view of this cost, particularly in light of the relatively small benefit
we believe our shareholders have received as a result of our status as a public
company, we believe the Reorganization will provide a more efficient means of
using our capital to benefit our shareholders. At present, we believe that our
thin trading market and the resulting inability of our shareholders to realize
the full value of their investment in our common stock through an efficient
market has resulted in little relative benefit for our shareholders as compared
to the costs of maintaining our registration.

The Plan is designed to substantially reduce the number of Darlington's
shareholders of record. As of June 30, 2004, approximately 43% of our
shareholders owned fewer than 100 shares of record. The Reorganization will
allow us to pay these shareholders a fair price for their shares in a limited
trading market while eliminating the costs associated with servicing
shareholders of record who own relatively small numbers of shares and saving the
significant administrative, accounting,

and legal expenses incurred in complying with disclosure, reporting and
compliance requirements under the Securities Exchange Act and the Sarbanes-Oxley
Act.

ALTERNATIVES CONSIDERED

In making our determination to proceed with the Reorganization, we
considered other alternatives. We rejected these alternatives because we
believed the Reorganization would be the simplest and most cost-effective manner
in which to achieve the purposes described above. These alternatives included:

Reverse Stock Split. We considered declaring a reverse stock split at a
ratio of 1-for-100, with cash payments to shareholders who would hold less than
a whole share on a post-split basis. This alternative would also have the effect
of reducing the number of shareholders, but would require us either to account
for outstanding fractional shares after the transaction, engage in a subsequent
forward stock split at the reverse split ratio, or pay cash to shareholders not
holding an even multiple of 100 shares. Although we did not precisely quantify
the costs in the last alternative, they would be much higher than those involved
in the Reorganization given that the number of shares to be repurchased would
greatly exceed the number to be repurchased under the merger structure. In view
of the administrative inconvenience involved in the issuance of fractional
shares or in adding the additional step of a forward stock split, and given the
cost involved in redeeming additional fractional interests, the board determined
that the Plan would be a more effective method of electing to reduce the number
of shareholders and rejected the reverse stock split alternative.

Issuer Tender Offer. We also considered an issuer tender offer to
repurchase shares of our outstanding common stock. The results of an issuer
tender offer would be unpredictable, however, due to its voluntary nature. We
were uncertain as to whether this alternative would result in shares being
tendered by a sufficient number of shareholders so as to result in the
Darlington common stock being held by fewer than 300 shareholders of record. As
a result, we rejected this alternative.

Acquisition of Another Institution or Branch. One method of utilizing
capital to improve shareholder value is to acquire another institution.
Acquiring another institution involves significant management time and expense,
however, and requires a great deal of effort in integrating the acquired
institution's personnel, customers and information systems. In addition, our
relatively small size essentially precludes us from acquiring another
institution. While we remain alert to opportunities for expansion of our
business, we have not identified any candidates that provide the appropriate
long-term return on the necessary investment.

Sale of the Company. We do not believe that the sale of Darlington at this
time would be appropriate because we believe it is in the best interest of
Darlington, its employees and the community we serve that we continue as an
independent institution. We believe a sale of our company would be detrimental
to our ability to serve our target markets because our business model and
success have been predicated on our ability to offer locally based management
and decision making that would likely be eliminated in a sale of our
institution. In addition, based on our industry experience, we believe that
shareholders of small community banks, banks located in rural communities do not
typically receive the maximum value of their investment in a sale of the
institution. Because we believe that a sale of Darlington would not be in the
best interests of our shareholders, employees or community, we have not
solicited, nor have we received, any unsolicited, third party bids or firm
offers, and we have not engaged in any specific discussions with potential
purchasers. For the foregoing reasons, we have rejected this alternative.

Expense Reductions in Other Areas. While we might be able to offset the
expenses relating to SEC registration and a large shareholder base by reducing
expenses in other areas, we have not pursued such an alternative because there
are no areas in which we could achieve comparable savings without adversely
affecting a vital part of our business or required compliance and internal
control expenses in other areas. Our most significant area of potential savings
would involve personnel costs, and we are already thinly staffed. We believe
that the expense savings that the Reorganization will enable us to accomplish
will not adversely affect our ability to execute our business plan, but will
instead position us to execute it more efficiently. For these reasons, we did
not analyze cost reductions in other areas as an alternative to the
Reorganization.

BACKGROUND OF THE REORGANIZATION

Although our directors and executive officers have informally discussed our
status as a public company during the past two years, serious consideration of
the issue began at an audit committee meeting on March 16, 2004. The meeting
was attended by the members of our audit committee, Albert L. James, III, G.
Clyde Scott and Eugene A. Vaughan; our President and Chief Executive Officer,
Henry M. Funderburk, III; our Vice President and Cashier, Ellen T. Berry; our
Vice President, Charles Hardin; and a representative of our external audit firm,
Elliott, Davis & Company, L.L.P. During this meeting, our auditor briefed the
participants on the additional internal controls documentation, testing,
reporting and auditing requirements that would begin to affect us during the
following year as a result of the Sarbanes-Oxley Act and related SEC
regulations. He advised that management and the board should anticipate a
significant increase in compliance and audit expenses as a result of these
requirements, particularly for 2005, which would be the year for which we would
first be required to produce an attested report.

The audit committee reported on this meeting at the next board meeting on
April 12, 2004. At this meeting, the board discussed the anticipated expense
and management time relating to the upcoming internal controls report and
reviewed generally with Mr. Funderburk the relative amounts of time and expense
dedicated to the Company's SEC compliance activities generally. The board
decided to invite a financial consultant to its next meeting to provide a basic
overview of the issues involved in a going-private transaction and to assist the
board in its evaluation of the costs and benefits involved in the Company's
status as a public company.

On May 11, 2004, a representative of Triangle Capital Partners, LLC met
with our board of directors and discussed the advantages and disadvantages of
going private and the alternative transaction structures described in "-Reasons
for the Reorganization," "-Alternatives Considered" and "-Effects of the
Reorganization on Darlington" above. The board then asked Mr. Funderburk to
recommend legal and financial advisors to work with the board in evaluating and
structuring a possible going-private transaction.

At the next board meeting on June 14, 2004, the board approved the
engagement of Triangle Capital Partners as financial advisor and Powell,
Goldstein, Frazer & Murphy LLP as legal counsel to the Company. During the
ensuing month, Mr. Funderburk met and conversed with representatives of both
firms frequently regarding how shareholders of record were to be counted, the
legal and financial issues involved with the various alternative transaction
structures, and the appropriate threshold number of shares for the retention of
shares or receipt of cash in the transaction. Counsel prepared a draft of the
Plan for review and discussion by management and the board, and Mr. Funderburk
and his staff provided information about the Company to Triangle Capital
Partners to assist them in the preparation of their report on a recommended
range of cash prices to be

paid in the Reorganization and the delivery of a related fairness opinion. See
"Opinion of Financial Advisor" for additional information on the data the
advisor considered.

On July 12, 2004, the board met with representatives of Triangle Capital
Partners and, by telephone, Powell Goldstein. Upon electing to proceed with a
cash-out merger in view of the various alternatives presented, the board
reviewed the terms of the Plan and discussed the appropriate consideration to be
issued under the Plan and the threshold for determining the shares to be
retained or exchanged for cash in the Reorganization. The board reviewed
Triangle's report that an appropriate range of fair value for the shares to be
exchanged for cash in the Reorganization was $26.00 to $31.00 and its oral
opinion that the Plan was fair, from a financial point of view, to the Company's
shareholders. It also considered the other issues described below under
"-Reasons for the Reorganization," "-Potential Disadvantages of the
Reorganization," "-Effects of the Reorganization on Darlington," "Effects of the
Reorganization on Affiliates," "-Effects of the Reorganization on Shareholders
Generally," and "Recommendation of the Board of Directors; Fairness of the
Reorganization" in its evaluation of the Plan. In the course of these
discussions, the board selected a $31.00 per share cash-out price but determined
that it needed more time to consider the appropriate threshold for the retention
of shares or receipt of cash in the Reorganization. As a result, the board
adjourned for one week to provide time for further consideration and discussion
of this issue.

On July 19, 2004, the board reconvened for further discussion of the
appropriate threshold for determining the retention or exchange of shares in the
Reorganization. The board reviewed the effect of a 100-share threshold for the
retention of shares on the Company's shareholder base, the approximate
transaction costs at this threshold, and the other issues discussed at the July
12, 2004 board meeting. The board, including all non-employee directors, then
set a 100-share threshold for retention of shares in the Reorganization and
unanimously approved the Plan. The board also determined that the Plan was
fair, from a procedural and substantive point of view, to Darlington's
unaffiliated shareholders, including those who would receive cash and those who
would retain their shares following the Reorganization, and directed that the
Plan be submitted to the shareholders with a recommendation for approval.

REASONS FOR THE REORGANIZATION

As described above in "-Purpose of the Reorganization," the Reorganization
will allow us to save the administrative, accounting and legal expenses incurred
in complying with the disclosure and reporting requirements under the Securities
Exchange Act and, secondarily, to eliminate the costs associated with servicing
shareholders who own relatively small numbers of shares. We estimate that we
will save approximately $100,000 per year in the following areas as a result of
the reduction in the number of shareholders and the elimination of the
registration of our common stock under the Securities Exchange Act.

Direct Costs
------------
Legal fees $ 25,000
Independent auditor fees 20,000
Accounting/internal controls
consulting fees 25,000*
Edgar conversion, printing and
mailing expenses 5,000
---------
75,000
---------
Indirect Costs
--------------

Management and staff time $ 25,000
---------
Total Costs $ 100,000
=========
__________________
* This does not include an anticipated one-time consulting expense of
approximately $60,000 relating to our initial preparation of the required
internal controls report under Section 404 of the Sarbanes-Oxley Act.

As is noted above, we incur substantial indirect costs in management time
spent in securities compliance activities. Although it is impossible to
quantify these costs specifically, we have two vice presidents who spend an
average of approximately 40% of their time on these activities, with a
significant proportion of that time occurring during the first quarter of each
year. These activities include preparing and reviewing SEC-compliant financial
statements and periodic reports, maintaining and overseeing our disclosure and
internal controls, monitoring and reporting transactions and other data relating
to insiders' stock ownership, and consulting with external auditors and counsel
on compliance issues. We expect that the amount of time spent in
compliance-related activities would increase in 2005, principally in connection
with the preparation of management's report on internal controls under Section
404 of the Sarbanes-Oxley Act.

Eliminating the registration of our common stock under the Securities
Exchange Act will also:

- reduce significantly the amount of information Darlington is required
to furnish to its shareholders and the public generally;

- eliminate the information Darlington is required to furnish to the
Securities and Exchange Commission; and

- reduce significantly Darlington's legal, accounting, and other
compliance costs relating to the requirements of the Sarbanes-Oxley
Act and the Securities Exchange Act described in "-Background of the
Reorganization" above.

In addition, our common stock is not listed on an exchange and has
historically been very thinly traded. We do not enjoy sufficient market
liquidity to enable our shareholders to trade their shares easily, and we do not
have sufficient liquidity in our common stock to enable us to use it as
potential acquisition currency. As a result, we do not believe that the
registration of our common stock under the Securities Exchange Act of 1934 has
benefited our shareholders in proportion to the costs we have incurred as a
result of this registration.

Although our reporting obligations and the illiquid nature of our trading
market have existed since we began filing reports with the SEC in 1999, and
although the Sarbanes-Oxley Act was enacted in 2002, we are undertaking a
going-private transaction at this point in our history principally in view of
the significant increase in our reporting obligations resulting from our
analysis of the nature, extent and additional expense of the internal control
documentation and audit requirements that will begin to affect us in 2005.
Furthermore, given the numerous legislative and regulatory changes that have
arisen since the Act became law, such as accelerated and expanded current
reporting obligations, and in view of the evolving nature of disclosure and
compliance standards generally, we cannot predict that our compliance costs or
obligations will remain stable in future

years. After considering the increasing and unpredictable nature of these costs,
the relative difficulty of controlling them in the face of dynamic and
challenging legal requirements, and, in particular, the absence of a meaningful
corresponding benefit, the board determined that the Reorganization would serve
the Company's long-term best interests.

POTENTIAL DISADVANTAGES OF THE REORGANIZATION

No organized trading market currently exists for Darlington's common stock.
The market liquidity for shares of Darlington's common stock after the
Reorganization will be even less than it is now because the number of shares of
Darlington common stock available to be traded will decrease. A further
decrease in the market liquidity for the shares of Darlington common stock may
cause a decrease in the value of the shares. Conversely, however, the more
limited supply of Darlington common stock could also prompt a corresponding
increase in its market price assuming stable or increased demand for the stock.

In addition, Darlington will no longer be required to file public reports
of its financial condition and other aspects of its business with the Securities
and Exchange Commission after the Reorganization. As a result, shareholders
will have less legally mandated access to information about Darlington's
business and results of operations than they had prior to the Reorganization.

Finally, the Reorganization will reduce Darlington's capital. However, we
believe that Darlington will continue to be "well capitalized" for regulatory
purposes and that it will have sufficient capital to support its anticipated
growth.

EFFECTS OF THE REORGANIZATION ON DARLINGTON

Reduction in the Number of Shareholders of Record and the Number of
Outstanding Shares. Based on information as of June 30, 2004, we believe that
the Reorganization will reduce our number of record shareholders from
approximately 487 to approximately 278. We estimate that approximately 5,250
shares held by approximately 209 shareholders of record will be exchanged for
cash in the Reorganization. The number of outstanding shares of common stock as
of June 30, 2004 will decrease from approximately 158,000 to approximately
152,795. Accordingly, the already minimal liquidity of shares of Darlington
common stock will be further reduced.

Transfer of Book Value. Because (1) the price to be paid to holders of
fewer than 100 shares of common stock will be $31.00 per share, (2) the number
of shares of common stock expected to be cashed out as a result of the
Reorganization is estimated to be approximately 5,205, (3) the total cost to
Darlington (including expenses) of effecting the Reorganization is expected to
be approximately $223,000, and (4) at June 30, 2004, aggregate shareholders'
equity in Darlington was approximately $3.78 million, or $23.93 per share,
Darlington expects that, as a result of the Reorganization, the book value per
share of common stock as of June 30, 2004 will be decreased by approximately
2.7%, from approximately $23.93 per share on a historical basis to approximately
$23.29 per share on a pro forma basis.

Decrease in Capital. As a result of the Reorganization, Darlington's
capital will be reduced as of June 30, 2004 from approximately $3.78 million on
a historical basis to approximately $3.56 million on a pro forma basis.
Darlington anticipates, however, that it will be "well capitalized" for bank
regulatory purposes and that its subsidiary, Darlington County Bank, will remain
"well capitalized" for bank regulatory purposes.

Increase in Earnings per Share and Dividends. Because we will have fewer
shares outstanding after the Reorganization, our earnings and dividends per
share are likely to increase on a pro forma basis. For example, we reported
$1.14 in earnings per share for the first six months of 2004, as compared to
$1.17 on a pro forma basis, representing a 2.6% increase. We also anticipate
that we will have an increased ability to raise our cash dividend, although we
have no present plans to do so. See "Information About Darlington and its
Affiliates-Dividend Policy."

Elimination of Securities Exchange Act Registration. Our common stock is
currently registered under the Securities Exchange Act. After the
Reorganization, our common stock will not be registered under the Securities
Exchange Act, nor will we be subject to any reporting requirements under the
Securities Exchange Act. As a result, we expect to eliminate direct and
indirect costs and expenses associated with the Securities Exchange Act
registration, which we estimate to be approximately $100,000 on an annual basis.
See "-Background of the Reorganization" and "-Reasons for the Reorganization"
for a discussion of the nature of the information we will no longer be required
to provide.

Effect on Market for Shares. Our common stock is not listed on an
exchange, nor will it be listed after the Reorganization. The failure to be
listed on an exchange, together with the reduction in public information
concerning Darlington as a result of its not being required to file reports
under the Securities Exchange Act, will have a minimal adverse effect on the
already limited liquidity of the common stock.

Financial Effects of the Reorganization. We estimate that approximately
$161,355 will be required to pay for the shares of Darlington common stock
exchanged for cash in the Reorganization. Additionally, we estimate that
professional fees and other expenses related to the transaction will total
approximately $62,000. We do not expect that the payment to shareholders
receiving cash in the Reorganization and the payment of expenses will have a
material adverse effect on our capital adequacy, liquidity, results of
operations or cash flow. Because we do not currently know the actual number of
shares that will be cashed out in the Reorganization, we do not know the net
amount of cash to be paid to shareholders in the Reorganization. You should
read the discussion under "Description of the Plan-Sources of Funds and
Expenses" for a description of the sources of funds for the Reorganization and
the fees and expenses we expect to incur in connection with the transaction.

EFFECTS OF THE REORGANIZATION ON AFFILIATES

In addition to the effects the Reorganization will have on shareholders
generally, which are described in the next section, the Reorganization will have
some additional specific effects on our executive officers and directors, each
of whom may, as a result of his position, be deemed to be an affiliate of
Darlington. As used in this Proxy Statement, the term "affiliated shareholder"
means any shareholder who is a director or executive officer of Darlington or
the beneficial owner of 10% or more of Darlington's outstanding shares, and the
term "unaffiliated shareholder" means any shareholder other than an affiliated
shareholder.

Reduction in Book Value and Increase in Earnings per Share. Assuming the
Reorganization had been completed as of June 30, 2004, our affiliated
shareholders, including Messrs. Funderburk and Scott, would experience the same
changes in book value and earnings per share as our unaffiliated shareholders
who will be retaining their equity interest in our company: (i) a 2.7%

decrease in book value per share from $23.93 on a historical basis to $23.29 on
a pro forma basis; and (ii) a 2.6% increase in earnings per share for the first
six months of 2004 from $1.14 on a historical basis to $1.17 on a pro forma
basis. If the Reorganization had been effected on December 31, 2003, their 2003
earnings per share would be increased by 1.9% from $1.61 on a historical basis
to $1.64 on a pro forma basis. See "Information About Darlington and its
Affiliates-Stock Ownership by Affiliates" for information about the number of
shares of Darlington common stock held by Messrs. Funderburk and Scott and our
other affiliates.

No Further Reporting Obligations Under the Securities Exchange Act. After
the Reorganization, Darlington's common stock will not be registered under the
Securities Exchange Act. As a result, the executive officers, directors and
other affiliates of Darlington will no longer be subject to many of the
reporting requirements and restrictions of the Securities Exchange Act,
including the reporting and short-swing profit provisions of Section 16, and
information about their compensation and stock ownership will not be publicly
available.

Consolidation of Management Ownership. As a result of the Reorganization,
we expect that the percentage of beneficial ownership of Darlington common stock
held by our executive officers and directors as a group will increase slightly
from approximately 14.25% before the Reorganization to approximately 14.73%
after the Reorganization. None of the affiliated shareholders will receive cash
in the Reorganization because they each own 100 or more shares of Darlington
common stock.

Rule 144 Not Available. Because Darlington's common stock will not be
registered under the Securities Exchange Act after the Reorganization, executive
officers and directors of Darlington may be deprived of the ability to dispose
of their shares of Darlington common stock under Rule 144 under the Securities
Act of 1933, which provides a "safe harbor" for resales of stock by affiliates
of an issuer.

EFFECTS OF THE REORGANIZATION ON SHAREHOLDERS GENERALLY

The Reorganization will have the following effects on shareholders
regardless of whether they are affiliated or unaffiliated shareholders. The
effects will vary depending on whether the shareholder (i) receives cash for all
of his or her shares, (ii) receives cash for some, but not all, of his or her
shares and remains a shareholder, or (iii) does not receive cash for any of his
or her shares and continues to hold the same number of shares following the
Reorganization. Because a shareholder may own shares in more than one capacity
(for example, individually and through an individual retirement account), a
shareholder may receive cash for some of his or her shares while retaining
ownership of the remaining shares following the Reorganization.

The following sections describe the material effects that we expect to
result from the Reorganization with respect to shares that are exchanged for
cash and shares that are unaffected by the Reorganization. You may experience a
combination of these effects if you receive cash for some of your shares while
retaining ownership of other shares. The effects described below assume that
5,205 shares are exchanged for cash in the Reorganization.

Cashed-out shares. As to shares of our common stock that are exchanged in
the Reorganization for cash, shareholders will experience the following effects:

- Receipt of Cash. Shareholders will receive $31.00 in cash per share,
without interest.

- Loss of Ownership Interest. Shareholders will no longer have any
equity or voting interest in Darlington and will not participate in
any future potential earnings or growth of the company or in any
shareholder votes.

- Taxes. Shareholders likely will be required to pay federal and, if
applicable, state and local income taxes on cash received in the
Reorganization. See "-Federal Income Tax Consequences of the
Reorganization."

- No Trading Costs. Shareholders will be able to liquidate their
ownership interests without incurring brokerage costs.

Remaining Shares. As to shares of our common stock that are not exchanged
for cash in the Reorganization, shareholders will experience the following
effects:

- Continuing Interest. Shareholders will retain an ongoing equity
interest in Darlington and the ability to participate in any future
potential earnings or growth.

- Decreased Liquidity. We anticipate that the liquidity of our common
stock will decrease as a result of the reduction in the number of
shareholders from approximately 487 to approximately 278. The absence
of an established trading market or a larger shareholder base may
restrict your ability to transfer your shares of stock following the
Reorganization. See "-Effects of the Reorganization on
Darlington-Effect on Market for Shares."

- Decreased Access to Information. If the Reorganization is completed,
we intend to terminate the registration of our common stock under the
Securities Exchange Act. As a result, we would no longer be required
to file periodic reports with the Securities and Exchange Commission.
See "-Effects of the Reorganization on Darlington-Elimination of
Securities Exchange Act Registration."

- Reduction in Book Value per Share. Assuming the Reorganization had
been completed as of June 30, 2004, the book value per share of our
common stock as of June 30, 2004 would have been reduced from
approximately $23.93 per share on a historical basis to approximately
$23.29 per share on a pro forma basis, representing a 2.7% decrease.

- Increase in Earnings per Share. Assuming the Reorganization had been
completed as of December 31, 2003, our earnings per share would have
increased 1.9% from $1.61 per share on a historical basis as of
December 31, 2003 to approximately $1.64 per share on a pro forma
basis. Had the Reorganization been completed as of June 30, 2004, the
increase would have been from approximately $1.14 per share on a
historical basis to $1.17 per share on a pro forma basis, representing
a 2.6% increase.

- Slight Increase in Percentage Interest. Shareholders will experience a
slight increase in their respective ownership percentages because
there will be fewer shares outstanding.

FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION

Presented below are the material federal income tax consequences of the
Reorganization to: (i) shareholders (including any affiliated shareholders) who
will receive cash in the Reorganization; (ii) Messrs. Funderburk, Scott and all
other shareholders who will retain shares of Darlington common stock after the
Reorganization; and (iii) Darlington itself.

The discussion does not address all U.S. federal income tax considerations
that may be relevant to certain Darlington shareholders in light of their
particular circumstances. The discussion assumes that the Darlington
shareholders hold their shares of Darlington common stock as capital assets
(generally for investment). In addition, the discussion does not address any
foreign, state or local income tax consequences of the Reorganization. The
following summary does not address all U.S. federal income tax considerations
applicable to certain classes of shareholders, including:

- financial institutions;

- insurance companies;

- tax-exempt organizations;

- dealers in securities or currencies;

- traders in securities that elect to mark-to-market;

- persons that hold Darlington common stock as part of a hedge, straddle
or conversion transaction;

- persons who are considered foreign persons for U.S. federal income tax
purposes;

- persons who acquired or acquire shares of Darlington common stock
pursuant to the exercise of employee stock options or otherwise as
compensation; and

- persons who do not hold their shares of Darlington common stock as a
capital asset.

ACCORDINGLY, DARLINGTON SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES OF THE REORGANIZATION, INCLUDING
APPLICABLE FEDERAL, FOREIGN, STATE AND LOCAL TAX CONSEQUENCES TO THEM OF THE
REORGANIZATION IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.

The receipt by a shareholder of cash in the Reorganization will be a
taxable transaction for federal income tax purposes under the United States
Internal Revenue Code of 1986, as amended (the "Code").

Federal Income Tax Consequences to Shareholders Receiving Cash in the
Reorganization

Under Section 302 of the Code, a shareholder will recognize gain or loss
upon receiving cash in the Reorganization if:

- the Reorganization results in a "complete redemption" of all of the
shares held by a shareholder immediately prior to the Reorganization;

- the receipt of cash is "substantially disproportionate" with respect
to the shareholder; or

- the receipt of cash is "not essentially equivalent to a dividend" with
respect to the shareholder.

These three tests are applied by taking into account not only shares that a
shareholder actually owns, but also shares that the shareholder constructively
owns pursuant to Section 318 of the Code, as described below.

If any one of the three tests is satisfied, the shareholder will recognize
gain or loss on the difference between the amount of cash received by the
shareholder pursuant to the Reorganization and the tax basis in the shares held
by such shareholder immediately prior to the Reorganization. Provided that
these shares constitute a capital asset in the hands of the shareholder, this
gain or loss will be long-term capital gain or loss if the eligible shares are
held for more than one year and will be short-term capital gain or loss if such
shares are held for one year or less.

Under the constructive ownership rules of Section 318 of the Code, a
shareholder is deemed to constructively own shares owned by certain related
individuals and entities in addition to shares directly owned by the
shareholder. For example, an individual shareholder is considered to own shares
owned by or for his or her spouse and his or her children, grandchildren and
parents ("family attribution"). In addition, a shareholder is considered to own
a proportionate number of shares owned by estates or certain trusts in which the
shareholder has a beneficial interest, by partnerships in which the shareholder
is a partner, and by corporations in which 50% or more in value of the stock is
owned directly or indirectly by or for such shareholder. Similarly, shares
directly or indirectly owned by beneficiaries of estates of certain trusts, by
partners of partnerships and, under certain circumstances, by shareholders of
corporations may be considered owned by these entities ("entity attribution").
A shareholder is also deemed to own shares which the shareholder has the right
to acquire by exercise of an option.

The receipt of cash by a shareholder in the Reorganization will result in a
"complete redemption" of all of the shareholder's shares held immediately prior
to the Reorganization as long as the shareholder does not constructively own any
shares of common stock immediately after the Reorganization. However, a
shareholder may qualify for gain or loss treatment under the "complete
redemption" test even though such shareholder constructively owns shares of
common stock provided that (1) the shareholder constructively owns shares of
common stock as a result of the family attribution rules (or, in some cases, as
a result of a combination of the family and entity attribution rules), and (2)
the shareholder qualifies for a waiver of the family attribution rules (such
waiver being subject to several conditions, one of which is that the shareholder
has no interest in Darlington immediately after the Reorganization, including as
an officer, director or employee, other than an interest as a creditor).

It is anticipated that most shareholders who receive cash in the
Reorganization will qualify for capital gain or loss treatment as a result of
satisfying the "complete redemption" requirements. However, if the constructive
ownership rules prevent compliance with these requirements, such shareholder may
nonetheless qualify for capital gain or loss treatment by satisfying either the
"substantially disproportionate" or the "not essentially equivalent to a
dividend" requirements. In general, the receipt of cash in the Reorganization
will be "substantially disproportionate" with respect to the shareholder if the
percentage of shares of common stock owned by the shareholder immediately after
the Reorganization is less than 80% of the percentage of shares directly and
constructively owned by the shareholder immediately before the Reorganization
(giving effect to the difference in number of outstanding shares due to the
Reorganization), and the shareholder does not

own directly and constructively 50% or more of Darlington's outstanding common
stock after the Reorganization. Alternatively, the receipt of cash in the
Reorganization will, in general, be "not essentially equivalent to a dividend"
if the Reorganization results in a "meaningful reduction" in the shareholder's
proportionate interest in Darlington.

If none of the three tests described above is satisfied, the shareholder
will be treated as having received a taxable dividend in an amount equal to the
entire amount of cash received by the shareholder pursuant to the
Reorganization.

No ruling has been or will be obtained from the Internal Revenue Service in
connection with the Reorganization.

Federal Income Tax Consequences to Shareholders Who Do Not Receive Cash in the
---
Reorganization

Messrs. Funderburk and Scott and other affiliated and unaffiliated
shareholders who remain Darlington shareholders following the Reorganization and
do not receive any cash in the Reorganization will not recognize gain or loss as
a result of the Reorganization. The Reorganization will not affect the adjusted
tax basis or holding period of any shares of Darlington common stock that a
shareholder continues to own after the Reorganization.

Federal Income Tax Consequences to Darlington and Darlington County Bank

Neither Darlington nor Darlington County Bank will recognize gain or loss
for U.S. federal income tax purposes as a result of the Reorganization.

Non-corporate shareholders of Darlington may be subject to backup
withholding at a rate of 28% on cash payments received in the Reorganization.
Backup withholding will not apply, however, to a shareholder who (1) furnishes a
correct taxpayer identification number and certifies that he or she is not
subject to backup withholding on the substitute Form W-9 included in the letter
of transmittal, (2) who provides a certificate of foreign status on an
appropriate Form W-8, or (3) who is otherwise exempt from backup withholding. A
shareholder who fails to provide the correct taxpayer identification number on
Form W-9 may be subject to a $50 penalty imposed by the Internal Revenue
Service.

THE PRECEDING DISCUSSION DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OR
DISCUSSION OF ALL POTENTIAL TAX EFFECTS RELEVANT TO THE REORGANIZATION. THUS,
DARLINGTON SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
SPECIFIC TAX CONSEQUENCES TO THEM OF THE REORGANIZATION, INCLUDING TAX RETURN
REPORTING REQUIREMENTS, THE APPLICABILITY AND EFFECT OF FOREIGN, FEDERAL, STATE,
LOCAL AND OTHER APPLICABLE TAX LAWS AND THE EFFECT OF ANY PROPOSED CHANGES IN
THE TAX LAWS.

PRO FORMA EFFECT OF THE REORGANIZATION

The following selected pro forma financial data illustrates the pro forma
effect of the Reorganization on Darlington's financial statements as of June 30,
2004, for the six months ended June 30, 2004 and for the year ended December 31,
2003. Management has prepared this information based on its estimate that
Darlington will pay $161,355 to shareholders in the Reorganization and
approximately $62,000 in transaction expenses. Please see "Pro Forma
Consolidated Financial Information" for the complete pro forma financial
information relating to this transaction.

As of and for the six As of and
months ended for the year ended
(In thousands except per share data) June 30, 2004 December 31, 2003
------------------------ ---------------------
Actual Pro Forma Actual Pro Forma
------------ ---------- ---------- ---------

Net interest income $ 732 730 $ 1,408 1,405
Provision for loan losses 36 36 108 108
Noninterest income 189 189 351 351
Noninterest expense 615 615 1,258 1,258
Income tax benefit 90 89 139 138
Net income $ 180 179 $ 254 252

PER COMMON SHARE
Basic earnings per share $ 1.14 1.17 1.61 1.64
Diluted earnings per share 1.14 1.17 1.61 1.64
Book value $ 23.93 23.29 25.15 24.54

AT PERIOD END
Assets $ 36,134 35,911 35,643 35,420
Stockholders' equity 3,781 3,558 3,973 3,750
Common shares outstanding 158,000 152,795 158,000 152,795

Weighted average shares outstanding 158,000 152,795 158,000 152,795

RECOMMENDATION OF THE BOARD OF DIRECTORS; FAIRNESS OF THE REORGANIZATION

The board believes that the Plan is substantively and procedurally fair to,
and in the best interests of, Darlington's unaffiliated shareholders. The board
of directors, including those directors who are not employees of Darlington,
have unanimously approved the Plan, and the board unanimously recommends that
the shareholders vote for approval of the Plan, which will effect the
Reorganization. The board has also approved, and unanimously recommends that
the shareholders approve, the adjournment proposal relating to our ability to
obtain shareholder approval of the Plan.

All of Darlington's directors and executive officers have indicated that
they intend to vote their shares of common stock (and any shares with respect to
which they have or share voting power) in favor of the Plan and the adjournment
proposal. The directors and executive officers of Darlington beneficially owned
approximately 14.25% of the shares outstanding as of June 30, 2004. Although the
board as a whole recommends that the shareholders vote in favor of the Plan for
the reasons set

forth in "-Reasons for the Reorganization," no director or executive officer is
making any recommendation to the shareholders in his or her individual capacity.

We considered a number of factors in determining to approve the
Reorganization, including the effects described under "-Effects of the
Reorganization on Darlington," "-Effects of the Reorganization on Affiliates"
and "Effects of the Reorganization on Shareholders Generally" and the relative
advantages and disadvantages described under "-Reasons for the Reorganization"
and "-Potential Disadvantages of the Reorganization." The board also reviewed
the tax and pro forma financial effects of the Reorganization on Darlington and
its shareholders.

After the Reorganization, Darlington's common stock will not be registered
under the Securities Exchange Act. The board considered the views of management
regarding the cost savings to be achieved by eliminating the reporting and
disclosure requirements related to the registration of the common stock under
the Securities Exchange Act, including indirect savings resulting from
reductions in the time and effort currently required of management to comply
with the reporting and other requirements associated with continued registration
of the common stock under the Securities Exchange Act. Similarly, the board
also considered the prospective decrease in the expenses related to servicing
shareholders holding small positions in Darlington's stock. Darlington's
management determined that the recapitalization would result in cost savings of
approximately $100,000 per year.

Additionally, the board considered the effect that terminating the
registration of the common stock would have on the market for the common stock
and the ability of shareholders to buy and sell shares. However, the board
determined that, even as a public company, Darlington has not had an organized
trading market for its common stock and that Darlington's shareholders derive
little relative benefit from Darlington's status as a public company. The board
determined that the cost savings and reduced management time to be achieved by
terminating registration of the common stock under the Securities Exchange Act
outweighed any potential detriment from eliminating the registration.

We considered alternatives to the proposed going-private transaction but
ultimately approved the Reorganization proposal. Please read the discussion
under "-Alternatives Considered" for a description of these alternatives.

Substantive Fairness. The board considered numerous factors, discussed
below, in reaching its conclusion as to the substantive fairness of the Plan to
our unaffiliated shareholders. In reaching this conclusion, the board
considered the effects of the Reorganization on unaffiliated shareholders who
will receive cash in the Reorganization and on unaffiliated shareholders who
will retain their shares.

- Historical Market Prices of the Darlington Common Stock: Our
stock is not listed on an exchange, and there is not an organized
trading market for our common stock. To our knowledge, the
trading prices for the common stock since June 30, 2002 have
ranged from $23.39 to $25.75 per share. We have never repurchased
any shares of our common stock. The price per share to be paid in
the Reorganization represents a 28% premium over the last known
trading price for our common stock prior to announcement of the
Reorganization. The board considered the recent trading history
of our common stock in comparison to the cash consideration
offered in the Reorganization as a factor supporting its
recommendation to approve the Plan

and its conclusion as to the fairness of the cash consideration
to unaffiliated shareholders, including those who would receive
cash and those who would retain their shares following the
Reorganization.

- Earnings: The price per share that will be paid in the
Reorganization reflects a multiple of 19.25 times Darlington's
earnings per share for the year ended December 31, 2003 and 13.6
times its annualized earnings per share for the six months ended
June 30, 2004. The board viewed these multiples as factors
supporting its decision to approve the Plan and its conclusion as
to the fairness of the cash consideration to unaffiliated
shareholders, including those who would receive cash for their
shares and those who would retain their shares following the
Reorganization.

- Book Value: The price per share to be paid in the Reorganization
reflects a multiple of 1.30 times Darlington's June 30, 2004 book
value per share. Although book value was a factor, among others,
that the board considered in determining the cash consideration
to be paid in the Reorganization, the board determined that it
was not directly relevant because book value is a historical
number that may not reflect the fair market values of our assets
and liabilities.

- Independent Valuation. According to a report delivered to the
board by Triangle Capital Partners, the range of fair value of
the Darlington common stock as of July 12, 2004 was between
$26.00 and $31.00 per share. The board considered this report as
well as the underlying factors and methodologies as factors in
support of its recommendation to approve the Plan and its
conclusion as to the fairness in relation to Darlington's "going
concern" value of the proposed cash consideration to unaffiliated
shareholders, including those who would receive cash for their
shares and those who would retain their shares following the
Reorganization. In determining the fairness of the transaction in
relation to the "going concern" value, our board relied upon the
factors, analyses and conclusions relating to the comparable
company analysis, dividend discount analysis and merger premium
analysis set forth by Triangle Capital Partners in its report and
adopted these factors, analyses and conclusions as its own. The
board did not consider the amount per share that might be
realized in a sale of 100% of the stock of Darlington because the
board determined that consideration of such an amount was
inappropriate in the context of a transaction that would not
result in a change of control. The board determined specifically
a price of $31.00 per share, which represented the high end of
Triangle's range, was fair to both cashed-out and remaining
shareholders in view of the involuntary nature of the transaction
for those receiving cash and the relatively small incremental
effect of the selected price on those retaining their shares. See
"Opinion of Financial Advisor" for additional information.

- Opinion of Independent Financial Advisor: Triangle Capital
Partners, an independent financial advisor to the board of
directors, has delivered its opinion that the $31.00 per share to
be paid in the Reorganization is fair, to Darlington's
shareholders. The board reviewed and considered the financial
analyses presented to the board in connection with the opinion
and adopted

the advisor's conclusions and analyses as its own. The board
considered the conclusions drawn in the fairness opinion as
factors supporting its recommendation to approve the Plan and its
conclusion as to the fairness of the cash consideration to
unaffiliated shareholders, including those who would receive cash
for their shares and those who would retain their shares
following the Reorganization. A copy of the opinion is attached
as Appendix C. See "Opinion of Independent Financial Advisor" for
----------
additional information.

- Liquidity Provided: The Reorganization will provide liquidity,
without brokerage costs, to shareholders who will receive cash
for their shares in the Reorganization. We believe this provides
a significant benefit to investors seeking a more liquid
investment alternative, given the lack of an organized market for
our stock. The board considered the opportunity to provide this
liquidity as a factor supporting its recommendation to approve
the Plan and its conclusion as to the fairness of the cash
consideration to unaffiliated shareholders receiving cash in the
Reorganization.

- Tax Consequences. The board noted that the Reorganization would
not result in a taxable event for shareholders retaining their
shares in the Reorganization, as Messrs. Funderburk and Scott and
all of our directors are entitled to do. The board also
considered that, except with respect to shareholders who have
acquired their shares within the prior 12 months, the cash
consideration offered in the Reorganization would be taxed as a
long-term capital gain for shareholders terminating their actual
and constructive stock ownership in the Company. The facts that
the transaction would not result in a taxable event to
shareholders retaining their shares following the Reorganization
contributed to the board's recommendation and conclusion as to
the fairness of the transaction to unaffiliated shareholders who
would retain their shares following the Reorganization. Although
the transaction would result in a taxable event to unaffiliated
shareholders receiving cash in the Reorganization, the board
determined that this negative factor was mitigated somewhat by
the positive factor that the cash to be received by these
shareholders would likely receive tax-advantaged long-term
capital gains treatment.

- Absence of Firm Offers. The board considered the absence of any
firm offers for the acquisition of our company, the fact that the
board has no plans to seek an acquisition of our company in the
foreseeable future and its opinion that firm offers are not
likely to be forthcoming as factors tending to support its
recommendation to approve the Reorganization and its conclusion
as to the fairness of the cash consideration to unaffiliated
shareholders, including those who would receive cash for their
shares and those who would retain their shares following the
Reorganization.

In connection with its fairness determination, and given its determination
that the $31.00 per share cash consideration represented a premium over book
value, the board did not consider Georgian's liquidation value in light of the
following reasons. First, because the vast majority of a bank's assets and
liabilities are monetary assets whose book values generally approximate their
fair

market values, the liquidation values of these assets and liabilities would
generally command material discounts both to fair market value and, accordingly,
book value. In addition to the liquidation discounts, because the liquidation of
a financial institution is an extremely expensive and time-consuming process
involving significant regulatory procedures and numerous regulatory approvals,
the costs of the liquidation of a financial institution further reduce any net
assets that would otherwise be available to shareholders following liquidation.
In light of these factors, and because the Reorganization consideration was
greater than Darlington's book value, the board of directors concluded that the
determination of a liquidation value was not material to the financial fairness
of the transaction. However, it is not possible to predict with certainty the
future value of our assets or liabilities or the intrinsic value that those
assets or liabilities may have to a specific buyer that has not been identified.
As a result, although we believe the possibility is remote, the liquidation of
our assets and liabilities could conceivably produce a higher value than our
value as a going concern.

After consideration of all of the foregoing information, the board
determined that a fair price to be paid to cashed-out shareholders in the
Reorganization is $31.00 per share. The board is not aware of any material
contacts, negotiations or transactions, other than in conjunction with the
Reorganization as described in "-Background of the Reorganization," during the
preceding two years for (1) the merger or consolidation of Darlington into or
with another person or entity, (2) the sale or other transfer of all or any
substantial part of the assets of Darlington, (3) a tender offer for any
outstanding shares of Darlington common stock, or (4) the election of directors
to our board.

Procedural Fairness. The board of directors is seeking shareholder
approval of the transactions contemplated by the Plan. The vote of two-thirds
of the votes entitled to be cast on the Plan will be required to approve it.
Approval by a majority of unaffiliated shareholders is not required. The board
determined that such a voting requirement was unnecessary in view of the
relatively high vote required to approve the Plan under South Carolina law, the
equal application of the Plan's provisions to affiliated and unaffiliated
shareholders, and each shareholder's right to dissent from the Plan and obtain
the fair value of his or her shares under South Carolina law.

In addition, the board noted that shareholders who wish to increase their
record holdings in order to avoid being cashed out may do so by purchasing
shares of Darlington common stock from other shareholders prior to the effective
time of the Reorganization. The Reorganization will also provide liquidity,
without brokerage costs, to shareholders receiving cash in the Reorganization.

No unaffiliated representative acting solely on behalf of unaffiliated
shareholders for the purpose of negotiating the terms of the Reorganization or
preparing a report covering its fairness was retained by Darlington or by a
majority of directors who are not employees of Darlington. In rendering its
fairness determination, the board concluded that the Reorganization is fair
regardless of whether certain other procedural safeguards were used, such as the
retention of an unaffiliated shareholder representative, because the Plan treats
affiliated and unaffiliated shareholders identically. In making its
determination of fairness, the board also considered the other procedural
safeguards that were implemented. In that regard, the board noted that an
independent financial advisor had been engaged and had considered and rendered
its opinion as to the fairness of the consideration payable in the
Reorganization, from a financial point of view, to all shareholders, including
those who would receive cash for their shares and those who would retain their
shares following the Reorganization. Because the board obtained an independent
valuation report and fairness opinion from an unaffiliated entity, the board
determined that the cost of obtaining an additional fairness opinion or
valuation from another unaffiliated representative would not provide any
meaningful

additional benefit. The board also considered that the transaction was approved
by all of the directors who are not employees of Darlington. After consideration
of the factors described above, the board believes that the Reorganization is
procedurally fair notwithstanding the absence of such an unaffiliated
shareholder approval requirement or unaffiliated representative.

We have not made any provision in connection with the Reorganization to
grant unaffiliated shareholders access to our corporate files, except as
provided under the South Carolina Business Corporation Act, or to obtain legal
counsel or appraisal services at our expense. With respect to unaffiliated
shareholders' access to our corporate files, the board determined that this
Proxy Statement, together with Darlington's other filings with the SEC, provide
adequate information for unaffiliated shareholders to make an informed decision
with respect to the Plan. The board also considered the fact that under the
South Carolina Business Corporation Act, and subject to specified conditions set
forth under South Carolina law, shareholders have the right to review
Darlington's relevant books and records of account. As for obtaining legal
counsel or appraisal services for unaffiliated shareholders at Darlington's
expense, the board did not consider these necessary or customary. In deciding
not to adopt these additional procedures, the board also took into account
factors such as Darlington's size and the cost of such procedures.

After consideration of the factors described above, the board of directors
believes that the Plan is procedurally fair, notwithstanding the absence of an
unaffiliated shareholder approval requirement, an unaffiliated shareholder
representative and the provision of legal counsel or appraisal services at
Darlington's expense, to Darlington's unaffiliated shareholders, both those who
will receive cash in the Reorganization and those who will retain their shares.
Additionally, the board believes that the Plan is substantively fair to these
constituencies. Finally, it has determined that the Plan is substantively and
procedurally fair to affiliated shareholders for the same reasons specified as
to unaffiliated shareholders, given that the Plan does not distinguish between
these groups.

AFFILIATES' DETERMINATION OF FAIRNESS OF THE REORGANIZATION

Darlington's affiliates consist of its directors and executive officers,
all of whom are listed under "Information About Darlington and its
Affiliates-Directors and Executive Officers." Each of Darlington's affiliates
believes that the Reorganization is substantively and procedurally fair to, and
in the best interests of Darlington's shareholders, including unaffiliated
shareholders as a group, both those who will receive cash in the Reorganization
and those who will retain their shares. In reaching this conclusion, they relied
upon the factors considered by and the analyses and conclusions of the board of
directors and adopted such factors, analyses, and conclusions as their own. See
"-Recommendation of the Board of Directors; Fairness of the Reorganization."

DETERMINATION BY INTERIM AND OTHER FILING PERSONS

Interim was organized for the sole purpose of facilitating the
Reorganization. Its sole shareholder, director and executive officer is Henry M.
Funderburk, III, who is also Darlington's President and Chief Executive Officer.
In addition to Interim, Mr. Funderburk and G. Clyde Scott, a director and 6.4%
shareholder of the Company, are also deemed to be "filing persons" for purposes
of this transaction. In each case, the purpose and reasons for engaging in the
Reorganization, the alternatives considered, and the determination and
supporting analyses regarding financial and procedural fairness of the
Reorganization by Interim and the other filing persons are the same as ours.

OPINION OF INDEPENDENT FINANCIAL ADVISOR

The Board of Directors retained Triangle Capital Partners, LLC ("Triangle")
as its financial advisor to render an opinion to our Board concerning the
fairness, from a financial point of view, to Darlington shareholders of the
price to be paid to shareholders receiving the right to receive cash in
connection with the proposed Reorganization. On July 12, 2004, at a meeting in
which the Board of Directors considered and approved the Reorganization,
Triangle reported that, as of such date, consideration in the amount of $26.00
to $31.00 per share represented an appropriate range of value to be offered to
shareholders who would receive cash in the Reorganization. Triangle presented
its financial analyses supporting its report, and the Board had an opportunity
to ask questions and discuss each analysis individually. On July 19, 2004,
Triangle delivered an oral opinion to the effect that, as of the date hereof and
based upon and subject to the matters stated in that opinion, the $31.00 in cash
offered pursuant to the Reorganization is fair, from a financial point of view,
to the shareholders of Darlington common stock, including both those
shareholders who will receive cash in the Reorganization and those who will
remain shareholders after the Reorganization. A copy of Triangle's written
opinion, dated as of the date of this document, is attached as Appendix C.
----------

Triangle is a regional investment banking firm and was selected by
Darlington based on the firm's reputation and experience in investment banking,
its extensive experience and knowledge of the South Carolina banking market, its
recognized expertise in the valuation of commercial banking businesses and
because of its familiarity with Darlington. Triangle, through its investment
banking business, specializes in commercial banking institutions and is
continually engaged in the valuation of such businesses and their securities in
connection with mergers and acquisitions and other corporate transactions.

No material relationship exists or has existed within the past two years
between Darlington, Triangle or any of their respective affiliates. Darlington
paid Triangle a fee of approximately $20,000 for its services rendered in
connection with the Reorganization and will reimburse Triangle for up to $2,000
in out-of-pocket expenses incurred in connection with such services. Triangle
may provide additional investment banking services to Darlington in the future.

Prior to rendering its fairness opinion, Triangle reviewed and analyzed,
among other things, (i) the terms of the Reorganization as set forth in the
proposed Agreement, (ii) Darlington's annual reports to shareholders and its
financial statements for each of the three years ended December 31, 2001,
December 31, 2002, and December 31, 2003, (iii) Darlington's quarterly report
and its financial statements for the three months ended June 30, 2004, (iv)
information regarding the trading of Darlington common stock and the price range
within which the stock has traded, (v) certain publicly available business and
financial information related to Darlington, (vi) transactions Triangle deemed
to be relevant, (vii) certain other internal information relating to Darlington
prepared by Darlington's management for Triangle's analysis with respect to the
Reorganization, (viii) discussions with members of Darlington's management about
the background of the Reorganization, the reasons and basis for the
Reorganization and the business and future prospects of Darlington, and (ix)
other studies, analyses and investigations, particularly of the banking
industry, and such other information as Triangle deemed appropriate. Triangle
did not obtain or receive any independent appraisals or valuations of
Darlington's assets or liabilities, nor did it receive any analyses or
valuations of the rights of shareholders, creditors or others holding any claims
or rights against Darlington.

In connection with rendering its opinion, Triangle performed a variety of
financial analyses. Neither Darlington nor its Board of Directors placed any
limitations of the scope of these analyses. Triangle's analyses included an
evaluation of the financial terms of the Reorganization using standard valuation
methods, including (i) comparable company analysis, (ii) dividend discount
analysis, and (iii) merger premium analysis. The following is a summary of the
material analyses presented by Triangle to the Board of Directors on July 12,
2004 in connection with its fairness opinion. This summary does not purport to
be a complete description of all analyses performed by Triangle or the Board of
Directors. Moreover, Triangle believes that these analyses must be considered
as a whole and that selecting portions of such analyses and the factors
considered by it, without considering all such analyses and factors, could
create an incomplete understanding of the scope of the process underlying the
analyses and, more importantly, the opinion derived from them. In its full
analysis, Triangle included assumptions with respect to general economic,
financial market and other financial conditions. Triangle also drew from its
past experience in similar transactions, as well as its experience in the
valuation of securities and its general knowledge of the banking industry as a
whole. Any estimates in Triangle's analyses were not necessarily indicative of
actual future results or values, which may significantly diverge more or less
favorably from such estimates.

Summary of Reorganization Analysis

The implied aggregate transaction value of the Reorganization is
approximately $161,355, based on the $31.00 price per share and Darlington's
estimate of the number of shares to be cashed out pursuant to the
Reorganization. The price to be paid to shareholders receiving cash in the
Reorganization represents a 16.9 times multiple of Darlington's earnings per
share for the twelve (12) months ended March 31, 2004 and 125% of the book value
and tangible book value at March 31, 2004.

Comparable Company Analysis

Triangle analyzed the performance and financial condition of Darlington
relative to a group of nine (9) publicly traded financial institutions east of
the Mississippi with assets less than $70 million that did not report a loss and
for which meaningful trading information was available (the "Peer Group").
Triangle assumed that all members of the Peer Group are non-merger targets. In
addition, Triangle analyzed the financial performance and financial
characteristics of Darlington relative to the national medians for (i) all
publicly traded banks, (ii) all publicly traded banks in the Southeast United
States, and (iii) all publicly traded banks in the United States with less than
$100 million in assets. The financial ratios shown in the table below are as of
most recent reported data, and the market price multiples are based on market
prices as of the market close on July 2, 2004 according to SNL Financial, LC.

COMPARABLE COMPANY ANALYSIS
- -------------------------------------------------------------------------------------------
Darlington Peer All Banks Southeast Banks <
Group Median Banks $100 million
Median Median in assets
(3) Median
- ------------------------------ ----------- ------- ---------- ---------- -------------

LTM(1) Net Interest Margin 4.42% 4.22% 3.99% 3.86% 4.43%
- ------------------------------ ----------- ------- ---------- ---------- -------------
LTM(1) Efficiency Ratio 69.4% 73.0% 64.7% 64.0% 78.7%
- ------------------------------ ----------- ------- ---------- ---------- -------------
LTM(1) Return on Average 0.83% 0.75% 1.01% 0.99% 0.61%
Assets
- ------------------------------ ----------- ------- ---------- ---------- -------------
LTM(1) Return on Average 7.4% 5.8% 12.2% 11.1% 5.5%
Equity
- ------------------------------ ----------- ------- ---------- ---------- -------------
Tangible Equity/Tangible 10.5% 14.5% 8.3% 8.2% 11.0%
Assets
- ------------------------------ ----------- ------- ---------- ---------- -------------
Nonperforming Assets/Assets 0.16% 0.52% 0.41% 0.43% 0.06%
- ------------------------------ ----------- ------- ---------- ---------- -------------
Reserves/Nonperforming Assets 383.1% NM 136.7% 134.1% NM
- ------------------------------ ----------- ------- ---------- ---------- -------------
Price(2)/LTM(1) Earnings 16.9x 16.7x 17.1x 16.6x 20.7x
- ------------------------------ ----------- ------- ---------- ---------- -------------
Price(2)/Book Value 125% 102% 181% 174% 135%
- ------------------------------ ----------- ------- ---------- ---------- -------------
Dividend Yield(2) 3.2% 1.9% 2.3% 2.3% 2.4%
- ------------------------------ ----------- ------- ---------- ---------- -------------

(1) Last twelve months ending March 31, 2004.

(2) With respect to Darlington, based on the $31.00 price per share to be paid
to shareholders receiving cash in the Reorganization.

(3) Consists of nine publicly traded financial institutions east of the
Mississippi with assets less than $70 million that did not report a loss
and for which meaningful trading information was available: Citizens NB of
Meyersdale, PA; CommerceFirst Bancorp Inc., MD; Globe Bancorp Inc., LA;
Home Building Bancorp, IN; Home Financial Bancorp, IN; People's Bank of
Commerce, OR; SFB Bancorp Inc., TN; Sistersville Bancorp Inc., WV;
WebFinancial Corp., NY.

Dividend Discount Analysis

Triangle performed a dividend discount analysis to determine a range of
present values per share of Darlington common stock. In order to perform this
analysis, Triangle made assumptions regarding (i) the dividend payout ratio,
(ii) the earnings growth rate, and (iii) an appropriate discount rate.

In order to project a dividend stream, Triangle assumed a dividend payout
equal to 54% of Darlington's projected net income. Darlington paid a dividend of
$1.00 per share over the twelve months ended March 31, 2004, which was 54% of
its net income during the twelve month period. Darlington believed this payout
ratio would accurately reflect its dividend payout ratio in the future.

Triangle selected discount rates between 11% and 13% in discounting the
future dividend stream from Darlington as they are appropriate for a company
with the financial and operational characteristics of Darlington. Triangle
based its assumptions on appropriate discount rates based on industry averages
as appropriate for companies like Darlington. Through discussions with
professional investors and analysts of financial institution securities and by
reviewing their written analyses, Triangle has frequently observed discount
rates of 11% to 13% being applied to financial institutions.

Triangle assumed Darlington's earnings would grow at an annual rate between
5.0% and 8.0%. Darlington's net income declined from the year ended 2002 to the
year ended 2003, but increased 35% for the six months ended June 30, 2004 in
comparison to the prior year ago period. Earnings are also expected to benefit
from the cost savings expected upon the successful completion of the
Reorganization. From December 31, 2000 to March 31, 2004, Darlington's assets
grew at a compound annual growth rate of 8.7%. According to SNL Financial, LC
deposits in Darlington County, South Carolina have grown at a compound annual
rate of 3.02% from June 30, 1999 to June 30, 2003.

Based upon the above assumptions, the stand-alone value of Darlington
common stock ranged from approximately $14.00 to $36.00 per share. The
following table further reflects this analysis.

EARNINGS GROWTH RATE
D ----------------------------------
I 5.0% 6.0% 7.0% 8.0%
S ------- ------- ------- -------
C 11.0% $18.23 $21.88 $27.35 $36.46
O ----- ------- ------- ------- -------
U 11.5% $16.83 $19.89 $24.31 $31.25
N ----- ------- ------- ------- -------
T 12.0% $15.63 $18.23 $21.88 $27.35
----- ------- ------- ------- -------
R 12.5% $14.58 $16.83 $19.89 $24.31
A ----- ------- ------- ------- -------
T 13.0% $13.67 $15.63 $18.23 $21.88
E ----- ------- ------- ------- -------

Triangle noted that the dividend discount analysis was included because it
is a widely used valuation methodology, but it also noted that the results of
this methodology are highly dependent upon numerous assumptions that must be
made, including, but not limited to, earnings growth rates, dividend payout
ratios, and discount rates.

Merger Premium Analysis

Triangle studied relevant bank merger activity in order to determine the
acquisition value of Darlington. In determining a range for the acquisition
value of Darlington, Triangle relied on reported acquisition pricing of
companies of similar size. Upon determining a range of acquisition values for
Darlington, Triangle reduced this valued by an amount equivalent to the merger
premium a shareholder would reasonably expect to receive upon the sale of a
company. By observing merger premiums paid in other acquisitions of publicly
traded banks, Triangle was able to estimate a range of merger premiums
appropriate for this analysis. By reducing the acquisition value of Darlington
by an expected merger premium, Triangle was able to estimate a range of minority
interest values for Darlington. Since only a small percentage of Darlington's
common stock will be repurchased and the voting control of Darlington is not
materially changed as a result of the Reorganization, the minority interest
standard of value is the appropriate standard of value in the Reorganization.

Triangle focused on commercial bank transactions announced within two years
of July 2, 2004 according to SNL Financial, LC where the selling bank had less
than $70 million in assets. Triangle found that 114 mergers had been announced
that met these criteria. The table below details the summary pricing
information from these deals and implied valuations based on the financial
condition of Darlington as of March 31, 2004. The implied acquisition value
ranged from $34.00 per share to $47.00 per share.

NATIONWIDE ACQUISITION PRICING OF SMALL BANKS
1ST QUARTILE MEDIAN 3RD QUARTILE
(1) (1) (1)

Price / Book Value 135% 161% 190%

Price / Tangible Book Value 138% 163% 190%

Price / LTM Reported EPS 15.1x 19.3x 25.8x

Premium to Tangible Book Value 5.0% 8.0% 11.8%
/ Core Deposits
- ----------------------------------------------------------------------------

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

IMPLIED PRICING FOR DARLINGTON CO. (2)

Price / Book Value $ 33.31 $ 39.77 $ 46.90

Price / Tangible Book Value $ 34.12 $ 40.35 $ 46.89

Price / LTM Reported EPS $ 27.77 $ 35.46 $ 47.50

Premium to Tangible Book Value $ 35.03 $ 41.06 $ 48.94
/ Core Deposits

- ----------------------------------------------------------------------------
MEDIAN $ 33.72 $ 40.06 $ 47.20

INDICATED ACQUISITION RANGE $ 34.00 $ 47.00
- ----------------------------------------------------------------------------
<FN>

(1) First quartile, median, and third quartile for acquisitions of
commercial banks with $70 million in assets or less announced
between July 2, 2002 and July 2, 2004 based on the data according to
SNL Financial, LC.

(2) Based on the financial condition of Darlington as of 3/31/2004.

Triangle studied the premium to trading prices paid in bank merger
transactions announced in (i) the past 90 days, (ii) the last year and (iii) the
last two years as of July 2, 2004 according to SNL Financial, LC. From the
results of this analysis, Triangle concluded that Darlington could expect a
merger premium 30% - 40% above its fair value. The table below summarizes the
findings of Triangle's analysis.

MERGER PREMIUMS OF PUBLICLY TRADED BANKS

LAST 90 DAYS LAST 12 MONTHS LAST 24 MONTHS
---------------- ----------------- -----------------

PREMIUM PREMIUM PREMIUM
OVER OVER OVER
TRADING TRADING TRADING
DEALS PRICE DEALS PRICE DEALS PRICE
# % # % # %

Banks < $50mm . . . 0 NA 0 NA 1 NM
Banks $50 < $100mm. 1 19 5 39 7 39
Banks $100 < $250mm 4 34 15 36 22 37
Banks $250 < $500mm 2 46 8 46 15 39
Banks $500mm < $1b. 1 38 8 15 14 22
Banks $1b < $5b . . 2 24 14 19 19 20
Banks $5b < $10b. . 0 NA 1 13 1 13
Banks $10b < $25b . 1 19 2 17 3 19
Banks $25b < $50b . 1 25 2 12 2 12
Banks $50b +. . . . 1 20 3 20 3 20

High 46 46 39
Median 24 19 20
Low 19 12 12

Triangle calculated a range of fair values by subtracting the indicated
merger premium from the indicated range of acquisition value. This study
suggested that Darlington had a fair value between $24.00 and $36.00. The table
below details these results.

Estimate of Acquisition Value
-----------------------------

Merger
Premium $34.00 $37.00 $40.00 $43.00 $47.00
- ------- ------- ------ ------ ------ ------
30% $26.15 $28.46 $30.77 $33.08 $36.15
------- ------ ------ ------ ------
35% $25.19 $27.41 $29.63 $31.95 $34.81
------- ------ ------ ------ ------
40% $24.29 $26.43 $28.57 $30.71 $33.57
------- ------ ------ ------ ------

No company used by Triangle as a comparison in the above analyses is
identical to Darlington, and no other transaction is identical to the
Reorganization. Accordingly, an analysis of the results of the foregoing is not
purely mathematical; rather, such analyses involve complex considerations and
judgments concerning differences in financial markets and operating
characteristics of the companies and other factors that could affect the public
trading volume of the companies to which Darlington is being compared.

Triangle determined that $26.00 - $31.00 per share was a fair value range
based primarily on the Comparable Company Analysis to establish its valuation
range. Due to the Company's limited trading activity and lack of complete
trading records, an analysis of historic trading activity produced no data
relevant in determining the fair market value of the Company's shares. In
determining a range of fair values, the Comparable Company methodology is the
most relevant valuation technique for valuing a minority interest. The
Comparable Company Analysis directly compares the financial condition and
operating performance of the Company to a peer group of companies for which
relevant trading data is available. The Dividend Discount Analysis and Merger
Premium Analysis are not direct comparisons to other companies but rather use
market data and other assumptions to derive a range of fair values. Both
methodologies produced a wide range of values. For instance, the Dividend
Discount Analysis supported a valuation as low as $14.00 per share and as high
as $36.00. Triangle discounted the extreme values provided by either the
Dividend Discount Analysis or the Merger Premium Analysis. Triangle relied on
these two valuation techniques to support the results shown by its Comparable
Company Analysis.

In addition, the summary set forth above includes a variety of the material
factors considered by Triangle in developing its opinion. However, the
preparation of such a fairness opinion involves various determinations, which
are not readily susceptible to a summary description. Triangle believes that
its analyses must be considered as a whole and that selecting portions of its
analysis and of the factors considered by it, without considering all analyses
and factors, could create an incomplete view of the evaluation process
underlying its opinion. As a whole, these various analyses

contributed to Triangle's opinion that the Reorganization is fair from a
financial point of view to Darlington shareholders, including those shareholders
who will receive cash in the Reorganization and those shareholders who will
remain shareholders after the Reorganization.

The full text of Triangle's opinion, which sets forth many of the
assumptions made, procedures followed, matters considered and limits on the
review undertaken, is attached as Appendix C to this Proxy Statement. The
----------
description of the Triangle opinion set forth herein is qualified in its
entirety by reference to Appendix C and the text of the fairness opinion letter.
----------
The Triangle opinion is provided for the information of Darlington shareholders
in part because it was provided to the Board of Directors of Darlington in
connection with its consideration of the Reorganization.

INFORMATION REGARDING THE
SPECIAL MEETING OF SHAREHOLDERS

TIME AND PLACE OF MEETING

We are soliciting proxies through this Proxy Statement for use at a special
meeting of Darlington shareholders. The special meeting will be held at
__________ on __________, 2004, at Darlington County Bank, 202 Cashua Street,
Darlington, South Carolina.

RECORD DATE AND MAILING DATE

The close of business on __________, 2004, is the record date for the
determination of shareholders entitled to notice of and to vote at the special
meeting. We first mailed the Proxy Statement and the accompanying form of proxy
to shareholders on or about ____________, 2004.

NUMBER OF SHARES OUTSTANDING

As of the close of business on the record date, Darlington had 1,000,000
shares of common stock, $.01 par value, authorized, of which __________ shares
were issued and outstanding. Each outstanding share is entitled to one vote on
all matters presented at the meeting. Darlington also has 200,000 shares of
preferred stock, no par value, authorized, but no shares of such stock are
outstanding or were outstanding on the record date.

PURPOSE OF SPECIAL MEETING

The purpose of the special meeting is for shareholders to vote on an
Agreement and Plan of Reorganization (the "Plan") providing for the merger of
Darlington Interim Corporation with and into Darlington, with Darlington
surviving the merger and the holders of fewer than 100 shares of Darlington
common stock receiving $31.00 in cash in exchange for each of their shares of
such stock. The text of the Plan is set forth in Appendix A to the enclosed
----------
Proxy Statement. The Reorganization is designed to take Darlington private by
reducing its number of shareholders of record below 300. Shareholders will also
vote on a proposal to allow the special meeting to be adjourned to another time
and date in the event such action is necessary for the board of directors to
solicit additional proxies or attendance at the meeting.

DISSENTERS' RIGHTS

Shareholders are entitled to dissenters' rights in connection with the
Plan. See "Description of the Plan-Dissenters' Rights."

PROCEDURES FOR VOTING BY PROXY

If you properly sign, return and do not revoke your proxy, the persons
appointed as proxies will vote your shares according to the instructions you
have specified on the proxy. If you sign and return your proxy but do not
specify how the persons appointed as proxies are to vote your shares, your proxy
will be voted FOR the approval of the Plan, FOR the adjournment proposal and in
the best judgment of the persons appointed as proxies on all other matters that
are unknown to us as of a reasonable time prior to this solicitation and that
are properly brought before the special meeting.

You can revoke your proxy at any time before it is voted by delivering to
Darlington's Corporate Secretary, at 202 Cashua Street, Darlington, South
Carolina 29532, either a written revocation of the proxy or a duly signed proxy
bearing a later date or by attending the special meeting and voting in person.

REQUIREMENTS FOR SHAREHOLDER APPROVAL

A quorum will be present at the meeting if a majority of the outstanding
shares of Darlington common stock are represented in person or by valid proxy.
We will count abstentions and broker non-votes, which are described below, in
determining whether a quorum exists. Approval of the Plan requires the
affirmative vote of two-thirds of the votes entitled to be cast on the Plan.
The adjournment proposal and any other matter that may properly come before the
special meeting requires that more shares be voted in favor of the matter than
are voted against the matter. As of June 30, 2004, Darlington's directors and
executive officers owned, directly or indirectly, 22,513, representing
approximately 14.25%, of the outstanding shares of common stock as of that date.
Each of the directors and executive officers has indicated that he intends to
vote his shares in favor of the Plan and the adjournment proposal.

Abstentions. A shareholder who is present in person or by proxy at the
special meeting and who abstains from voting on any or all proposals will be
included in the number of shareholders present at the special meeting for the
purpose of determining the presence of a quorum. Abstentions do not count as
votes in favor of or against a given matter. Based on the 158,000 shares
outstanding as of the record date, a quorum will consist of 79,001 shares
represented either in person or by proxy. This also represents the minimum
number of votes required to be cast in favor of the Plan in order to approve it.
Assuming only the minimum number of shares necessary to constitute a quorum are
present in person or by proxy at the special meeting, and assuming one of those
shares is subject to a proxy marked as an abstention, the Plan proposal would
not pass because it would not have received the affirmative vote of a majority
of the votes entitled to be cast at the meeting. As a result, such an
abstention would effectively function as a vote against the Plan, even though it
would not be counted in the voting tally as such. On the other hand,
abstentions will not affect the outcome of any other proposal properly brought
before the meeting because only a majority of the votes actually cast must be
voted in favor of such a proposal.

Broker Non-Votes. Brokers who hold shares for the accounts of their
clients may vote these shares either as directed by their clients or in their
own discretion if permitted by the exchange or other organization of which they
are members. Proxies that contain a broker vote on one or more proposal but no
vote on others are referred to as "broker non-votes" with respect to the
proposal(s) not voted upon. Broker non-votes are included in determining the
presence of a quorum. A broker non-vote, however, does not count as a vote in
favor of or against a particular proposal for which the broker has no
discretionary voting authority. Based on the same reasoning that applies to
abstentions as discussed above, broker non-votes will effectively function as
votes against the Plan but will not affect the outcome of any other proposal(s)
at the special meeting.

SOLICITATION OF PROXIES

Proxies are being solicited by our board of directors, and Darlington will
pay the cost of the proxy solicitation. In addition, our directors, officers and
employees may, without additional compensation, solicit proxies by personal
interview, telephone or fax. We will direct brokerage firms

or other custodians, nominees or fiduciaries to forward our proxy solicitation
material to the beneficial owners of common stock held of record by these
institutions and will reimburse them for the reasonable out-of-pocket expenses
they incur in connection with this process.

DESCRIPTION OF THE PLAN

THE REORGANIZATION

Structure

Because the purpose of Reorganization is to reduce the number of
shareholders of record below 300, the Plan permits our board of directors to
increase the 100-share threshold prior to the date of the special shareholders'
meeting to the extent necessary to ensure that the number of record shareholders
will be less than 300 upon effectiveness of the Reorganization. If such action
is necessary, we will notify our shareholders through a supplement to this Proxy
Statement and will postpone the special shareholders' meeting to the extent
necessary to allow shareholders to consider such action and change their votes
if they so desire.

Determination of Shares Held of Record

A shareholder who owns fewer than 100 shares of Darlington common stock "of
record" will receive $31.00 per share in cash in the Reorganization, while a
record holder of 100 shares of more will be unaffected. A shareholder "of
record" is the shareholder whose name is listed on the front of the stock
certificate, regardless of who ultimately has the power to vote or transfer the
shares. For example, four separate certificates issued to a shareholder
individually, as a joint tenant with someone else, as trustee, and in an IRA
represent shares held by four different record holders, even though a single
shareholder might control the voting or transfer of all of the shares. Because
SEC rules require that we count "record holders" for purposes of determining our
reporting obligations, the Plan is based on the number of shares held of record
without regard to the ultimate control of the shares. As a result, a single
shareholder with 100 or more shares held in various accounts could receive cash
in the Reorganization for all of his or her shares if those accounts
individually hold fewer than 100 shares. To avoid this, the shareholder would
need to consolidate his or her ownership into a single certificate representing
100 or more shares. The acquisition of additional shares prior to the effective
date of the Reorganization is also permitted.

Legal Effectiveness

As soon as practicable after shareholder approval of the Plan, we will file
articles of merger with the South Carolina Secretary of State and will send a
Letter of Transmittal to all record holders of Darlington common stock who are
entitled to receive cash in the Reorganization. The Reorganization will be
effective upon filing of the articles or certificate of merger with the South
Carolina Secretary of State. We anticipate that this will occur in the fourth
quarter of 2004.

On the effective date of the Reorganization, each shareholder who owns
fewer than 100 shares of record immediately prior to the Reorganization will not
have any rights as a Darlington shareholder and will have only the right to
receive cash as provided under the Plan.

Exchange of Stock Certificates for Cash

The Letter of Transmittal will provide the means by which shareholders will
surrender their Darlington stock certificates and obtain the cash to which they
are entitled. If certificates evidencing the Darlington common stock have been
lost or destroyed, Darlington may, in its full discretion, accept a duly
executed affidavit and indemnity agreement of loss or destruction in a form
satisfactory to Darlington in lieu of the lost or destroyed certificate. If a
certificate is lost or destroyed, the shareholder may be required to submit, in
addition to other documents, a bond or other security, satisfactory to the
board, indemnifying Darlington and all other persons against any losses occurred
as a consequence of the issuance of a new stock certificate. Shareholders whose
certificates have been lost or destroyed should contact Darlington. Additional
instructions regarding lost or destroyed stock certificates will be included in
the Letter of Transmittal that will be sent to shareholders after the
Reorganization becomes effective.

Except as described above with respect to lost stock certificates, there
will be no service charges or costs payable by shareholders in connection with
the exchange of their certificates for cash in the Reorganization. Darlington
will bear these costs.

THE LETTER OF TRANSMITTAL WILL BE SENT TO SHAREHOLDERS PROMPTLY AFTER THE
EFFECTIVE DATE OF THE REORGANIZATION. DO NOT SEND IN YOUR STOCK CERTIFICATE(S)
UNTIL YOU HAVE RECEIVED THE LETTER OF TRANSMITTAL. ASSUMING YOU SUBMIT YOUR
STOCK CERTIFICATE(S) PROMPTLY THEREAFTER, WE EXPECT THAT YOU WILL RECEIVE YOUR
CASH PAYMENT WITHIN APPROXIMATELY FOUR WEEKS AFTER THE EFFECTIVE DATE OF THE
REORGANIZATION.

Conditions and Regulatory Approvals

Aside from shareholder approval of the Plan, the Reorganization is not
subject to any conditions or regulatory approvals.

Termination of Securities Exchange Act Registration

Darlington's common stock is currently registered under the Securities
Exchange Act. We will be permitted to terminate our registration once we can
certify that Darlington has fewer than 300 shareholders of record. Upon the
completion of the Reorganization, Darlington will have approximately 278
shareholders of record. We intend to apply for termination of the registration
of Darlington's common stock under the Securities Exchange Act as promptly as
possible after the effective date of the Reorganization.

Termination of registration under the Securities Exchange Act will
substantially reduce the information required to be furnished by Darlington to
its shareholders and to the Securities and Exchange Commission and would make
some of the provisions of the Securities Exchange Act, such as the short-swing
profit provisions of Section 16, the requirement of furnishing a proxy or
information statement in connection with shareholder meetings under Section
14(a) and required compliance with the Sarbanes-Oxley Act, no longer applicable
to Darlington. Furthermore, Darlington's affiliates may be deprived of the
ability to dispose of their Darlington common stock under Rule 144 promulgated
under the Securities Act of 1933.

We estimate that termination of the registration of Darlington common stock
under the Securities Exchange Act will save Darlington approximately $100,000
per year in legal, accounting,

printing, management time and other expenses per year. See "Special
Factors-Effects of the Reorganization on Darlington."

SOURCE OF FUNDS AND EXPENSES

We estimate that approximately $161,355 will be required to pay for the
shares of Darlington common stock exchanged for cash in the Reorganization. We
intend to finance the Reorganization with available cash. At June 30, 2004, we
had approximately $4.1 million in cash and cash equivalents.

Additionally, Darlington will pay all of the expenses related to the
Reorganization. We estimate that these expenses will be as follows:

SEC filing fees $ 32
Legal fees 35,000
Accounting fees 500
Financial advisory fees 22,000
Printing costs 4,000
Other 468
----------------
Total $ 62,000
================

DISSENTERS' RIGHTS

Pursuant to the provisions of the South Carolina Code, Darlington's
shareholders have the right to dissent from the Plan and to receive the fair
value of their shares in cash. THIS VALUE MAY BE MORE OR LESS THAN THE $31.00
PER SHARE THAT WE ARE PAYING IN THE REORGANIZATION. Holders of Darlington
common stock who fulfill the requirements described below will be entitled to
assert dissenters' rights.

Pursuant to the provisions of Sections 33-13-101 et seq. of the South
Carolina Code, if the Reorganization is consummated, you must:

- give to Darlington, prior to the vote at the special meeting with
respect to the approval of the Plan, written notice of your intent to
demand payment for your shares of Darlington common stock (hereinafter
referred to as "shares") if the proposed action is effected;

- not vote in favor of the Plan; and

- comply with the statutory requirements summarized below. If you
perfect your dissenters' rights, you will receive the fair value of
your shares as of the effective date of the Reorganization.

You may assert dissenters' rights as to fewer than all of the shares
registered in your name only if you dissent with respect to all shares
beneficially owned by any one beneficial shareholder and you notify Darlington
in writing of the name and address of each person on whose behalf you are
asserting dissenters' rights. The rights of a partial dissenter are determined
as if the shares as to which that holder dissents and that holder's other shares
were registered in the names of different shareholders.

Voting against the Plan will not satisfy the written demand requirement. In
addition to not voting in favor of the Plan, if you wish to preserve the right
to dissent and seek appraisal, you must

give a separate written notice of your intent to demand payment for your shares
if the Reorganization is effected. Any shareholder who returns a signed proxy
but fails to provide instructions as to the manner in which such shares are to
be voted will be deemed to have voted in favor of the Plan and will not be
entitled to assert dissenters' rights.

Any written objection to the Plan satisfying the requirements discussed
above should be addressed to Darlington Bancshares, Inc., 202 Cashua Street,
Darling, South Carolina 29532, Attention: Henry M. Funderburk, III, President
and Chief Executive Officer.

If the shareholders of Darlington approve the Plan at the special meeting,
Darlington must deliver a written dissenters' notice (the "Dissenters' Notice")
to all of its shareholders who satisfied the foregoing requirements. The
Dissenters' Notice must be sent within 10 days after the effective date of the
Reorganization and must:

- state where dissenting shareholders should send the demand for payment
and where and when dissenting shareholders should deposit certificates
for the shares;

- inform holders of uncertificated shares to what extent transfer of
these shares will be restricted after the demand for payment is
received;

- supply holders with a form for demanding payment that includes the
date of the first announcement of the terms of the Plan and requires
the holder (or the beneficial shareholder on whose behalf he is
asserting dissenters' rights) to certify whether or not he acquired
beneficial ownership of the shares prior to the announcement date;

- set a date by which Darlington must receive the demand for payment
(which date may not be fewer than 30 nor more than 60 days after the
Dissenters' Notice) is delivered and set a date by which certificates
for certificated shares must be deposited, which may not be earlier
than 20 days after the demand date; and

- be accompanied by a copy of Sections 33-13-101 et seq. of the South
Carolina Code.

A record shareholder who receives the Dissenters' Notice must demand
payment, certify whether he (or the beneficial shareholder on whose behalf he is
asserting dissenters' rights) acquired beneficial ownership of the shares before
the date set forth in the dissenters' notice pursuant to Section 33-13-220(b)(3)
of the South Carolina Code and deposit such holder's certificates in accordance
with the Dissenters' Notice. Dissenting shareholders will retain all other
rights of a shareholder until those rights are canceled or modified by the
consummation of the Reorganization. A shareholder who does not comply
substantially with the requirements that he demand payment and deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under Sections 33-13-101 et seq. of the
South Carolina Code

Except as described below, Darlington must upon the effective date of the
Reorganization, or upon receipt of a payment demand, pay each dissenting
shareholder who substantially complied with the payment demand and deposit
requirements described above the amount Darlington estimates to be the fair
value of the shares, plus accrued interest from the effective date of the Plan.
Darlington's offer of payment under Section 33-13-250 of the South Carolina Code
must be accompanied by:

- recent financial statements of Darlington;

- Darlington's estimate of the fair value of the shares and an
explanation of how the fair value was calculated;

- an explanation of how the interest was calculated;

- a statement of the dissenter's right to demand additional payment
under the South Carolina Code; and

- a copy of Sections 33-13-101 et seq. of the South Carolina Code.

If the Reorganization is not consummated within 60 days after the date set
forth demanding payment and depositing share certificates, Darlington must
return the deposited certificates and release the transfer restrictions imposed
on uncertificated shares. Darlington must send a new Dissenters' Notice if the
Reorganization is consummated after the return of certificates and repeat the
payment demand procedure described above.

Section 33-13-280 of the South Carolina Code provides that a dissenting
shareholder may notify Darlington in writing of his or her own estimate of the
fair value of such holder's shares and the interest due, and may demand payment
of such holder's estimate (less any payment made under the procedure described
above), if:

- he or she believes that the amount paid by Darlington is less than the
fair value of his or her shares or that Darlington has calculated
incorrectly the interest due;

- Darlington fails to make payment under Section 33-13-250 within 60
days after the date set for demanding payment; or

- Darlington, having failed to consummate the Reorganization, does not
return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after the date set for
demanding payment.

A dissenting shareholder waives his or her right to demand payment under
Section 33-13-280 unless he or she notifies Darlington of his or her demand in
writing within 30 days after Darlington makes or offers payment for his or her
shares.

If a demand for payment under Section 33-13-280 remains unsettled,
Darlington must commence a nonjury equity valuation proceeding in the Court of
Common Pleas of Darlington County, South Carolina, within 60 days after
receiving the payment demand and must petition the court to determine the fair
value of the shares and accrued interest. If Darlington does not commence the
proceeding within those 60 days, the South Carolina Code requires Darlington to
pay each dissenting shareholder whose demand remains unsettled the amount
demanded. Darlington is required to make all dissenting shareholders whose
demands remain unsettled parties to the proceeding and to serve a copy of the
petition upon each of them. The court may appoint appraisers to receive
evidence and to recommend a decision on fair value. Each dissenting shareholder
made a party to the proceeding is entitled to judgment for the fair value of
such holder's shares plus interest to the date of judgment.

The court in an appraisal proceeding commenced under the foregoing
provision must determine the costs of the proceeding, excluding fees and
expenses of attorneys and experts for the respective parties, and must assess
those costs against Darlington, except that the court may assess the costs
against all or some of the dissenting shareholders to the extent the court finds
they acted arbitrarily, capriciously, or not in good faith in demanding payment
under Section 33-13-280. The court also may

assess the fees and expenses of attorneys and experts for the respective parties
against Darlington if the court finds Darlington did not substantially comply
with the requirements of specified provisions of the South Carolina Code, or
against either Darlington or a dissenting shareholder if the court finds that
such party acted arbitrarily, capriciously, or not in good faith with respect to
the dissenters' rights provided by the South Carolina Code.

If the court finds that the services of attorneys for any dissenting
shareholder were of substantial benefit to other dissenting shareholders
similarly situated, and that the fees for those services should be not assessed
against Darlington, the court may award those attorneys reasonable fees out of
the amounts awarded the dissenting shareholders who were benefited. In a
proceeding commenced by dissenters to enforce the statutory liability of
Darlington in the event Darlington fails to commence an appraisal within the
sixty day period described above, the court will assess costs of the proceeding
and fees and expenses of dissenters' counsel against the corporation.

This is a summary of the material rights of a dissenting shareholder and is
qualified in its entirety by reference to Section 33-13 of the South Carolina
Business Corporation Act, included as Appendix B to this Proxy Statement. If
----------
you intend to dissent from approval of the Plan, you should review carefully the
text of Appendix B and should also consult with your attorney. We will not give
----------
you any further notice of the events giving rise to dissenters' rights or any
steps associated with perfecting dissenters' rights, except as indicated above
or otherwise required by law.

We have not made any provision to grant you access to any of the corporate
files of Darlington, except as may be required by the South Carolina Business
Corporation Act, or to obtain legal counsel or appraisal services at the expense
of Darlington.

Any dissenting shareholder who perfects his or her right to be paid the
"fair value" of his or her shares will recognize taxable gain or loss upon
receipt of cash for such shares for federal income tax purposes. See "Special
Factors-Federal Income Tax Consequences of the Reorganization."

INFORMATION ABOUT DARLINGTON AND ITS AFFILIATES

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of Darlington after the Reorganization
will be the same as the directors and executive officers of Darlington
immediately prior to the Reorganization. The board of directors consists of 10
members with staggered three-year terms. The following table shows information
regarding the members of our board of directors and executive officers. The
ages shown are as of June 30, 2004.

TERM EXPIRES IN 2005

DIRECTOR
NAME (AGE) SINCE POSITIONS AND BUSINESS INFORMATION
- ----------------------------- -------- ----------------------------------

W. Edwin Dargan (59) 1999 Mr. Dargan has engaged in a farming operation in
Darlington County, South Carolina for over 25 years.
Albert L. James, III (60) 1997 Mr. James has been an attorney in private practice in
Darlington, South Carolina for over 25 years.
W. B. McCown, III (65) 1986 Mr. McCown served as Darlington's President and
Chief Executive Officer from 1986 through 2003.

TERM EXPIRES IN 2006

DIRECTOR
NAME (AGE) SINCE POSITIONS AND BUSINESS INFORMATION
- ----------------------------- -------- ----------------------------------

Hubert C. Baker (62) 1998 Dr. Baker has been a dentist in practice with Askins
& Baker, P.A., Darlington, South Carolina for over 25 years.
G. Clyde Scott (66) 1986 Mr. Scott has served as President of Darlington
Machinery Co., Inc., a hardware store and machine
shop located in Darlington, South Carolina, for over
10 years.
Eugene A. Vaughan (54) 1986 Mr. Vaughan has been with Vaughan Insurance
Agency, Inc., an insurance agency located in
Darlington, South Carolina, for 25 years, serving as .
President for over five years
Henry M. Funderburk, III (53) 2003 Mr. Funderburk has served as Executive Vice
President of Darlington County Bank since 1989 and
has served as Darlington's President and Chief
Executive Officer since January 1, 2004.

TERM EXPIRES IN 2007

DIRECTOR
NAME (AGE) SINCE POSITIONS AND BUSINESS INFORMATION
- ----------------------------- -------- ----------------------------------

Raymond Galloway (83) 1986 Mr. Galloway has engaged in farming operations in
Darlington County, South Carolina for over 50 years.
R. E. Goodson, Sr. (89) 1986 Mr. Goodson has served as the Chairman of the
Board of R. E. Goodson Construction Co., Inc., a
Charles G. Howard (66) 1997 Mr. Howard has been the President of Chase Oil
Company, Inc. a fuel distribution in the Pee Dee

During the past five years, none of the above named persons has been
convicted in a criminal proceeding or has been a party to any judicial or
administrative proceeding that resulted in a judgment, decree or final order
enjoining him from future violations of, or prohibiting activities subject to,
federal or state securities laws, or a finding of any violation of federal or
state securities laws.

STOCK OWNERSHIP BY AFFILIATES

The following table sets forth the number and the percentage ownership of
shares of Darlington common stock beneficially owned by each director and
executive officer of Darlington and by all current directors and executive
officers as a group as of September 30, 2004. Except for Mr. Scott, we are
unaware of any shareholder who owns more than five percent of our outstanding
shares of common stock.

The table also sets forth the number and approximate percentage of shares
of Darlington common stock that the persons named in the table would
beneficially own after the effective date of the Reorganization on a pro forma
basis, assuming no changes in ownership between September 30, 2004 and the
effective date of the Reorganization.

Under SEC rules, a person is deemed to be a "beneficial owner" of a
security if that person has or shares "voting power," which includes the power
to vote or to direct the voting of such security, or "investment power" which
includes the power to dispose or to direct the disposition of such security.
The number of shares beneficially owned also includes any shares the person has
the right to acquire within the next 60 days. Unless otherwise indicated, each
person is the record owner of and has sole voting and investment power over his
or her shares.

Percent Beneficial Ownership
-----------------------------
Amount and Nature of Before the After the
Name Beneficial Ownership Reorganization Reorganization
- ------------------------------------- ----------------------------- -------------- --------------

Hubert C. Baker 1,000 (1) * *
W. Edwin Dargan 400 * *
Henry M. Funderburk, III 696 (2) * *
Raymond Galloway 1,770 1.1 1.2
R. E. Goodson, Sr. 100 * *
Charles G. Howard 2,745 (3) 1.7 1.8
Albert L. James, III 430 * *
W. B. McCown, III 2,300 (4) 1.5 1.5
G. Clyde Scott 9,777 (5) 6.1 6.4
Eugene A. Vaughan 3,295 (6) 2.1 2.2

All directors and executive officers
as a group (10 persons) 22,513 14.25 14.73
<FN>

* Represents less than 1 percent.

(1) Includes 300 shares held of record by Dr. Baker's spouse's individual
retirement account.

(2) Includes 696 shares held of record by Mr. Funderburk's individual retirement account.

(3) Includes 2,000 shares held of record by Mr. Howard's individual retirement account.

(4) Includes 2,000 shares held of record by Mr. McCown's individual retirement account.

(5) Includes 2,017 shares held by Mr. Scott's spouse and 4,995 shares held by Darlington Machinery,
Inc. of which Mr. Scott is a majority shareholder and president. Mr. Scott disclaims beneficial
ownership of 31% of the shares owned by Darlington Machinery, Inc.

(6) Includes 195 shares held of record by Mr. Vaughan's spouse's individual retirement account.

RECENT AFFILIATE TRANSACTIONS IN DARLINGTON STOCK

The following table shows all transactions in Darlington common stock
involving Darlington and its executive officers, directors and affiliates during
the past two years or since becoming an affiliate, whichever is later. All of
these transactions were private purchases from other Darlington shareholders.
Darlington has never repurchased any of its outstanding shares of common stock.

Name Date No of Shares Price per Share
- ------------------------------ --------------- ------------ ------------

Albert L. James, III 4/6/04 70 $24.14
2/14/03 80 23.39

W. B. McCown, III 4/3/03 200 23.39

Carolyn A. Scott 2/14/03 1,000 23.39

Name Date No of Shares Price per Share
- ------------------------------ --------------- ------------ ------------

G. Clyde Scott 3/15/04 10 24.16
2/18/04 80 24.14

Vaughan Insurance Agency, Inc. 2/14/03 2,000 23.39

RELATED PARTY TRANSACTIONS

Other than ordinary lending transactions between Darlington County Bank on
standard commercially available terms, made in compliance with Federal Reserve
Regulation O, there have been no transactions since June 30, 2002 between the
Company and any current affiliate involving more than $60,000 or 1% of
Darlington's revenues for the year or, if in 2004, the first 6 months of the
year.

MARKET FOR COMMON STOCK

There is not an organized trading market for Darlington's common stock, and
we do not expect that an active market for Darlington common stock will develop
after the Reorganization. The common stock has never been listed on an exchange
or quotation system. To our knowledge, our stock has traded at prices ranging
from $23.39 to $25.75 per share since June 30, 2002. We will not take any steps
to cause the shares of Darlington common stock to become eligible for trading on
an exchange or automated quotation system after the Reorganization, and
Darlington will not be required to file reports under the Securities Exchange
Act of 1934.

DESCRIPTION OF COMMON STOCK

Pursuant to the Plan, the articles of incorporation of Darlington will be
the articles of incorporation of the surviving corporation. The surviving
corporation's authorized capital will consist of 1,000,000 shares of voting
common stock, $0.01 par value, and 200,000 shares of preferred stock, no par
value.

As of the record date, 158,000 shares of Darlington common stock were
issued and outstanding and were held of record by approximately 487
shareholders. We estimate that the number of shares of Darlington common stock
outstanding after the Reorganization will be approximately 152,795. The exact
change in the number of outstanding shares will depend on the number of shares
that shareholders exchange for cash. As of the record date, no shares of
Darlington preferred stock were issued and outstanding.

The rights of Darlington shareholders will be governed by the South
Carolina Business Corporation Act and Darlington's articles of incorporation and
bylaws. Darlington's articles of incorporation require the affirmative vote of
80% of the shares entitled to vote in order to approve a merger between
Darlington and another corporation unless two-thirds of the directors have
approved the transaction and recommended it unconditionally to the shareholders.
Because this condition has been fulfilled, and because Darlington's bylaws do
not provide for a higher vote, the provisions of the South Carolina Code
requiring approval of a merger by two-thirds of the votes entitled to be cast
will govern the approval of the Plan.

Generally, we may issue additional shares of Darlington common stock
without regulatory or shareholder approval, and common stock may be issued for
cash or other property. The common stock will not be subject to liability for
further calls or assessments by Darlington or its subsidiary bank and will not
be subject to any redemption, sinking fund or conversion provisions.

Holders of Darlington common stock will be entitled to one vote per share
on all matters requiring a vote of shareholders. The holders of shares of
Darlington common stock will be entitled to dividends and other distributions as
and when declared by the Board of Directors out of legally available assets.
Darlington may pay dividends in cash, property or shares of common stock, unless
Darlington is insolvent or the dividend payment would render it insolvent.

Darlington's bylaws contain indemnification provisions that require it to
indemnify directors who are parties to a proceeding by reason of the fact that
they were or are directors of Darlington against liability incurred in the
proceeding to the fullest extent permitted by law. Directors are also entitled
to have Darlington advance funds for expenses prior to the final disposition of
the proceeding to the fullest extent permitted by law. The board of directors
may grant indemnification rights or advance expenses to other Darlington
employees and agents to the fullest extent of the corresponding bylaw provisions
relating to the indemnification of directors.

DIVIDEND POLICY

The holders of shares of Darlington common stock will be entitled to
dividends and other distributions as and when declared by the board of directors
out of assets legally available therefor. Dividends may be paid in cash,
property or shares of common stock unless Darlington is insolvent or the
dividend payment would render it insolvent. Darlington paid an annual cash
dividend of $1.00 per share on January 1, 2004, 2003 and 2002 and plans to
continue this dividend policy after the Reorganization.

Our ability to pay cash dividends is influenced, and in the future could be
further influenced, by bank regulatory policies or agreements and by capital
guidelines. Accordingly, the actual amount and timing of future dividends, if
any, will depend upon, among other things, future earnings, the financial
condition of Darlington County Bank and Darlington, the amount of cash on hand
at the holding company level, outstanding debt obligations and limitations on
the payment of dividends on any debt obligations, and the requirements imposed
by regulatory authorities.

SHAREHOLDER PROPOSALS

Proposals by shareholders for consideration at our 2005 Annual Meeting of
Shareholders must be received at our offices at 202 Cashua Street, Darlington,
South Carolina 29532 no later than November 19, 2004 if any such proposal is to
be eligible for inclusion in our proxy materials for our 2005 Annual Meeting.
Proposals by shareholders received after that date will not be included in our
proxy materials for the 2005 Annual Meeting. Until we complete the
Reorganization, shareholders submitting proposals for inclusion in our proxy
statement and form of proxy must comply with the proxy rules under the
Securities Exchange Act of 1934, as amended. Under applicable regulations, we
are not required to include shareholder proposals in our proxy materials unless
certain other conditions specified in those regulations are satisfied.

Shareholder proposals may still be considered at our 2005 Annual Meeting
even if they are not included in the proxy materials for the 2005 Annual Meeting
provided the proposals are timely submitted in accordance with the requirements
of our Bylaws described in this paragraph. Our Bylaws require timely

advance written notice of shareholder nominations of director candidates and of
any other proposals to be presented at an annual meeting of shareholders. In the
case of director nominations by shareholders, the Bylaws require that a
shareholder's notice be delivered to our principal executive offices during the
period of time from the 30th day to the 60th day prior to the annual meeting of
shareholders at which directors are to be elected, unless such requirement is
expressly waived in advance of the meeting by formal action of the board of
directors. In the case of other proposals by shareholders at an annual meeting,
the Bylaws require that advance written notice be delivered to the Company's
Secretary at the address indicated in the paragraph above. To be timely, such
notice must be delivered to or mailed and received at our principal executive
offices between the 60th and 90th days prior to the first anniversary of the
preceding year's annual meeting. For non-director nomination shareholder
proposals to be timely submitted for such consideration at the 2005 Annual
Meeting, such proposals must be received during the period of time from January
20, 2005 to February 20, 2005. However, in the event that the date of the annual
meeting is more than 30 days before or more than 60 days after such anniversary
date, such shareholder notice must be so delivered between the 60th and 90th
days prior to such annual meeting or within 10 days following the day on which
public announcement of the date of such meeting is first made by the Company.
Our Bylaws also require that shareholder nominations for director and
shareholder proposals must be in proper form as specified in the Bylaws. A copy
of the Bylaws is available upon request to the Secretary of the Company at the
address indicated above.

SELECTED HISTORICAL FINANCIAL DATA

The following selected historical financial data is derived from, and
qualified by reference to, Darlington's Consolidated Financial Statements and
the Notes thereto included in its Annual Report on Form 10-KSB for the year
ended December 31, 2003 and its Quarterly Report on Form 10-QSB for the quarter
ended June 30, 2004. You should read the selected financial data set forth
below in conjunction with the foregoing financial statements and notes and in
the context of "Management's Discussion and Analysis of Financial Condition and
Results of Operations" attached as Appendices D and E to this proxy statement.
------------------

--------------------------
(In thousands except per share data) 2003 2002 2001
-------- ------- -------

Net interest income $ 1,408 1,358 1,226
Provision for loan losses 108 70 60
Noninterest income 351 380 336
Noninterest expense 1,258 1,196 1,143
Income taxes 139 151 109
Net earnings $ 254 321 250

PER COMMON SHARE
Basic earnings per share $ 1.61 2.03 1.59
Diluted earnings per share 1.61 2.03 1.59
Cash dividends declared 1.00 1.00 1.00
Book value $ 25.15 24.97 23.38

AT YEAR END
Loans, net $ 20,328 18,809 17,425
Earning assets 33,111 27,997 29,532
Assets 35,643 30,268 31,173
Deposits 31,569 26,204 27,359
Stockholders' equity $ 3,973 3,946 3,694
Common shares outstanding 158,000 158,000 158,000

AVERAGE BALANCES
Loans $ 19,883 18,468 18,047
Earning assets 31,061 28,523 28,004
Assets 33,281 30,830 30,429
Deposits 29,277 26,940 26,678
Stockholders' equity $ 3,856 3,747 3,635
Weighted average shares outstanding 158,000 158,000 158,000

KEY PERFORMANCE RATIOS
Return on average assets .76 1.04 .82
Return on average stockholders' equity 6.59 8.57 6.89
Dividend payout ratio 62.10 49.19 63.09
Average equity to average assets 11.59 12.15 11.95

For the Six Months
Ended June 30,
-------------------

(In thousands except per share data) 2004 2003
---------- -------
Net interest income $ 732 681
Provision for loan losses 36 42
Noninterest income 189 193
Noninterest expense 615 633
Income taxes 90 65
Net earnings $ 180 134

PER COMMON SHARE
Basic earnings per share $ 1.14 0.84
Diluted earnings per share 1.14 0.84
Cash dividends declared 1.00 1.00
Book value $ 23.93 24.75

AT PERIOD END
Loans, net $ 19,486 19,357
Earning assets 33,395 29,763
Assets 36,134 32,313
Deposits 32,275 28,322
Stockholders' equity $ 3,781 3,911
Common shares outstanding 158,000 158,000

AVERAGE BALANCES
Loans $ 19,977 19,075
Earning assets 34,449 29,362
Assets 36,857 31,689
Deposits 32,877 27,651
Stockholders' equity $ 3,863 3,881
Weighted average shares outstanding 158,000 158,000

KEY PERFORMANCE RATIOS
Return on average assets (annualized) .98 .85
Return on average stockholders'
equity (annualized) 9.32 6.91
Dividend payout ratio (annualized) 43.89 58.96
Average equity to average assets 10.48 12.25

PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma consolidated balance sheet as of June 30,
2004 (the "Pro Forma Balance Sheet"), and the unaudited pro forma consolidated
statements of operations for the six months ended June 30, 2004, and for the
year ended December 31, 2003 (collectively, the "Pro Forma Statements of
Operations"), show the pro forma effect of the Reorganization. Pro forma
adjustments to the Pro Forma Balance Sheet are computed as if the Reorganization
occurred at June 30, 2004, while the pro forma adjustments to the Pro Forma
Statements of Operations are computed as if the Reorganization were consummated
on January 1, 2003, the earliest period presented. The following financial
statements do not reflect any anticipated cost savings that may be realized by
Darlington after consummation of the Reorganization.

The pro forma information does not purport to represent what Darlington's
results of operations actually would have been if the Reorganization had
occurred on January 1, 2003.

DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 2004
(DOLLARS IN THOUSANDS)
(UNAUDITED)

Pro Forma Pro Forma
--------- ---------
Historical Adjustments Combined
------------- ----------- ---------

ASSETS
Cash and due from banks $ 1,333 1,333
Federal funds sold 2,783 (3) (223) 2,560
-------------
Cash and cash equivalents 4,116 3,893
Interest-bearing deposits 0 0
Securities available for sale 10,565 (4) 0 10,565
Other investments 561 561
Mortgage loans held for sale 0 0
Loans 19,486 19,486
Premises and equipment 918 918
Other assets 488 488
------------- ---------
Total assets $ 36,134 (223) 35,911
============= =========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Deposits:
Non-interest bearing $ 5,752 5,752
Interest bearing 26,523 26,523
------------- ---------
Total deposits 32,275 32,275

Accrued expenses and other liabilities 78 78
Federal Home Loan Bank Advances 0 0
Federal funds purchased 0 0
Other borrowed funds 0 0
------------- ---------

Total liabilities 32,353 32,353

Shareholders' equity:
Common stock 2 (1) 0 2
Additional paid-in capital 1,618 (2) (223) 1,395
Retained earnings 2,377 2,377
Accumulated other comprehensive income (216) (216)
Treasury stock 0 0

Total stockholders' equity 3,781 (223) 3,558
------------- ---------

Total liabilities and equity $ 36,134 (223) 35,911
============= =========
Common stock

(1) Retirement of shares
- ------------------------------------------------
(2) Issuance of new shares
(3) Reduction of Fed Funds to finance purchase
(4) Reduction of Investments to finance purchase

Shares outstanding 158,000 152,795
Book value per share $ 23.93 23.29

See accompanying notes to pro forma consolidated financial statements.

DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

Historical Pro Forma Adjustments Pro Forma
----------- --------------------- ---------

Interest income $ 896 (1) (2) 894
Interest expense 164 164
----------- --------
Net interest income 732 730

Provision for loan losses 36 36
Noninterest income 189 189
Noninterest expense 615 615
----------- --------
Earnings before taxes 270 268

Income tax expense 90 (2) (1) 89

Net earnings $ 180 (1) 179
=========== ========

(1) Reduction of interest income on Fed Funds at 1.5%
(2) Income tax effect of reduced income at 33.3%

Basic earnings per share $ 1.14 1.17
Diluted earnings per share $ 1.14 1.17

Weighted average shares:
Basic 158,000 152,795
Diluted 158,000 152,795

See accompanying notes to pro forma consolidated financial statements.

DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

Historical Pro Forma Adjustments Pro Forma
----------- --------------------- ---------

Interest income $ 1,783 (1) (3) 1,780
Interest expense 375 375
----------- --------
Net interest income 1,408 1,405

Provision for loan losses 108 108
Noninterest income 351 351
Noninterest expense 1,258 1,258
----------- --------
Earnings before income taxes 393 390

Income tax expense 139 (2) (1) 138

Net earnings $ 254 (2) 252
=========== ========

(1) Reduction of interest income on Fed Funds at 1.15%
(2) Income tax effect of reduced income at 35.3%

Basic earnings per share $ 1.61 1.64
Diluted earnings per share $ 1.61 1.64

Weighted average shares:
Basic 158,000 152,795
Diluted 158,000 152,795

See accompanying notes to pro forma consolidated financial statements.

DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS

(1) The unaudited pro forma consolidated balance sheet as of June 30, 2004 and
consolidated statements of operations for the six months ended June 30,
2004 and for the year ended December 31, 2003 have been prepared based on
the historical consolidated balance sheets and statements of operations,
which give effect to the Reorganization as if it had occurred on the
earliest date presented.

(2) In the opinion of management, all adjustments considered necessary for a
fair presentation of the financial position and results for the period
presented have been included. Adjustments, if any, are normal and recurring
nature.

WHERE YOU CAN FIND MORE INFORMATION

We file reports, Proxy Statements and other information with the SEC.
Copies of these reports and other information may be inspected and copied at the
SEC's public reference facilities located at 450 Fifth Street, NW, Washington,
D.C. 20549. Copies of these reports and other information can also be obtained
by mail at prescribed rates from the SEC at the address provided above, by
telephone from the SEC at 1-800-SEC-0330, or via the SEC's website at
www.sec.gov.

We have a filed a Schedule 13E-3 under the Exchange Act in connection with
the Reorganization. This Proxy Statement does not contain all the information
contained in the Schedule 13E-3 because certain portions have been omitted in
accordance with SEC rules and regulations. The Schedule 13E-3 is available at
the SEC for inspection and copying as described above.

APPENDIX A
----------

AGREEMENT AND PLAN OF REORGANIZATION

A-1

AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan of Reorganization") is
made and entered into as of the 1st day of September, 2004, by and between
Darlington County Bancshares, Inc. ("Darlington"), a bank holding company
organized under the laws of the State of South Carolina, and Darlington Interim
Corporation ("Interim"), a South Carolina corporation.

WITNESSETH
----------

WHEREAS, Darlington and Interim have determined that in order to effect a
recapitalization of Darlington resulting in the termination of its duties to
file reports with the Securities and Exchange Commission, Darlington should
cause Interim to be organized as a South Carolina corporation for the sole
purpose of merging with and into Darlington, with Darlington being the surviving
corporation;

WHEREAS, the authorized capital stock of Darlington consists of 1,000,000
shares of common stock ("Darlington Common Stock"), $0.01 par value, of which
158,000 shares are issued and outstanding;

WHEREAS, the authorized capital stock of Interim consists of 1,000 shares
of common stock ("Interim Common Stock"), $0.01 par value, of which 100 shares
are issued and outstanding;

WHEREAS, the respective Boards of Directors of Darlington and Interim deem
it advisable and in the best interests of Darlington and Interim and their
respective shareholders that Interim be merged with and into Darlington;

WHEREAS, the respective Boards of Directors of Darlington and Interim, by
resolutions duly adopted, have approved and adopted this Plan of Reorganization
and directed that it be submitted to the respective shareholders of Darlington
and Interim for their approval; and

NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements herein contained, and for the purpose of stating the method, terms
and conditions of the merger provided for herein, the mode of carrying the same
into effect, the manner and basis of converting and exchanging the shares of
Darlington Common Stock and Interim Common Stock as hereinafter provided, and
such other provisions relating to the reorganization and merger as the parties
deem necessary or desirable, the parties hereto agree as follows:

SECTION 1

REORGANIZATION
--------------

Pursuant to the applicable provisions of South Carolina law, Interim shall
be merged with and into Darlington (the "Reorganization"). Darlington shall be
the survivor of the merger (the "Surviving Corporation").

A-2

SECTION 2

EFFECTIVE DATE OF THE REORGANIZATION
------------------------------------

The merger of Interim with and into Darlington shall be effective as of the
date (the "Effective Date") specified in the articles or certificate of merger
relating to the Reorganization as filed with the South Carolina Secretary of
State.

SECTION 3

LOCATION, ARTICLES AND BYLAWS, AND MANAGEMENT
---------------------------------------------

On the Effective Date:

(a) The principal office of the Surviving Corporation shall be located
at 202 Cashua Street, Darlington, South Carolina 29532, or such other location
where Darlington is located on the Effective Date of the Reorganization.

(b) The Articles of Incorporation and Bylaws of the Surviving
Corporation shall be the same Articles of Incorporation and Bylaws of Darlington
as are in effect on the Effective Date of the Reorganization.

(c) The directors and officers of the Surviving Corporation shall be
the directors and officers of Darlington on the Effective Date of the
Reorganization. All such directors and officers of the Surviving Corporation
shall serve until their respective successors are elected or appointed pursuant
to the applicable provisions of the Articles and Bylaws of the Surviving
Corporation.

SECTION 4

EXISTENCE, RIGHTS, DUTIES, ASSETS, AND LIABILITIES
--------------------------------------------------

(a) As of the Effective Date of the Reorganization, the existence of
Darlington shall continue in the Surviving Corporation.

(b) As of the Effective Date of the Reorganization, the Surviving
Corporation shall have, without further act or deed, all of the properties,
rights, powers, trusts, duties and obligations of Darlington and Interim.

(c) As of the Effective Date of the Reorganization, the Surviving
Corporation shall have the authority to engage only in such businesses and to
exercise only such powers as are provided for in the Articles of Incorporation
of the Surviving Corporation, and the Surviving Corporation shall be subject to
the same prohibitions and limitations to which it would be subject upon original
incorporation, except that the Surviving Corporation may engage in any business
and may exercise any right that Darlington or Interim could lawfully have
exercised or engaged in immediately prior to the Effective Date of the
Reorganization.

A-3

(d) No liability of Darlington or Interim or of any of their
shareholders, directors or officers shall be affected by the Reorganization, nor
shall any lien on any property of Darlington or Interim be impaired by the
Reorganization. Any claim existing or any action pending by or against
Darlington or Interim may be prosecuted to judgment as if the Reorganization had
not taken place, or the Surviving Corporation may be substituted in place of
Darlington or Interim.

SECTION 5

EFFECT OF MERGER ON INTERIM SHAREHOLDERS
----------------------------------------

Each share of Interim Common Stock outstanding immediately prior to the
Effective Date of the Reorganization shall be cancelled and shall no longer be
outstanding.

SECTION 6

MANNER AND BASIS OF CONVERTING SHARES
-------------------------------------
OFDARLINGTONCOMMON STOCK
------------------------

(a) Conversion of Shares. The shares of Darlington Common Stock that
----------------------
are outstanding on the Effective Date of the Reorganization, excluding those
shares of Darlington Common Stock held by shareholders who have perfected
dissenters' rights of appraisal under the applicable provisions of South
Carolina law (the "Dissenters' Rights Provisions"), shall be converted or
retained as follows:

(1) Each share of Darlington Common Stock held by a shareholder
who is the record holder of fewer than 100 shares of Darlington Common
Stock shall be converted into the right to receive cash, payable by the
Surviving Corporation, in the amount of $31.00 per share of Darlington Common
Stock.

(2) Each share of Darlington Common Stock held of record by a
shareholder who is the holder of at least 100 shares of Darlington Common Stock
shall remain outstanding and held by such shareholder.

(3) All treasury stock eld by the Company shall remain treasury
stock and shall be unaffected by this Plan of Reorganization.

(b) Failure to Surrender Darlington Common Stock Certificates. Until a
---------------------------------------------------------
Darlington shareholder receiving cash in the Reorganization surrenders his or
her Darlington Common Stock certificate or certificates to Darlington (or
suitable arrangements are made to account for any lost, stolen or destroyed
certificates according to Darlington's usual procedures), the shareholder shall
not be issued the cash (or any interest thereon) that such Darlington Common
Stock certificate entitles the shareholder to receive.

A-4

SECTION 7

ACQUISITION OF DISSENTERS' STOCK
--------------------------------

Darlington shall pay to any shareholder of Darlington who complies fully
with the Dissenters' Rights Provisions an amount of cash (as determined and paid
under the terms of such Provisions) for his or her shares of Darlington Common
Stock. The shares of Darlington Common Stock so acquired shall be cancelled.

SECTION 8

FURTHER ACTIONS
---------------

From time to time, as and when requested by the Surviving Corporation, or
by its successors or assigns, Darlington shall execute and deliver or cause to
be executed and delivered all such deeds and other instruments, and shall take
or cause to be taken all such other actions, as the Surviving Corporation, or
its successors and assigns, may deem necessary or desirable in order to vest in
and confirm to the Surviving Corporation, and its successors and assigns, title
to and possession of all the property, rights, powers, trusts, duties and
obligations referred to in Section 4 hereof and otherwise to carry out the
intent and purposes of this Plan of Reorganization.

SECTION 9

CONDITIONS PRECEDENT TO CONSUMMATION OF THE REORGANIZATION
----------------------------------------------------------

This Plan of Reorganization is subject to, and consummation of the
Reorganization herein provided for is conditioned upon, the fulfillment prior to
the Effective Date of the Reorganization of each of the following conditions:

(a) Approval of the Plan of Reorganization by the shareholders of each
of Darlington and Interim in accordance with the provisions of applicable law
and the provisions of the applicable constituent's articles of incorporation,
bylaws and other governing instruments;

(b) The number of shares held by persons who have perfected dissenters'
rights of appraisal pursuant to the Dissenters' Rights Provisions shall not be
deemed by the Board of Directors to make consummation of this Plan of
Reorganization inadvisable;

(c) Procurement of any action, consent, approval or ruling,
governmental or otherwise, which is, or in the opinion of counsel for Darlington
and Interim may be, necessary to permit or enable the Surviving Corporation,
upon and after the Reorganization, to conduct all or any part of the business
and activities conducted by the Darlington prior to the Reorganization.

A-5

SECTION 10

TERMINATION
-----------

In the event that:

(a) The number of shares of Interim Common Stock or Darlington Common
Stock voted against the Reorganization shall make consummation of the
Reorganization inadvisable in the opinion of the Board of Directors of
Darlington or Interim;

(b) Any action, consent, approval, opinion, or ruling required to be
provided by Section 9 of this Plan of Reorganization shall not have been
obtained; or

(c) For any other reason consummation of the Reorganization is deemed
inadvisable in the opinion of the Board of Directors of Darlington or Interim;

then this Plan of Reorganization may be terminated at any time before
consummation of the Reorganization by written notice, approved or authorized by
the Board of Directors of the party wishing to terminate, to the other party.
Upon termination by written notice as provided by this Section 10, this Plan of
Reorganization shall be void and of no further effect, and there shall be no
liability by reason of this Plan of Reorganization or the termination hereof on
the part of Darlington, Interim, or their directors, officers, employees, agents
or shareholders.

SECTION 11

AMENDMENT; WAIVER
-----------------

(a) At any time before or after approval and adoption hereof by the
respective shareholders of Darlington and Interim, this Plan of Reorganization
may be amended by written agreement by Darlington and Interim; provided,
however, that after the approval and adoption of this Plan of Reorganization by
the shareholders of Darlington and Interim, no amendment reducing the
consideration payable to Darlington shareholders shall be valid without having
been approved by the Darlington shareholders in the manner required for approval
of this Plan of Reorganization. In particular, in the event that the
consummation of the Plan of Reorganization would yield more than 300
shareholders of record, the Board may amend the Plan of Reorganization to
increase the 100-share threshold described in Section 6(a) to the minimum
threshold necessary to ensure that the Company will have fewer than 300
shareholders of record as a result of the transactions contemplated by this Plan
of Reorganization.

(b) A waiver by any party hereto of any breach of a term or condition
of this Plan of Reorganization shall not operate as a waiver of any other breach
of such term or condition or of other terms or conditions, nor shall failure to
enforce any term or condition operate as a waiver or release of any other right,
in law or in equity, or claim which any party may have against another party for
anything arising out of, connected with or based upon this Plan of
Reorganization. A waiver shall be effective only if evidenced by a writing
signed by the party who is entitled to the benefit of the term or condition of
this Plan of Reorganization which is to be waived. A waiver of a term or
condition on one occasion shall not be deemed to be a waiver of the same or of
any other term or condition on a future occasion.

A-6

SECTION 12

BINDING EFFECT; COUNTERPARTS; HEADINGS; GOVERNING LAW
-----------------------------------------------------

This Plan of Reorganization is binding upon the parties hereto and upon
their successors and assigns. This Plan of Reorganization may be executed
simultaneously in any number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument. The
title of this Plan of Reorganization and the headings herein set out are for
convenience or reference only and shall not be deemed a part of this Plan of
Reorganization. This Plan of Reorganization shall be governed by and construed
in accordance with the laws of the State of South Carolina.

A-7

IN WITNESS WHEREOF, the parties hereto have caused this Plan of
Reorganization to be executed by their duly authorized officers and their
corporate seals to be affixed hereto all as of the day and year first above
written.

DARLINGTON COUNTY BANCSHARES, INC.

By: /s/ Henry M. Funderburk, III
-------------------------------------

Name: Henry M. Funderburk, III
-------------------------------------

Title: President and Chief Executive Officer
-------------------------------------

ATTEST:

/s/ Ellen Berry
- ------------------

Name: Ellen Berry
------------

DARLINGTON INTERIM CORPORATION

By: /s/ Henry M. Funderburk, III
-------------------------------------

Name: Henry M. Funderburk, III
-------------------------------------

Title: President
-------------------------------------

ATTEST:

/s/ Ellen Berry
- -----------------

Name: Ellen Berry
-----------

A-8

APPENDIX B
----------

SECTION 33-13 OF THE
SOUTH CAROLINA BUSINESS CORPORATION ACT

B-1

CHAPTER 13.

DISSENTERS' RIGHTS

ARTICLE 1.

RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES

SECTION 33-13-101. Definitions.

In this chapter:
(1) "Corporation" means the issuer of the shares held by a dissenter before the
corporate action, or the surviving or acquiring corporation by merger or share
exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from corporate
action under Section 33-13-102 and who exercises that right when and in the
manner required by Sections 33-13-200 through 33-13-280.
(3) "Fair value", with respect to a dissenter's shares, means the value of the
shares immediately before the effectuation of the corporate action to which the
dissenter objects, excluding any appreciation or depreciation in anticipation of
the corporate action to which the dissenter objects, excluding any appreciation
or depreciation in anticipation of the corporate action unless exclusion would
be inequitable. The value of the shares is to be determined by techniques that
are accepted generally in the financial community.
(4) "Interest" means interest from the effective date of the corporate action
until the date of payment, at the average rate currently paid by the corporation
on its principal bank loans or, if none, at a rate that is fair and equitable
under all the circumstances.
(5) "Record shareholder" means the person in whose name shares are registered in
the records of a corporation or the beneficial owner of shares to the extent of
the rights granted by a nominee certificate on file with a corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner of
shares held by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial shareholder.

SECTION 33-13-102. Right to dissent.

(A) A shareholder is entitled to dissent from, and obtain payment of the fair
value of, his shares in the event of any of the following corporate actions:
(1) consummation of a plan of merger to which the corporation is a party (i) if
shareholder approval is required for the merger by Section 33-11-103 or the
articles of incorporation and the shareholder is entitled to vote on the merger
or (ii) if the corporation is a subsidiary that is merged with its parent under
Section 33-11-104 or 33-11-108 or if the corporation is a parent that is merged
with its subsidiary under Section 33-11-108;
(2) consummation of a plan of share exchange to which the corporation is a party
as the corporation whose shares are to be acquired, if the shareholder is
entitled to vote on the plan;
(3) consummation of a sale or exchange of all, or substantially all, of the
property of the corporation other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all of
the net proceeds of the sale must be distributed to the shareholders within one
year after the date of sale;

B-2

(4) an amendment of the articles of incorporation that materially and adversely
affects rights in respect of a dissenter's shares because it:
(i) alters or abolishes a preferential right of the shares;
(ii) creates, alters, or abolishes a right in respect of redemption, including a
provision respecting a sinking fund for the redemption or repurchase, of the
shares;
(iii) alters or abolishes a preemptive right of the holder of the shares to
acquire shares or other securities;
(iv) excludes or limits the right of the shares to vote on any matter, or to
cumulate votes, other than a limitation by dilution through issuance of shares
or other securities with similar voting rights; or
(v) reduces the number of shares owned by the shareholder to a fraction of a
share if the fractional share so created is to be acquired for cash under
Section 33-6-104; or
(5) in the case of corporations which are not public corporations, the approval
of a control share acquisition under Article 1 of Chapter 2 of Title 35;
(6) any corporate action to the extent the articles of incorporation, bylaws, or
a resolution of the board of directors provides that voting or nonvoting
shareholders are entitled to dissent and obtain payment for their shares.
(B) Notwithstanding subsection (A), no dissenters' rights under this section are
available for shares of any class or series of shares which, at the record date
fixed to determine shareholders entitled to receive notice of a vote at the
meeting of shareholders to act upon the agreement of merger or exchange, were
either listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc.

SECTION 33-13-103. Dissent by nominees and beneficial owners.

(a) A record shareholder may assert dissenters' rights as to fewer than all the
shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the corporation in writing of
the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares to which he dissents and his other shares were registered in
the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares held on
his behalf only if he dissents with respect to all shares of which he is the
beneficial shareholder or over which he has power to direct the vote. A
beneficial shareholder asserting dissenters' rights to shares held on his behalf
shall notify the corporation in writing of the name and address of the record
shareholder of the shares, if known to him.

ARTICLE 2.

PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS

SECTION 33-13-200. Notice of dissenters' rights.

(a) If proposed corporate action creating dissenters' rights under Section
33-13-102 is submitted to a vote at a shareholders' meeting, the meeting notice
must state that shareholders are or may be entitled to assert dissenters' rights
under this chapter and be accompanied by a copy of this chapter.
(b) If corporate action creating dissenters' rights under Section 33-13-102 is
taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was taken
and send them the dissenters' notice described in Section 33-13-220.

B-3

SECTION 33-13-210. Notice of intent to demand payment.

(a) If proposed corporate action creating dissenters' rights under Section
33-13-102 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights (1) must give to the corporation before the
vote is taken written notice of his intent to demand payment for his shares if
the proposed action is effectuated and (2) must not vote his shares in favor of
the proposed action. A vote in favor of the proposed action cast by the holder
of a proxy solicited by the corporation shall not disqualify a shareholder from
demanding payment for his shares under this chapter.
(b) A shareholder who does not satisfy the requirements of subsection (a) is not
entitled to payment for his shares under this chapter.

SECTION 33-13-220. Dissenters' notice.

(a) If proposed corporate action creating dissenters' rights under Section
33-13-102 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders who satisfied the
requirements of Section 33-13-210(a).
(b) The dissenters' notice must be delivered no later than ten days after the
corporate action was taken and must:
(1) state where the payment demand must be sent and where certificates for
certificated shares must be deposited;
(2) inform holders of uncertificated shares to what extent transfer of the
shares is to be restricted after the payment demand is received;
(3) supply a form for demanding payment that includes the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action and requires that the person asserting dissenters' rights
certify whether or not he or, if he is a nominee asserting dissenters' rights on
behalf of a beneficial shareholder, the beneficial shareholder acquired
beneficial ownership of the shares before that date;
(4) set a date by which the corporation must receive the payment demand, which
may not be fewer than thirty nor more than sixty days after the date the
subsection (a) notice is delivered and set a date by which certificates for
certificated shares must be deposited, which may not be earlier than twenty days
after the demand date; and
(5) be accompanied by a copy of this chapter.

SECTION 33-13-230. Shareholders' payment demand.

(a) A shareholder sent a dissenters' notice described in Section 33-13-220 must
demand payment, certify whether he (or the beneficial shareholder on whose
behalf he is asserting dissenters' rights) acquired beneficial ownership of the
shares before the date set forth in the dissenters' notice pursuant to Section
33-13-220(b)(3), and deposit his certificates in accordance with the terms of
the notice.
(b) The shareholder who demands payment and deposits his share certificates
under subsection (a) retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
(c) A shareholder who does not comply substantially with the requirements that
he demand payment and deposit his share certificates where required, each by the
date set in the dissenters' notice, is not entitled to payment for his shares
under this chapter.

B-4

SECTION 33-13-240. Share restrictions.

(a) The corporation may restrict the transfer of uncertificated shares from the
date the demand for payment for them is received until the proposed corporate
action is taken or the restrictions are released under Section 33-13-260.
(b) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are canceled
or modified by the taking of the proposed corporate action.

SECTION 33-13-250. Payment.

(a) Except as provided in Section 33-13-270, as soon as the proposed corporate
action is taken, or upon receipt of a payment demand, the corporation shall pay
each dissenter who substantially complied with Section 33-13-230 the amount the
corporation estimates to be the fair value of his shares, plus accrued interest.
(b) The payment must be accompanied by:
(1) the corporation's balance sheet as of the end of a fiscal year ending not
more than sixteen months before the date of payment, an income statement for
that year, a statement of changes in shareholders' equity for that year, and the
latest available interim financial statements, if any;
(2) a statement of the corporation's estimate of the fair value of the shares
and an explanation of how the fair value was calculated;
(3) an explanation of how the interest was calculated;
(4) a statement of the dissenter's right to demand additional payment under
Section 33-13-280; and
(5) a copy of this chapter.

SECTION 33-13-260. Failure to take action.

(a) If the corporation does not take the proposed action within sixty days after
the date set for demanding payment and depositing share certificates, the
corporation, within the same sixty-day period, shall return the deposited
certificates and release the transfer restrictions imposed on uncertificated
shares.
(b) If, after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under Section 33-13-220 and repeat the payment demand
procedure.

SECTION 33-13-270. After-acquired shares.

(a) A corporation may elect to withhold payment required by section 33-13-250
from a dissenter as to any shares of which he (or the beneficial owner on whose
behalf he is asserting dissenters' rights) was not the beneficial owner on the
date set forth in the dissenters' notice as the date of the first announcement
to news media or to shareholders of the terms of the proposed corporate action,
unless the beneficial ownership of the shares devolved upon him by operation of
law from a person who was the beneficial owner on the date of the first
announcement.
(b) To the extent the corporation elects to withhold payment under subsection
(a), after taking the proposed corporate action, it shall estimate the fair
value of the shares, plus accrued interest, and shall pay this amount to each
dissenter who agrees to accept it in full satisfaction of his demand. The
corporation shall send with its offer a statement of its estimate of the fair
value of the shares, an explanation of how the fair value and interest were
calculated, and a statement of the dissenter's right to demand additional
payment under Section 33-13-280.

B-5

SECTION 33-13-280. Procedure if shareholder dissatisfied with payment or offer.

(a) A dissenter may notify the corporation in writing of his own estimate of the
fair value of his shares and amount of interest due and demand payment of his
estimate (less any payment under Section 33-13-250) or reject the corporation's
offer under Section 33-13-270 and demand payment of the fair value of his shares
and interest due, if the:
(1) dissenter believes that the amount paid under Section 33-13-250 or offered
under Section 33-13-270 is less than the fair value of his shares or that the
interest due is calculated incorrectly;
(2) corporation fails to make payment under Section 33-13-250 or to offer
payment under Section 33-13-270 within sixty days after the date set for
demanding payment; or
(3) corporation, having failed to take the proposed action, does not return the
deposited certificates or release the transfer restrictions imposed on
uncertificated shares within sixty days after the date set for demanding
payment.
(b) A dissenter waives his right to demand additional payment under this section
unless he notifies the corporation of his demand in writing under subsection (a)
within thirty days after the corporation made or offered payment for his shares.

ARTICLE 3.

JUDICIAL APPRAISAL OF SHARES

SECTION 33-13-300. Court action.

(a) If a demand for additional payment under Section 33-13-280 remains
unsettled, the corporation shall commence a proceeding within sixty days after
receiving the demand for additional payment and petition the court to determine
the fair value of the shares and accrued interest. If the corporation does not
commence the proceeding within the sixty-day period, it shall pay each dissenter
whose demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in the circuit court of the
county where the corporation's principal office (or, if none in this State, its
registered office) is located. If the corporation is a foreign corporation
without a registered office in this State, it shall commence the proceeding in
the county in this State where the principal office (or, if none in this State,
the registered office) of the domestic corporation merged with or whose shares
were acquired by the foreign corporation was located.
(c) The corporation shall make all dissenters (whether or not residents of this
State) whose demands remain unsettled parties to the proceeding as in an action
against their shares and all parties must be served with a copy of the petition.
Nonresidents may be served by registered or certified mail or by publication, as
provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced under
subsection (b) is plenary and exclusive. The court may appoint persons as
appraisers to receive evidence and recommend decisions on the question of fair
value. The appraisers have the powers described in the order appointing them or
in any amendment to it. The dissenters are entitled to the same discovery
rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to judgment for
the amount, if any, by which the court finds the fair value of his shares, plus
interest, exceeds the amount paid by the corporation.

B-6

SECTION 33-13-310. Court costs and counsel fees.

(a) The court in an appraisal proceeding commenced under Section 33-13-300 shall
determine all costs of the proceeding, including the reasonable compensation and
expenses of appraisers appointed by the court. The court shall assess the costs
against the corporation, except that the court may assess costs against all or
some of the dissenters, in amounts the court finds equitable, to the extent the
court finds the dissenters acted arbitrarily, vexatiously, or not in good faith
in demanding payment under Section 33-13-280.
(b) The court also may assess the fees and expenses of counsel and experts for
the respective parties, in amounts the court finds equitable:
(1) against the corporation and in favor of any or all dissenters if the court
finds the corporation did not comply substantially with the requirements of
Sections 33-13-200 through 33-13-280; or
(2) against either the corporation or a dissenter, in favor of any other party,
if the court finds that the party against whom the fees and expenses are
assessed acted arbitrarily, vexatiously, or not in good faith with respect to
the rights provided by this chapter.
(c) If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
(d) In a proceeding commenced by dissenters to enforce the liability under
Section 33-13-300(a) of a corporation that has failed to commence an appraisal
proceeding within the sixty-day period, the court shall assess the costs of the
proceeding and the fees and expenses of dissenters' counsel against the
corporation and in favor of the dissenters.

B-7

APPENDIX C
----------

OPINION OF TRIANGLE CAPITAL PARTNERS, LLC

C-1

[Date]

Board of Directors
Darlington County Bancshares, Inc.
202 Cashua Street
Darlington, South Carolina 29532

Gentlemen:

You have asked us to render our opinion relating to the fairness, from a
financial point of view, to the shareholders of Darlington County Bancshares,
Inc. ("Darlington") of the cash consideration to be paid to certain shareholders
of Darlington's common stock in connection with a proposed Reorganization (the
"Reorganization") pursuant to and in accordance with the terms more fully set
forth in the draft of the Agreement and Plan of Reorganization attached hereto
(the "Agreement"). The effect of the Reorganization will be to make Darlington
a private company.

Triangle Capital Partners, LLC as part of its investment banking business is
regularly engaged in performing financial analyses of financial institutions and
their securities in connection with mergers and acquisitions, corporate
transactions, and for other purposes. We have acted as financial advisor to
Darlington in connection with the Reorganization as set forth in the Agreement.
We expect to receive compensation for our services in connection with the
Reorganization, and Darlington has agreed to reimburse our reasonable expenses
and indemnify us against certain liabilities arising out of our engagement
including liabilities under federal securities laws. We may provide investment
banking services to Darlington in the future for which we may receive fees for
such services.

You have advised us that, in accordance with the Agreement, Darlington Interim
Corporation, formed for the sole purpose of effecting the merger, will be merged
with and into Darlington, which shall be the surviving corporation. When the
merger becomes effective, each outstanding shareholder owning less than 100
shares of Darlington's common stock (excluding shares held by Darlington's
shareholders who have perfected their dissenters rights of appraisal) will be
converted into the right to receive cash in the amount of $31.00 per share (the
"Conversion Price"). All other shares not so converted will continue to be
outstanding after the merger

In the course of our engagement, we have, among other things, reviewed and
analyzed:

i. The Agreement;

ii. Darlington's annual reports to stockholders and its financial
statements for each of the three years ended December 31, 2001,
December 31, 2002, and December 31, 2003;

iii. Darlington's quarterly report and its financial statements for the
three months ended June 30, 2004;

C-2

iv. Information regarding the trading of Darlington common stock and the
price range within which the stock has traded;

v. Certain publicly available business and financial information related
to Darlington;

vi. Certain transactions which we deemed to be relevant;

vii. Certain other internal information relating to Darlington prepared by
Darlington's management for our analysis with respect to the
Reorganization; viii. Discussions with members of Darlington
management about the background to the Reorganization, reasons and
basis for the Reorganization and the business and future prospects of
Darlington; and

ix. Other studies, analyses and investigations, particularly of the
banking industry, and such other information as we deemed appropriate.

For purposes of this opinion, we have assumed and relied on, without
independent verification, the accuracy and completeness of the financial,
accounting, legal, tax, and other information discussed with or furnished to us
by Darlington and the material otherwise made available to us, including
information from published sources, and we have not independently verified such
data. With respect to the financial information, including financial forecasts
of management and information relating to certain strategic, financial and
operational benefits anticipated from the Reorganization, which we received from
Darlington, we have assumed (with your consent) that they have been reasonably
prepared reflecting the best currently available estimates and good faith
judgment of the management of Darlington. We express no view as to such
forecasts or projected information. We have also assumed that all government,
regulatory, and other consents necessary for the consummation of the
Reorganization will be obtained without any adverse affect on Darlington or the
expected benefits of the Reorganization in any way material to our analysis. We
express no opinion on matters of a legal, regulatory, tax or accounting nature
or the ability of the Reorganization to be consummated.

We have not made, obtained, or been provided with (i) any independent
appraisals or valuations of the assets or liabilities, and potential and/or
contingent liabilities of, Darlington or (ii) any independent analysis or
valuation of the rights of stockholders, creditors, or any other holders of
claims or rights against Darlington or any of its affiliates. We have further
relied on the assurances of the management of Darlington that they are not aware
of any facts that would make any information reviewed by us inaccurate or
misleading. No opinion is expressed as to whether any alternative transaction
might be more favorable to Darlington. We express no opinion as to Darlington's
future business, assets, liabilities, operations or prospects.

Our opinion is based on the market, economic and other relevant
considerations as they exist and have been evaluated by us on the date hereof.
We have assumed that there has been no material change in Darlington's assets,
financial condition, results of operations, business or prospects since the date
of the most recent financial statements made available to us. In rendering our
opinion, we have assumed that the Reorganization, including the transactions
contemplated in the draft Agreement, will be consummated according to the terms
described in the draft Agreement. In addition, we assumed that the Agreement
will not differ in any material respect from the draft thereof reviewed by us.

C-3

This opinion does not address the underlying business decision of
Darlington to engage in the Reorganization. It should be understood that
subsequent developments may affect this opinion, and we do not have any
obligation to revise or reaffirm this opinion. In addition, we express no
opinion or recommendation as to how the stockholders or creditors of or any
claimants against Darlington or any of its affiliates should view or regard the
Reorganization. We render no opinion with respect to the relative rights and
benefits or detriments of stockholders, creditors, or any other holders of
claims or rights against Darlington or any of its affiliates in connection with
the Reorganization. Our opinion is rendered in regard to the Conversion Price
and does not take into account or give effect to any adjustment or increase to
the Conversion Price that may occur subsequent to the date hereof. This opinion
does not address the prices at which the capital stock of Darlington or any of
its respective affiliates has traded in the past or at which such stock of
Darlington or any of its affiliates may trade after the date hereof or after the
consummation of the Reorganization.

This opinion may not be disclosed, communicated, reproduced, disseminated,
quoted or referred to at any time (in whole or part), to any third party or in
any manner or for any purpose whatsoever without our prior written consent,
which consent shall not be unreasonably withheld, based upon review by us of the
content of any such public reference, which shall be satisfactory to us in our
reasonable judgment, and which review shall be completed by us as soon as
practicable, although this opinion may be included in its entirety in the Proxy
of Darlington used to solicit stockholder approval of the Reorganization so long
as any description of or reference to us or this opinion and the related
analysis in such filing is in a form reasonably acceptable to us and our
counsel.

Based upon and subject to the foregoing, including the various assumptions
and limitations set forth herein, and based on such other matters as we
considered relevant, it is our opinion that as of the date hereof the Conversion
Price to be paid in the Reorganization is fair, from a financial point of view,
to the shareholders of Darlington common stock, including both those
shareholders who will receive cash in the Reorganization and those shareholders
who will remain shareholders after the Reorganization.

Very truly yours,

TRIANGLE CAPITAL PARTNERS, LLC

C-4

APPENDIX D
----------

FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND
ANALYSIS FOR THE SIX MONTHS ENDED JUNE 30, 2004

D-1

DARLINGTON COUNTY BANCSHARES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

PART I - FINANCIAL INFORMATION
- ------------------------------

ITEM 1 - FINANCIAL STATEMENTS
- -----------------------------

JUNE 30, DECEMBER 31,
2004 2003
------------ --------------

(Dollars in thousands) (UNAUDITED)
ASSETS
Cash and cash equivalents:
Cash and due from banks $ 1,333 $ 1,378
Federal funds sold 2,783 1,368
------------ --------------
Total cash and cash equivalents 4,116 2,746
------------ --------------
Securities available-for-sale 10,565 11,065
Securities held-to-maturity 511 85
Nonmarketable equity securities 50 50
------------ --------------
Total investment securities 11,126 11,200
------------ --------------
Loans 19,707 20,543
Less allowance for loan losses (221) (215)
------------ --------------
Loans, net 19,486 20,328
Premises and equipment, net 918 940
Accrued interest receivable 274 295
Other assets 214 134
------------ --------------
Total assets $ 36,134 $ 35,643
============ ==============
LIABILITIES
Deposits
Demand $ 5,752 $ 6,384
Savings and NOW 20,995 19,256
Other time deposits 5,528 5,928
------------ --------------
Total deposits 32,275 31,568
Accrued interest payable 23 23
Other liabilities 55 79
------------ --------------
Total liabilities 32,353 31,670
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 1,000,000 shares authorized,
158,000 shares issued and outstanding at June 30, 2004
and December 31, 2003 2 2
Capital in excess of par value of stock 1,618 1,618
Retained earnings 2,377 2,355
Accumulated other comprehensive loss (216) (2)
------------ --------------
Total stockholders' equity 3,781 3,973
------------ --------------
Total liabilities and stockholders' equity $ 36,134 $ 35,643
============ ==============

See notes to condensed consolidated financial statements.
D-2

DARLINGTON COUNTY BANCSHARES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

SIX MONTHS ENDED THREE MONTHS ENDED
(Dollars in thousands) JUNE 30, JUNE 30,
------------------ ------------------
2004 2003 2004 2003
-------- -------- -------- --------

INTEREST INCOME:
Loans, including fees $ 697 $ 713 $ 350 $ 359
Investment securities:
Taxable 173 121 86 61
Nontaxable 10 13 6 6
Nonmarketable equity securities 1 - 1 -
Federal funds sold 15 20 7 9
-------- -------- -------- --------
Total interest income 896 867 450 435
-------- -------- -------- --------
INTEREST EXPENSE:
Deposits 164 186 79 93
-------- -------- -------- --------
Total interest expense 164 186 79 93
-------- -------- -------- --------
NET INTEREST INCOME 732 681 371 342
Provision for loan losses 36 42 18 24
-------- -------- -------- --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 696 639 353 318
-------- -------- -------- --------
NONINTEREST INCOME:
Service charges on deposit accounts 170 162 81 81
Gains on sales of securities available-for-sale - 20 - 20
Other service charges, commissions and fees 19 11 10 6
-------- -------- -------- --------
Total 189 193 91 107
-------- -------- -------- --------
NONINTEREST EXPENSES:
Salaries and employee benefits 332 356 169 179
Net occupancy expense 40 41 20 22
Furniture and equipment expense 56 54 31 27
Other operating expenses 187 182 93 83
-------- -------- -------- --------
Total 615 633 313 311
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 270 199 131 114
Income tax provision 90 65 44 37
-------- -------- -------- --------
NET INCOME $ 180 $ 134 $ 87 $ 77
======== ======== ======== ========
PER SHARE
AVERAGE SHARES OUTSTANDING 158,000 158,000 158,000 158,000
======== ======== ======== ========
NET INCOME $ 1.14 $ 0.84 $ 0.55 $ 0.48
======== ======== ======== ========
DIVIDENDS PAID $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========

See notes to condensed consolidated financial statements.
D-3

DARLINGTON COUNTY BANCSHARES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(UNAUDITED)

ACCUMULATED
OTHER
COMMON STOCK ADDITIONAL COMPREHENSIVE
---------------- PAID-IN RETAINED INCOME
(Dollars in thousands ,except shares) SHARES AMOUNT CAPITAL EARNINGS (LOSS) TOTAL
------- ------- -------- ---------- ------- -------

BALANCE, DECEMBER 31, 2002 158,000 $ 2 $ 1,618 $ 2,260 $ 67 $3,947

Net income for the period 134 134

Other comprehensive loss, net of tax (12) (12)
-------

Comprehensive income 122

Cash dividend ($1.00 per share) (158) (158)
------- ------- -------- ---------- ------- -------

BALANCE, JUNE 30, 2003 158,000 $ 2 $ 1,618 $ 2,236 $ 55 $3,911
======= ======= ======== ========== ======= =======

BALANCE, DECEMBER 31, 2003 158,000 $ 2 $ 1,618 $ 2,355 $ (2) $3,973

Net income for the period 180 180
-------

Other comprehensive loss, net of tax (214) (214)
-------

Comprehensive loss (34)

Cash dividend ($1.00 per share) (158) (158)
------- ------- -------- ---------- ------- -------

BALANCE, JUNE 30, 2004 158,000 $ 2 $ 1,618 $ 2,377 $ (216) $3,781
======= ======= ======== ========== ======= =======

See notes to condensed consolidated financial statements.
D-4

DARLINGTON COUNTY BANCSHARES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

SIX MONTHS ENDED
JUNE 30,
------------------
(Dollars in thousands) 2004 2003
-------- --------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 180 $ 134
Adjustments to reconcile net income to net cash
provided by operating activities:
Accretion less amortization on investments 26 -
Depreciation 43 40
Provision for loan losses 36 42
Gain on sales of securities available-for-sale - (20)
(Increase) decrease in other assets 3 (39)
Decrease in other liabilities (24) (35)
-------- --------
Net cash provided by operating activities 264 122
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of securities held-to-maturity 85 80
Proceeds from sales of investment securities available-for-sale - 835
Proceeds from calls and maturities of securities available-for-sale 4,283 2,172
Purchase of investment securities available-for-sale (4,084) (5,095)
Purchase of investment securities held-to-maturity (512) -
Net (increase) decrease in loans 806 (590)
Purchase of equipment (21) (2)
-------- --------
Net cash provided by (used for) investing activities 557 (2,600)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposit accounts 707 2,118
Cash dividends paid (158) (158)
-------- --------
Net cash provided for financing activities 549 1,960
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,370 (518)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,746 3,530
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,116 $ 3,012
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Decrease in net unrealized gains on securities available-for-sale $ (214) $ (12)
======== ========
CASH PAID FOR
Interest $ 163 $ 190
======== ========
Income taxes $ 45 $ 76
======== ========

See notes to condensed consolidated financial statements.
D-5

DARLINGTON COUNTY BANCSHARES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION
- ------------------------------

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and item 310(b) of Regulation S-B of
the Securities and Exchange Commission. Accordingly, they do not include all
information and footnotes required by generally accepted accounting principles
for complete financial statements. However, in the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included.

NOTE 2 - NET INCOME PER SHARE
- -----------------------------

Net income per share is computed on the basis of the weighted average number of
common shares outstanding in accordance with Statement of Financial Accounting
Standards No. 128, "Earnings per Share". Darlington County Bancshares, Inc.
does not have any instruments which are dilutive; therefore, only basic net
income per share of common stock is presented.

D-6

DARLINGTON COUNTY BANCSHARES, INC.

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

The following is a discussion of our financial condition as of June 30, 2004
compared to December 31, 2003, and the results of operations for the six and
three months ended June 30, 2004 compared to the six and three months ended June
30, 2003. These comments should be read in conjunction with our condensed
financial statements and accompanying notes appearing in this report and in
conjunction with the financial statements and related notes and disclosures in
our Annual Report on Form 10-KSB for the year ended December 31, 2003.

RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 2004
- ------------------------------------------------------

Our net income for the six months ended June 30, 2004 was $180,000 or $1.14 per
share as compared to $134,000 or $0.84 per share for the six months ended June
30, 2003.

NET INTEREST INCOME
- -------------------

Net interest income is the difference between the interest earned on earning
assets and the interest paid for funds acquired to support those assets. Net
interest income, the principal source of our earnings, was $732,000 and $681,000
for the six months ended June 30, 2004 and 2003, respectively.

Changes that affect net interest income are changes in the average rate earned
on interest-earning assets, changes in the average rate paid on interest-bearing
liabilities, and changes in the volume of interest-earning assets and
interest-bearing liabilities.

Average interest-earning assets for the six months ended June 30, 2004 increased
by $5,137,686 or 17.5% over the same period in 2003, while average
interest-bearing liabilities increased by $3,891,586 or 17.0% comparing the six
months ended June 30, 2004 and 2003.

AVERAGE BALANCES, INCOME AND EXPENSES, AND RATES
SIX MONTHS ENDED JUNE 30, 2004
------------------------------------------------
AVERAGE INCOME/ ANNUALIZED
BALANCE EXPENSE YIELD/RATE
---------------- ------------- ---------------

Federal funds sold $ 3,278,132 $ 15,000 0.92%

Investment securities 11,244,386 184,000 3.28%

Loans 19,976,971 697,000 7.00%
---------------- ------------- ---------------

Total earning assets $ 34,499,489 896,000 5.21%
================

Total interest bearing liabilities $ 26,787,757 164,000 1.23%
================ ------------- ---------------

Net interest spread 3.98%

Net interest income/margin $ 732,000 4.26%
============= ===============

Federal funds sold $ 3,461,084 $ 20,000 1.16%

Investment securities 6,825,556 134,000 3.90%

Loans 19,075,162 713,000 7.48%
---------------- ------------- ---------------

Total earning assets $ 29,361,802 867,000 5.91%
================

Total interest bearing liabilities $ 22,896,171 186,000 1.62%
================ ------------- ---------------

Net interest spread 4.29%

Net interest income/margin $ 681,000 4.64%
============= ===============

D-7

DARLINGTON COUNTY BANCSHARES, INC.

As reflected above, for the first six months of 2004 the average yield on
earning assets amounts amounted to 5.21%, while the average cost of
interest-bearing liabilities was 1.23%. For the same period of 2003, the average
yield on earning assets was 5.91% and the average cost of interest-bearing
liabilities was 1.62%. The decrease in the yield on earning assets is
attributable to a decrease in the yield on all interest earning assets. The net
interest margin is computed by subtracting interest expense from interest income
and dividing the resulting figure by average interest-earning assets. The net
interest margin for the period ended June 30, 2004 was 4.26% and for 2003 was
4.64%.

NONINTEREST INCOME
- ------------------

Noninterest income for the six months ended June 30, 2004 and 2003 was $189,000
and $193,000, respectively. There were no gains on sales of securities during
the six months ended June 30, 2004, while there were $20,000 of gains on sales
of securities for the six months ended June 30, 2003. Service charges on
deposit accounts increased $8,000 or 4.94% to $170,000 when comparing the six
months ended June 30, 2004 to 2003.

NONINTEREST EXPENSES
- --------------------

Noninterest expenses for the six months ended June 30, 2004 and 2003 were
$615,000 and $633,000, respectively. Noninterest expenses decreased primarily
due to lower salaries and benefits, which were lower primarily as a result of
the retirement of our former president at year end who was replaced by our
executive vice president.

PROVISION FOR LOAN LOSSES
- -------------------------

The allowance for loan losses was 1.12% of loans as of June 30, 2004, compared
to 1.05% at December 31, 2003. The provision for loan losses was $36,000 and
$42,000 for the six months ended June 30, 2004 and 2003, respectively.
Management reviews the adequacy of the allowance on an ongoing basis and
believes the allowance is adequate.

Risks are inherent in making all loans, including risks with respect to the
period of time over which loans may be repaid, risks resulting from changes in
economic and industry conditions, risks inherent in dealing with individual
borrowers, and, in the case of a collateralized loan, risks resulting from
uncertainties about the future value of the collateral. We maintain an
allowance for loan losses based on, among other things, historical experience,
an evaluation of economic conditions, and regular reviews of delinquencies and
loan portfolio quality. Our judgment about the adequacy of the allowance is
based upon a number of assumptions about future events, which we believe to be
reasonable, but which may not prove to be accurate. Thus, charge-offs in future
periods could exceed the allowance for loan losses, or substantial additional
increases in the allowance for loan losses could be required. Additions to the
allowance for loan losses would result in a decrease of our net income and,
possibly, our capital. Based on present information, we believe the allowance
for loan losses is adequate at June 30, 2004 to meet presently known and
inherent risks in the loan portfolio.

RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 2004
- --------------------------------------------------------

Our net income for the second quarter of 2004 was $87,000 or $0.55 per share
compared to $77,000 or $0.48 per share for the second quarter of 2003.

NET INTEREST INCOME
- -------------------

Net interest income is the difference between the interest earned on earning
assets and the interest paid for funds acquired to support those assets. Net
interest income, the principal source of our earnings, was $371,000 and $342,000
for the quarters ended June 30, 2004 and 2003, respectively.

NONINTEREST INCOME
- ------------------

Noninterest income for the three months ended June 30, 2004 and 2003 was $91,000
and $107,000, respectively. Noninterest income decreased from the prior year due
to not having any gains on sales of securities for the quarter ended June 30,
2004, while there were $20,000 gains on sales of securities for the quarter
ended June 30, 2003. Service charges on deposit accounts had no change for the
three months ended June 30, 2003 compared to the same period in 2004.

NONINTEREST EXPENSES
- --------------------

D-8

DARLINGTON COUNTY BANCSHARES, INC.

Noninterest expenses for the three months ended June 30, 2004 and 2003 were
$313,000 and $311,000, respectively. Noninterest expenses increased due to
increased furniture and fixtures expense and other operating expenses, partially
offset by decreases in salaries and employee benefits. These increases were due
to the normal growth of our bank.

PROVISION FOR LOAN LOSSES
- -------------------------

The provision for loan losses was $18,000 and $24,000 for the three months ended
June 30, 2004 and 2003, respectively.

FINANCIAL CONDITION
- -------------------

LIQUIDITY
- ---------

Liquidity is the ability to meet current and future obligations through
liquidation or maturity of existing assets or the acquisition of liabilities.
We manage both assets and liabilities to achieve appropriate levels of
liquidity. Cash and short-term investments are our primary sources of asset
liquidity. These funds provide a cushion against short-term fluctuations in
cash flow from both deposits and loans. The investment portfolio is our
principal source of secondary asset liquidity. However, the availability of this
source of funds is influenced by market conditions. Management believes that our
liquidity sources are adequate to meet our operating needs. However, we have
approximately $2,500,000 of unused lines of credit to purchase federal funds
should additional funding sources be needed.

OFF-BALANCE SHEET RISK
- ----------------------

Through the operations of our bank, we have made contractual commitments to
extend credit in the ordinary course of our business activities. These
commitments are legally binding agreements to lend money to our customers at
predetermined interest rates for a specified period of time. At June 30, 2004,
we had issued commitments to extend credit of $5,038,000 through various types
of commercial lending arrangements. We evaluate each customer's credit
worthiness on a case-by-case basis. The amount of collateral obtained, if
deemed necessary by us upon extension of credit, is based on our credit
evaluation of the borrower. Collateral varies but may include accounts
receivable, inventory, property, plant and equipment, and commercial and
residential real estate. We manage the credit risk on these commitments by
subjecting them to normal underwriting and risk management processes.

INVESTMENT SECURITIES
- ---------------------

Total investment securities decreased $74,000 during the first six months of
2004. This decrease was due to a decrease in securities available-for-sale of
$500,000, partially offset by an increase in securities held-to-maturity of
$426,000. Excess funds generated from deposit growth were invested in
securities held-to-maturity.

LOANS
- -----

Loans decreased slightly during the first six months of 2004. Net loans
decreased $842,000 or 4.14%, during the period. As shown below, the main
component of the decrease in the loan portfolio was real estate-mortgage loans
which decreased $463,000, or 4.87%, from December 31, 2003 to June 30, 2004.
Balances within the major loans receivable categories as of June 30, 2004 and
December 31, 2003 are as follows:

JUNE 30, DECEMBER 31,
2004 2003
----------- -------------

Real estate - construction $ 1,382,000 $ 1,231,000
Real estate - mortgage 9,048,000 9,511,000
Commercial and industrial 3,537,000 3,755,000
Agriculture 921,000 931,000
Consumer and other 4,819,000 5,115,000
----------- -------------
$19,707,000 $ 20,543,000
=========== =============

DEPOSITS
- --------

Total deposits increased $707,000 or 2.24% to $32,275,000 during the first six
months of 2004. The largest increase was in savings and NOW accounts which
increased $1,739,000 to $20,995,000 at June 30, 2004. Money market accounts are
included in this total and we believe we offer a higher interest rate on money
market accounts than do our competitors. Money market accounts are an important
source of our deposits and we anticipate continuing to offer competitive rates
on such deposits in the near future.

D-9

DARLINGTON COUNTY BANCSHARES, INC.

CAPITAL RESOURCES
- -----------------

Our capital base decreased by $192,000 during the first six months of 2004.
This net change includes an increase to equity for net income of $180,000 offset
by a decrease in unrealized gains on investment securities of $214,000 and cash
dividends paid of $158,000.

The Federal Deposit Insurance Corporation has issued guidelines for risk-based
capital requirements. As of June 30, 2004, we exceed the capital requirement
levels that are to be maintained.

WELL CAPITALIZED ADEQUATELY CAPITALIZED
ACTUAL REQUIREMENT REQUIREMENT
--------------- ----------------- ----------------------
( Dollars in thousands) AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ------ -------- ------- ----------- ---------

Total capital (to risk-weighted assets) $ 4,218 18.04% $ 2,339 10.0% $ 1,871 8.0%

Tier 1 capital (to risk weighted assets) $ 3,997 17.09% $ 1,403 6.0% $ 935 4.0%

Tier 1 capital (to average assets) $ 3,997 10.92% $ 1,830 5.0% $ 1,464 4.0%

CRITICAL ACCOUNTING POLICIES
- ----------------------------

We have adopted various accounting policies which govern the application of
accounting principles generally accepted in the United States in the preparation
of our financial statements. Our significant accounting policies are described
in the notes to the consolidated financial statements at December 31, 2003 as
filed in our annual report on Form 10-KSB. Certain accounting policies involve
significant judgments and assumptions by us which have a material impact on the
carrying value of certain assets and liabilities. We consider these accounting
policies to be critical accounting policies. The judgments and assumptions we
use, which we believe to be reasonable under the circumstances, are based on the
historical experience and other factors. Because of the nature of the judgments
and assumptions we make, actual results could differ from these judgments and
estimates, which could have a major impact on our carrying values of assets and
liabilities and our results of operations.

We believe the allowance for loan losses is a critical accounting policy that
requires the most significant judgments and estimates used in preparation of our
consolidated financial statements. Refer to the portions of our 2003 Annual
Report on Form 10-KSB and this Form 10-QSB that address our allowance for loan
losses for a description of our processes and methodology for determining our
allowance for loan losses. There have been no significant changes in our
critical accounting policies since December 31, 2003.

EFFECTS OF REGULATORY ACTION
- ----------------------------

Our management is not aware of any current recommendations by regulatory
authorities, which if they were to be implemented, would have a material effect
on liquidity, capital resources, or operations.

D-10

APPENDIX E
----------

FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND
ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2003

DARLINGTON BANCSHARES, INC.

DESCRIPTION OF BUSINESS

GENERAL

Darlington County Bancshares, Inc. was organized in July 1999 for the purpose of
being the holding company for Darlington County Bank (the "Bank"). On July 1,
1999, pursuant to a Plan of Merger approved by the stockholders, all of the
outstanding shares of common stock of the Bank were exchanged for shares of
common stock of the Company. The Company presently engages in no other business
other than that of owning the Bank, has no employees and operates as one
business segment. The Company is subject to regulation by the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board").

Prior to the organization of the Company, the Bank filed its periodic securities
- - related reports with the Federal Deposit Insurance Corporation. Beginning
July 1, 1999, with the formation of the bank holding company, the Company became
subject to the informational requirements of the Securities Exchange Act of
1934.

Darlington County Bank was incorporated under the laws of South Carolina and
began operations on March 10, 1986 as a community bank.

The Company's principal offices are located at 202 Cashua Street, Darlington,
South Carolina 29532. The Company's telephone number is (843) 395-1956. The
Bank's sole branch is also located in this facility.

The Bank provides a variety of services and products to small business and
individual customers. The Bank's services include checking accounts, NOW
accounts, certificates of deposit, money market accounts, savings accounts, real
estate loans, overdraft protection, lines of credit, and personal and business
use loans. The Bank has no material concentration of deposits from one customer
or group of customers. No significant portion of loans is concentrated within a
single industry or group of related industries. There are no material seasonal
factors that would have an adverse effect on the Bank.

The Company's significant accounting policies are included throughout the
following discussion and are summarized in Note 1 of the Company's 2003
consolidated financial statements.

-1-

DARLINGTON BANCSHARES, INC.

The Bank serves its customers from one location. It primarily services
individuals and small businesses in the South Carolina midlands region.

The Bank competes with one other community bank and a credit union as well as
three other major banks. In Darlington County, such competitors have broader
geographical markets and higher lending limits than the Bank and may, therefore,
make more effective use of media advertising, support services and electronic
technology than can the Bank.

Competition between commercial banks and thrift institutions (savings and loan
associations and credit unions) has been intensified significantly by the
elimination of many previous distinctions between the various types of financial
institutions and the expanded powers and increased activity of thrift
institutions in areas of banking which previously had been the sole domain of
commercial banks. The Company believes that recent legislation, together with
other regulatory changes by the primary regulators of the various financial
institutions, has resulted in the almost total elimination of practical
distinctions between a commercial bank and thrift institution. Consequently,
competition among financial institutions of all types is virtually unlimited
with respect to legal ability and authority to provide most financial services.

NET INTEREST INCOME

AVERAGE BALANCES, INCOME AND EXPENSES AND RATES. The following tables set
forth, for the periods indicated, certain information related to the Bank's
average balance sheet and its average yields on assets and average costs of
liabilities. Such yields are derived by dividing income or expense by the
average balance of the corresponding assets or liabilities and are then
annualized. Average balances have been derived from the daily balances
throughout the periods indicated:

AVERAGE BALANCES, INCOME AND EXPENSES AND RATES

FOR THE YEAR ENDED
--------------------------------------------------------
DECEMBER 31, 2003 DECEMBER 31, 2002
---------------------------- --------------------------
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
(Dollars in thousands) BALANCE EXPENSE RATE BALANCE EXPENSE RATE
--------- --------- --------- --------- --------- ---------

ASSETS:
Earning Assets:
Loans (1) $ 19,883 $ 1,454 7.31% $ 18,468 $ 1,428 7.73%
Securities, taxable 7,771 276 3.55 7,566 340 4.49
Securities, nontaxable 416 21 5.04 667 29 4.35
Federal funds sold and other 2,991 31 1.04 1,822 29 1.59
--------- --------- --------- ---------
Total earning assets 31,061 1,782 5.74 28,523 1,826 6.40
--------- --------- --------- ---------
Cash and due from banks 1,057 1,064
Premises and equipment 973 1,035
Other, less reserve for loan losses 190 208
--------- ---------
Total assets $ 33,281 $ 30,830
========= =========
LIABILITIES:
Interest-Bearing Liabilities:
Savings deposits $ 2,305 $ 25 1.08% $ 2,351 $ 41 1.74%
Time deposits 6,109 121 1.98 7,680 209 2.72
NOW and money market 15,851 228 1.44 12,120 219 1.81
--------- --------- --------- ---------
Total interest-bearing liabilities 24,265 374 1.54 22,151 469 2.12
--------- --------- --------- ---------
Demand deposits 5,012 4,789
Accrued interest and other liabilities 148 143
Stockholders' equity 3,856 3,747
========= =========
Total liabilities and shareholders'
equity $ 33,281 $ 30,830
Net interest spread 4.20% 4.28%
Net interest income $ 1,408 $ 1,357
=========
Net interest margin 4.53% 4.76%
<FN>

(1) The effect of loans in nonaccrual status and fees collected is not significant to the
computations. All loans and deposits are domestic.

DARLINGTON BANCSHARES, INC.

Net interest income, the principal source of earnings, is the difference between
the income earned on earning assets (primarily loans and investment securities)
and the interest expenses incurred on interest bearing liabilities (mainly
deposits). The net interest spread represents the differential between the
yield earned on average earning assets and the rate paid on the average
interest-bearing liabilities. The net interest yield represents net interest
income divided by average earning assets.

Net interest income in 2003 increased $50,658 or 3.73% from net interest income
in 2002. The increase was primarily a result of lower rates on deposit
accounts. Interest income in 2003 decreased $42,807 or 2.34% from the
corresponding amount earned in 2002. Interest expense in 2003 decreased $93,465
or 19.97% from the amount paid in 2002. The net interest margin decreased to
4.53% in 2003 from 4.76% in 2002.

ANALYSIS OF CHANGES IN NET INTEREST INCOME. The following table sets forth the
effect that the varying levels of earning assets and interest-bearing
liabilities and the applicable rates have had on changes in net interest income
from 2003 to 2002.

2003 COMPARED WITH 2002
----------------------------------
VARIANCE
DUE TO
(Dollars in thousands) VOLUME(1) RATE(1) TOTAL
---------- ---------- ----------

EARNING ASSETS
Loans $ 106 $ (80) $ 26
Securities, taxable 9 (73) (64)
Securities, nontaxable (12) 5 (7)
Federal funds sold and other 14 (11) 3
---------- ---------- ----------
Total interest income 117 (159) (42)

INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Savings (1) (14) (15)
NOW and money market 60 (51) 9
Time deposits (38) (49) (87)
---------- ---------- ----------
Total interest-bearing liabilities 21 (114) (93)
---------- ---------- ----------
Net interest income $ 96 $ (45) $ 51
========== ========== ==========

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

LOAN PORTFOLIO

The Bank engages in a full complement of lending activities, including
commercial, consumer, installment and real estate loans.

Commercial loans are spread across various industry groups, with no single
industry accounting for a significant amount of the portfolio. Commercial loans
are made on either a secured or unsecured basis. When taken, security consists
of liens on real property, inventories, receivables, equipment, and furniture
and fixtures. Unsecured commercial loans are generally short-term with emphasis
on repayment strengths and low debt to net worth ratios. At December 31, 2003,
approximately $1,410,694 of loans were unsecured.

Consumer loans are primarily secured installment loans to individuals for
personal, family and household purposes, including automobile loans and
pre-approved lines of credit.

DARLINGTON BANCSHARES, INC.

Management believes that the loan portfolio is adequately diversified. There
are no foreign loans in the portfolio. The following table presents the major
categories of loans in the Bank's loan portfolio and total amount of all loans
at December 31, 2003 and 2002:

(Dollars in thousands) 2003 2002
------- -------

Real estate - mortgage $ 9,511 $ 8,714
Real estate - construction 1,231 732
Commercial and industrial 3,755 3,797
Loans to individuals for household, family
and other consumer expenditures 3,955 4,001
Agriculture 931 1,034
All other loans, including overdrafts 1,139 719
Deferred loan origination costs 20 18
------- -------
$20,542 $19,015
======= =======

Accrual of interest is discontinued on a loan when management of the Bank
determines, after consideration of economic and business factors affecting
collection efforts, that collection of interest is doubtful. At December 31,
2003, and 2002 the Bank had approximately $71,097 and $58,800 in non-accruing
loans, respectively.

With respect to the loans accounted for on a non-accrual basis, the gross
interest income that would have been recorded if the loans had been current in
accordance with their original terms and outstanding throughout the period or
since origination amounts to $5,731 for the year ended December 31, 2003 and
$3,900 for the year ended December 31, 2002.

As of December 31, 2003, there were no loans classified for regulatory purposes
as doubtful, substandard or special mention which (i) represent or result from
trends or uncertainties which management reasonably expects will materially
impact future operating results, liquidity, or capital resources, or (ii)
represent material credits about which management is aware of any information
which causes management to have serious doubts as to the ability of such
borrowers to comply with the loan repayment terms.

At December 31, 2003, management is not aware of any potential problem loans.

The Bank accounts for impaired loans in accordance with SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan". This standard requires
that all creditors value a loan at the loan's fair value if it is probable that
the creditor will be unable to collect all amounts due according to the terms of
the loan agreement. Fair value may be determined based upon the present value of
expected cash flows, market price of the loan, if available, or value of the
underlying collateral. Expected cash flows are required to be discounted at
the loan's effective interest rate. SFAS No. 114 was amended by SFAS No. 118 to
allow a creditor to use existing methods for recognizing interest income on an
impaired loan and by requiring additional disclosures about how a creditor
recognizes interest income on an impaired loan. When the ultimate collectibility
of an impaired loan's principal is in doubt, wholly or partially, all cash
receipts are applied to principal. When this doubt does not exist, cash
receipts are applied under the contractual terms of the loan agreement. Once
the recorded principal balance has been reduced to zero, future cash receipts
are applied to interest income, to the extent that any interest has been
foregone. Further cash receipts are recorded as recoveries of any amounts
previously charged off.

A loan is also considered impaired if its terms are modified in a troubled debt
restructuring. For these accruing impaired loans, cash receipts are typically
applied to principal and interest receivable in accordance with the terms of the
restructured loan agreement. Interest income is recognized on these loans using
the accrual method of accounting. As of December 31, 2003 and 2002 the Bank had
no impaired loans.

DARLINGTON BANCSHARES, INC.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is based on management's ongoing evaluation of the
loan portfolio and reflects an amount that, in management's opinion, is adequate
to absorb losses in the existing portfolio. In evaluating the portfolio,
management takes into consideration numerous factors, including current economic
conditions, prior loan loss experience, the composition of the loan portfolio,
and management's estimate of anticipated credit losses. Loans are charged
against the allowance at such time as they are determined to be losses.
Subsequent recoveries are credited to the allowance. The allowance for loan
losses is estimated by applying average loss percentages to accounts graded by
management as substandard or doubtful and adding a percentage of all outstanding
loans to allow for unidentified losses inherent in the portfolio. Management
reviews loans that are exhibiting signs of weakness and grades those loans
according to the borrowers' financial status, ability to repay, estimated
collateral values, etc. Management considers the year-end allowance appropriate
and adequate to cover possible losses in the loan portfolio. However,
management's judgment is based upon a number of assumptions about future events,
which are believed to be reasonable, but which may or may not prove valid.
Thus, there can be no assurance that charge-offs in future periods will not
exceed the allowance for loan losses or that additional increases in the
allowance for loan losses will not be required.

The Bank is subject to regulatory examinations which include a review of the
methodology used to calculate loan losses and the size of the allowance for loan
losses in comparison to a group of peer banks identified by the regulatory
agencies. Regulatory agencies may require additions to the allowance for loan
losses based upon the regulators' credit evaluations and information available
to them at the time of their examination.

In assessing the adequacy of the allowance, management relies predominantly on
its ongoing review of the loan portfolio, which reviews specific loans for
potential charge-off as well as an assessment of the portfolio in the aggregate.

On December 31, 2003 and 2002, the allowance for loan losses was $214,621 and
$205,728, respectively. The ratio of the allowance for loan losses to loans
outstanding was 1.04% at December 31, 2003 and 1.08% at December 31, 2002.
During 2003, the Bank experienced net charge-offs of $99,107 compared to net
charge-offs of $52,080 in the prior year.

The Bank made recoveries of loans previously charged off of $16,277 and $786 for
the years ended December 31, 2003 and 2002, respectively.

The Bank made provisions for loan losses of approximately $108,000 and $70,000
for the years ended December 31, 2003 and 2002, respectively.

Management continues to closely monitor the levels of non-performing and
potential problem loans and will address the weaknesses in these loans to
enhance the ultimate collection or recovery on these assets. Should increases
in the overall level of non-performing and potential problem loans accelerate
from the historical trend, management will adjust the methodology for
determining the allowance for loan losses and will increase the provision and
allowance for loan losses. This would likely decrease net income.

The following table summarizes changes in the allowance arising from charge-offs
and recoveries by category and additions to the allowance which have been
charged to expense for the years ended December 31, 2003 and 2002.

2003 2002
---------- ----------

Balance at beginning of year $ 205,728 $ 187,808
Charge-offs
Commercial and industrial (25,384) (12,000)
Consumer (90,000) (40,866)
---------- ----------
Total charge-offs (115,384) (52,866)
---------- ----------
Recoveries
Commercial and industrial 9,277 -
Real estate - -
Consumer 7,000 786
---------- ----------
Total recoveries 16,277 786
---------- ----------
Net charge-offs (99,107) (52,080)
Provision for loan losses 108,000 70,000
---------- ----------
Balance at end of year $ 214,621 $ 205,728
========== ==========

DARLINGTON BANCSHARES, INC.

The following table presents the allocation of the allowance for loan losses at
December 31, 2003 and 2002, based on the percentage of total loans in each
category for the applicable year. Management does not segregate the allowance
by category, and the entire allowance is available to absorb losses from all
categories.

2003 2002
---------------------- ----------------------
PERCENT OF PERCENT OF
(Dollars in thousands) AMOUNT TOTAL AMOUNT TOTAL
---------- ---------- ---------- ----------

Commercial and industrial $ 39,276 18.30% $ 41,146 20.00%
Real estate:
Construction 12,877 6.00 7,818 3.80
Mortgage 99,370 46.30 94,223 45.80
Consumer 63,098 29.40 62,541 30.40
---------- ---------- ---------- ----------
Total $ 214,621 100.0% $ 205,728 100.0%
========== ========== ========== ==========

Management considers the allowance for loan losses adequate to cover inherent
losses on loans outstanding as of December 31, 2003. The determination of the
allowance for loan losses using the Bank's procedures and methods is based upon
judgments and assumptions about future economic conditions and other factors
affecting loans. No assurance can be given that the Bank will not sustain losses
which are sizeable in comparison to the amount reserved or that subsequent
evaluation of the loan portfolio will not require changes to the allowance for
loan losses. The allowance for loan losses is also subject to review by
regulatory agencies through periodic examinations. Such examination could
result in required changes to the allowance for loan losses.

INVESTMENTS

The Bank invests primarily in federal agency obligations and mortgage backed
securities. Federal agency obligations are guaranteed by the United States.

The amortized cost and approximate fair value of investment securities,
including maturities, are summarized at December 31 in the table below.
Weighted-average yields on investment securities available for sale are based on
amortized cost. The weighted-average yields on state, county and municipal
securities are calculated on a fully taxable equivalent basis using a federal
tax rate of 34.00%.

2003
------------------------- WEIGHTED-
(Dollars in thousands) AMORTIZED FAIR AVERAGE
COST VALUE YIELD
------------ ------------ ------------

AVAILABLE FOR SALE
- ------------------
Federal agencies
One to five years $ 4,496 $ 4,502 2.97%
------------ ------------ ------------
Mortgage backed
One to five years 886 880 2.84
Five to ten years 5,164 5,165 3.64
After ten years 522 517 4.30
------------ ------------ ------------
6,572 6,562 3.58
------------ ------------ ------------
Total available for sale $ 11,068 $ 11,064
============ ============
HELD TO MATURITY
- ----------------
State, county and municipal
Less than one year $ 85 $ 87 6.54
------------ ------------ ------------
Total held to maturity $ 85 $ 87 6.54
============ ============ ============

DARLINGTON BANCSHARES, INC.

2002
------------------------- WEIGHTED-
(Dollars in thousands) AMORTIZED FAIR AVERAGE
COST VALUE YIELD
------------ ------------ ------------

AVAILABLE FOR SALE
Federal agencies
One to five years $ 2,595 $ 2,622 4.36%
------------ ------------ ------------
Mortgage backed
Less than one year 369 376 5.81
Five to ten years 1,488 1,503 4.05
After ten years 1,364 1,403 5.61
------------ ------------ ------------
3,221 3,282 4.91
------------ ------------ ------------
Total available for sale $ 5,816 $ 5,904
============ ============

HELD TO MATURITY
State, county and municipal
Less than one year $ 80 $ 81 6.39%
One to five years 87 90 6.50
Five to ten years 474 482 6.02
------------ ------------ ------------
Total held to maturity $ 641 $ 653 6.13
============ ============ ============

For purposes of the maturity table, mortgage-backed securities, which are not
due at a single maturity date, have been allocated over maturity groupings based
on an average maturity life computation of the underlying collateral. The
mortgage-backed securities may mature earlier than their average maturity lives
because of principal prepayments.

Investment securities with an aggregate amortized cost of approximately
$1,500,896 ($1,496,602 fair value) and $1,200,000 ($1,205,000 fair value) at
December 31, 2003 and 2002, respectively, were pledged to secure public deposits
and for other purposes.

The Bank accounts for investment securities in accordance with Statement of
Financial Accounting Standards (SFAS) No. 115 "Accounting for Certain
Investments in Debt and Equity Securities." Debt securities are classified upon
purchase as available for sale, held to maturity or trading. Such assets
classified as available for sale are carried at fair value. Unrealized gains or
losses are reported as a component of shareholders' equity net of deferred
income taxes. Securities classified as held to maturity are carried at cost and
adjusted for the amortization of premiums and the accretion of discounts. In
order to qualify as held to maturity, the Bank must have the ability to hold the
securities to maturity. Trading securities are carried at market value. The
Bank has no trading securities. Gains or losses on disposition of securities
are based on the difference between the net proceeds and the adjusted carrying
amount of the securities sold, using the specific identification method.

DEPOSITS

The Bank offers a full range of interest-bearing and noninterest-bearing
accounts, including commercial and retail checking accounts, negotiable orders
of withdrawal ("NOW") accounts, money market accounts, individual retirement
accounts, regular interest-bearing statement savings accounts and certificates
of deposit with fixed rates and a range of maturity date options. The sources
of deposits are residents, businesses and employees of businesses within the
midlands region. The Bank pays competitive interest rates on interest checking,
savings, money market, time and individual retirement accounts.

The Bank's average interest-bearing deposits in 2003 were $24,265,000, compared
to $22,151,000, in the prior year, an increase of $2,114,000 or 9.54%. The
largest increase was in money market accounts as a result of us paying higher
rates on these accounts than do our competitors. The Bank typically pays higher
money market rates in order to maintain the deposit base at the desired level.
Noninterest-bearing deposits increased from 2002 to 2003 primarily as a result
of deposits made by a large customer in the fourth quarter of 2003.The following
tables presents, for the years ended December 31, 2003 and 2002, the average
amount and average rate paid on each of the following deposit categories:

DARLINGTON BANCSHARES, INC.

2003 2002
------------------- --------------------
AVERAGE AVERAGE AVERAGE AVERAGE
(Dollars in thousands) AMOUNT RATE PAID AMOUNT RATE PAID
------- ---------- --------- ---------

Noninterest-bearing deposits $ 5,012 0.00% $ 4,789 0.00%
Interest-bearing deposits
Savings deposits 2,305 1.08 2,351 1.74
NOW and money market 15,851 1.44 12,117 1.81
Time deposits 6,109 1.98 7,680 2.72

The Bank's core deposits consist of consumer time deposits, savings accounts,
NOW accounts, money market accounts and checking accounts. Although such core
deposits are becoming increasingly interest sensitive for both the Bank and the
industry as a whole, such core deposits continue to provide the Bank with a
large and stable source of funds. The Bank closely monitors its reliance on
certificates of deposit greater than $100,000, which are generally considered
less stable and less reliable as a source of funds than core deposits.

At December 31, 2003 and 2002, certificates of deposit of $100,000 or more
totaled $906,887 and $773,000, respectively. At December 31, 2003,
approximately $430,635 matures within three months, and $349,902 matures over
three through six months.

RETURN ON EQUITY AND ASSETS

The following table presents certain ratios relating to the Company's equity and
assets:

YEARS ENDED
DECEMBER 31,
---------------
2003 2002
------ -------

Return on average total assets 0.76% 1.04%
Return on average stockholders' equity 6.59 8.57
Cash dividend payout ratio 62.10 49.19
Average equity to average assets ratio 11.58 12.15

DIVIDENDS

South Carolina banking regulations require that cash dividends paid to
shareholders receive the prior written approval of the Commissioner of Banking.
The Bank is authorized to pay cash dividends up to 100% of net income in any
calendar year without obtaining the prior approval of the Commissioner of
Banking provided that the Bank received a composite rating of one or two at the
last Federal or State regulatory examination. Under Federal Reserve Board
regulations, the amounts of loans or advances from the Bank to the parent
company are also restricted. The Company paid a cash dividend of $1.00 per
share in January 2003 to stockholders of record as of December 31, 2002. The
Company paid a cash dividend of $1.00 per share in January 2002 to stockholders
of record as of December 31, 2001.

IMPACT OF INFLATION

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

DARLINGTON BANCSHARES, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

GENERAL

The following discussion is intended to assist in understanding the financial
condition and results of operations of the Company, and should be read in
conjunction with the Company's consolidated financial statements and related
notes filed with this report. Because the Bank is responsible for all of the
Company's operations, the discussion will refer to the results of operations of
the Bank.

CRITICAL ACCOUNTING POLICIES

The Company has adopted various accounting policies which govern the application
of accounting principles generally accepted in the United States of America in
the preparation of the Company's financial statements. The significant
accounting policies of the Company are described in the footnotes to the
consolidated financial statements.

Certain accounting policies involve significant judgments and assumptions by
management which have a material impact on the carrying value of certain assets
and liabilities. Management considers such accounting policies to be critical
accounting policies. The judgments and assumptions used by management are based
on historical experience and other factors, which are believed to be reasonable
under the circumstances. Because of the nature of the judgments and assumptions
made by management, actual results could differ from these judgments and
estimates which could have a material impact on the carrying values of assets
and liabilities and the results of operations of the Company.

DARLINGTON BANCSHARES, INC.

The Company believes the allowance for loan losses is a critical accounting
policy that requires the most significant judgments and estimates used in
preparation of its consolidated financial statements. Refer to the "Allowance
for Loan Losses" sections above for a detailed description of the Company's
estimation process and methodology related to the allowance for loan losses.

RESULTS OF OPERATIONS

2003 COMPARED TO 2002

Net income for the year ended December 31, 2003 was $254,416 compared to 2002
net income of $321,229. The Company earned $1.61 per common share in 2003
compared to $2.03 per common share in 2002. The decrease in net interest income
is mainly attributable to a lower net interest margin as a result of significant
interest rate reductions during the year.

Net interest income, which is the difference between interest earned on the
Company's interest earning assets and interest paid on interest bearing
liabilities, was $1,408,448 for the year ended December 31, 2003 compared to
$1,357,790 for the year ended December 31, 2002. Net interest income, which is
the main driver of the Company's earnings increased $50,658 or 3.73%. Net
interest income increased in 2003 primarily because the drop in average rates on
interest bearing liabilities exceeded the drop in average rates on interest
earning assets.

Average earning assets were $31,061,000 or 93.32% of total average assets as
compared to $28,523,000 or 92.52% of total average assets in 2002. The primary
types of earning assets are loans, investment securities and short-term
investments. Loans comprised approximately 64.01% of the Bank's total earning
assets, while investment securities comprised 26.37% and short-term investments
9.62% in 2003.

Average loans increased $1,415,000 or 7.66% during 2003. The increase in loans
in 2003 was primarily due to rates which encouraged refinancings and other loan
growth. The average yield on loans decreased 42 basis points to 7.31%.

Commercial and industrial loans comprised 18.28% of the loan portfolio as of
December 31, 2003, compared to 19.97% in 2002. Loans secured by real estate
comprised 52.30% of the portfolio as of December 31, 2003, compared to 49.68% as
of December 31, 2002. Consumer and other loans comprised 29.33% and 30.26% of
the portfolio at December 31, 2003 and 2002, respectively.

During 2003 interest expense on deposits was $374,529, a decrease of $93,465
from 2002. During the year, the Bank was unable to decrease the average rate
paid on time deposits as quickly and by the same magnitude that rates decreased
on interest earning assets. As a result, the interest rate spread declined from
4.28% in 2002 to 4.20% in 2003.

The amount of net loans charged off in 2003 was approximately $99,107 compared
to approximately $52,080 in 2002. The ratio of net charge-offs to average loans,
net of unearned income, for 2003 was 0.48% as compared to 0.28% in 2002.

Provision for loan losses in 2003 was approximately $108,000 and in 2002 was
approximately $70,000. The allowance for loan losses as a percentage of loans,
net of unearned income, was 1.04% at December 31, 2003 and 1.08% at December 31,
2002. Loans greater than 90 days past due totaled $137,000 at December 31, 2003
compared to $188,000 at December 31, 2002. Management believes that the
allowance for loan losses is adequate to cover losses inherent in the loan
portfolio as of December 31, 2003.

Non-interest income decreased $29,779 or 7.83% in 2003 to $350,556. Service
charges on deposit accounts decreased $41,990 or 11.76% while other service
charges and fees decreased $12,554 or 54.01% in 2003. The decrease in service
charges on deposit accounts was primarily attributable to a decrease in
overdraft charges, which decreased $41,990, or 11.76% from the prior year.

Non-interest expense increased $62,066, or 5.19%, to $1,257,682 in 2003.
Salaries and employee benefits expense increased $22,352 or 3.37% to $685,596 in
2003. Furniture and equipment expense increased $27,689 or 28.83% from prior
year. The increase was primarily due to depreciation expenses and service
contracts associated with new equipment. Other operating expense increased
$35,473 or 20.39% in 2003 primarily as a result of increased professional fees
for outsourced internal audit and compliance services.

DARLINGTON BANCSHARES, INC.

LIQUIDITY AND CAPITAL RESOURCES

CAPITAL RESOURCES

The capital base for the Company increased by $27,399 during 2003. This is
comprised of $254,416 of net income and a negative charge of $69,017 in
unrealized losses on available for sale securities offset by $158,000 paid in
dividends to stockholders. The Company's equity to asset ratio was 11.15% on
December 31, 2003, as compared to 13.04% on December 31, 2002.

The Federal Deposit Insurance Corporation has issued guidelines for risk-based
capital requirements. As of December 31, 2003, the Bank exceeds the capital
requirement levels that are to be maintained.

ANALYSIS OF CAPITAL AND CAPITAL RATIOS

(Dollars in thousands) 2003 2002
-------- ----------

Tier 1 capital $ 3,976 $ 3,857
Tier 2 capital 214 205
-------- ----------
Total qualifying capital $ 4,190 $ 4,062
======== ==========

Risk-adjusted total assets (including off-balance-sheet exposures) $ 23,950 $ 20,665
======== ==========

Risk-based capital ratios:
Tier 1 risk-based capital ratio 16.60% 18.66%
Total risk-based capital ratio 17.49% 19.66%
Tier 1 leverage ratio 11.11% 12.51%

LIQUIDITY AND ASSET/LIABILITY MANAGEMENT

Asset/liability management is the process by which the Bank monitors and
controls the mix and maturities of its assets and liabilities in order to
promote stable growth in net interest income. The goal of liquidity management
is to ensure the availability of adequate funds to meet the loan demand and the
deposit withdrawal needs of bank customers. Maintaining an adequate level of
liquidity is achieved through a combination of sufficient liquid assets, core
deposit growth and access to alternate sources of funds which provide a sizable
base from which to draw as liquidity needs arise.

At December 31, 2003, the Bank has an unused line of credit to purchase Federal
funds from an unrelated bank totaling $2,500,000. This line of credit is
available on a one to fourteen day basis for general corporate purposes of the
Bank. The lender has reserved the right to withdraw this line at its option.

Interest sensitive assets and liabilities are those that are subject to
repricing in the near term, including both floating rate instruments and those
with approaching maturities. The interest sensitivity gap is the difference
between total interest sensitive assets and liabilities in a given time period.
The objective of interest rate sensitivity management is to maintain the
difference between interest sensitive assets and liabilities at a level that
will minimize the effects on the net interest margin of significant interest
rate shifts.

The Bank's period and cumulative interest sensitivity positions which existed at
year-end are as follows.

DARLINGTON BANCSHARES, INC.

INTEREST SENSITIVITY ANALYSIS

GREATER
AFTER ONE AFTER THREE THAN ONE
WITHIN THROUGH THROUGH WITHIN YEAR OR
DECEMBER 31, 2003 ONE THREE TWELVE ONE NON-
(Dollars in thousands) MONTH MONTHS MONTHS YEAR SENSITIVE TOTAL
----------- ------------- ---------- --------- ----------- --------

ASSETS
Earning assets:
Loans $ 5,015 $ 2,003 $ 2,115 $ 9,133 $ 11,409 $20,542
Securities - - 85 85 11,114 11,199
Federal funds sold and other 1,368 - - 1,368 - 1,368
----------- ------------- ---------- --------- ----------- --------
Total earning assets 1,368 5,976 2,200 10,586 22,523 33,109
----------- ------------- ---------- --------- ----------- --------
LIABILITIES
Interest-bearing liabilities
Interest-bearing deposits:
Demand deposits 17,355 - - 17,355 - 17,355
Savings deposits 1,911 - - 1,911 - 1,911
Time deposits 687 1,527 3,634 5,848 80 5,928
----------- ------------- ---------- --------- ----------- --------
Total interest-bearing deposits 19,953 1,527 3,634 25,114 80 25,194
----------- ------------- ---------- --------- ----------- --------
Total interest-bearing liabilities 19,953 1,527 3,634 25,114 80 25,194
Period gap $ (18,585) $ 5,491 $ (1,434) $ (14,528) $ 22,443
=========== ============= ========== ========= ===========
Cumulative gap $ 18,585) $ (13,094) $ (14,528) $ (14,528) $ 7,915
=========== ============= ========== ========= ===========
Ratio of cumulative gap to total
earning assets (56.13)% (39.55)% (43.88)% (43.88)% 23.91%

SOURCES AND USES OF FUNDS

DECEMBER 31,
---------------------------------------------
2003 2002
------------------------ -------------------
PERCENT OF PERCENT OF
(Dollars in thousands) AMOUNT TOTAL AMOUNT TOTAL
----------- ----------- ----------- -----------

Composition of sources
Demand deposits $ 5,012 15.06% $ 4,789 15.53%
NOW and money market 15,851 47.63 12,117 39.30
Time and savings deposits 8,414 25.28 10,031 32.55
Short-term borrowings - - 3 0.01
Other non interest-bearing funds 148 0.44 143 0.46
Stockholders' equity 3,856 11.59 3,747 12.15
----------- ----------- ----------- -----------
Total sources $ 33,281 100.00% $30,830 100.00%
=========== =========== =========== ===========
Composition of uses
Loans(1) $ 19,883 59.74% $ 18,468 59.90%
Investment securities 8,187 24.60 8,233 26.70
Other earning assets 2,991 8.99 1,822 5.92
Other assets 2,220 6.67 2,307 7.48
----------- ----------- ----------- -----------
Total uses $ 33,281 100,00% $30,830 100.00%
=========== =========== =========== ===========
<FN>

(1) Loan balances stated net of unearned income

SOURCES OF FUNDS

Average sources of funds increased $2,451,000 to $33,281,000 from December 31,
2002 to December 31, 2003. This represents an increase of 7.95% in total average
sources of funds. Average NOW and money market deposits increased $3,734,000 or
30.82%. This was partially offset by a decrease of $1,617,000, or 16.12% in
time and savings deposits. Average loans increased $1,415,000 or 7.66% while
average investment securities decreased $46,000 or 0.56% and other earning
assets increased $1,169,000 or 64.16%, to account for the majority of the
overall increase of total uses of funds in 2003.

DARLINGTON BANCSHARES, INC.

OFF BALANCE SHEET ARRANGEMENTS

The Bank is a party to financial instruments with off balance sheet risk in the
normal course of business to meet the financing needs of its customers. These
financial instruments include available credit on credit lines and commitments
to extend credit. Those instruments involve, to varying degrees, elements of
credit and interest rate risk in excess of the amount recognized in the
statements of financial position. The Bank uses the same credit policies in
making commitments and conditional obligations as it does for on balance sheet
instruments.

CONTRACT
AMOUNT
------------
Financial instruments whose contract amounts
represent credit risk at December 31, 2003:
Commitments to extend credit $ 4,793,976
============

Of these commitments to extend credit, $3,443,012 are at variable rates and
$1,350,964 are at fixed rates.

Commitments to extend credit are agreements to lend 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. Since many of the commitments are expected to expire without being
drawn upon, the total commitment amounts do not necessarily represent future
cash requirements. 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.

RECENTLY ISSUED ACCOUNTING STANDARDS

In December 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 148, "Accounting for
Stock-based Compensation - Transition and Disclosure," an amendment of FASB
Statement No. 123, "Accounting for Stock-Based Compensation", to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. SFAS No. 148 also
amends the disclosure provisions of SFAS No. 123 and Accounting Pronouncement
Board ("APB") Opinion No. 28, "Interim Financial Reporting", to require
disclosure in the summary of significant accounting policies of the effects of
an entity's accounting policy with respect to stock-based employee compensation
on reported net income and earnings per share in annual and interim financial
statements. While SFAS No. 148 does not amend SFAS No. 123 to require companies
to account for employee stock options using the fair value method, the
disclosure provisions of SFAS No. 148 are applicable to all companies with
stock-based employee compensation, regardless of whether they account for that
compensation using the fair value method of SFAS No. 123 or the intrinsic value
method of APB Opinion No. 25. The provisions of SFAS No. 148 are effective for
annual financial statements for fiscal years ending after December 15, 2002, and
for financial reports containing condensed financial statements for interim
periods beginning after December 15, 2002. The disclosure-only provisions of
SFAS 148 had no impact on the financial condition of the Company.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities." SFAS No. 149 amends and
clarifies accounting for derivative instruments, including certain derivative
instruments embedded in other contracts and loan commitments that relate to the
origination of mortgage loans held for sale, and for hedging activities under
SFAS No. 133. SFAS No. 149 is generally effective for contracts entered into or
modified after June 30, 2003. The adoption of SFAS No. 149 did not have a
material impact on the financial condition or operating results of the Company.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150
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. SFAS No. 150 is generally effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period beginning after June
15, 2003. The adoption of SFAS No. 150 did not have a material impact on the
financial condition or operating results of the Company.

DARLINGTON BANCSHARES, INC.

In November 2002, the FASB issued Interpretation ("FIN") No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others". FIN No. 45 requires a company, at the
time it issues a guarantee, to recognize an initial liability for the fair value
of obligations assumed under the guarantee and elaborates on existing disclosure
requirements related to guarantees and warranties. The initial recognition
requirements of FIN No. 45 are effective for guarantees issued or modified after
December 31, 2002. The disclosure requirements are effective for financial
statements of periods ending after December 15, 2002. The adoption of FIN No.
45 did not have a material effect on the Company's financial position or results
of operations.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities." FIN No. 46 requires a variable interest entity to be consolidated by
a company if that company is subject to a majority of the risk of loss from the
variable interest entity's activities or entitled to receive a majority of the
entity's residual returns, or both. FIN No. 46 also requires disclosures about
variable interest entities that a company is not required to consolidate, but in
which it has a significant variable interest. FIN No. 46 provides guidance for
determining whether an entity qualifies as a variable interest entity by
considering, among other considerations, whether the entity lacks sufficient
equity or its equity holders lack adequate decision-making ability. The
consolidation requirements of FIN No. 46 apply immediately to variable interest
entities created after January 31, 2003. The consolidation requirements apply to
existing entities in the first fiscal year or interim period beginning after
June 15, 2003. Certain of the disclosure requirements apply in all financial
statements issued after January 31, 2003, regardless of when the variable
interest entity was established. The adoption of FIN No. 46 did not have a
material effect on the Company's financial position or results of operations.

INFLATION

Since the assets and liabilities of a bank are primarily monetary in nature
(payable in fixed, determinable amounts), the performance of a bank is affected
more by changes in interest rates than by inflation. Interest rates generally
increase as the rate of inflation increases, but the magnitude of the change in
rates may not be the same.

While the effect of inflation on banks is normally not as significant as is its
influence on those businesses which have large investments in plant and
inventories, it does have an effect. During periods of high inflation, there
are normally corresponding increases in the money supply, and banks will
normally experience above-average growth in assets, loans and deposits. Also,
general increases in the prices of goods and services will result in increased
operating expenses.

DARLINGTON COUNTY BANCSHARES, INC.

CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2003

TABLE OF CONTENTS

PAGE NO.
--------

Independent Accountants' Report. . . . . . . . . . . . . . . . . . . . . F-2
Consolidated Balance Sheets. . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Income. . . . . . . . . . . . . . . . . . . . F-4
Consolidated Statements of Stockholders' Equity and Comprehensive Income F-5
Consolidated Statements of Cash Flows. . . . . . . . . . . . . . . . . . F-6
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . F-7-18

F-1

INDEPENDENT ACCOUNTANTS' REPORT
-------------------------------

The Directors and Stockholders
Darlington County Bancshares, Inc. and Subsidiary
Darlington, South Carolina

We have audited the accompanying consolidated balance sheets of Darlington
County Bancshares, Inc. and Subsidiary as of December 31, 2003 and 2002, and the
related consolidated statements of income, stockholders' equity and
comprehensive income and cash flows for each of the years in the three year
period ended December 31, 2003. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Darlington County Bancshares, Inc. and Subsidiary as of December 31, 2003 and
2002 and the results of their operations and cash flows for each of the years in
the three year period ended December 31, 2003, in conformity with auditing
standards generally accepted in the United States of America.

/s/ Elliott Davis, LLC
Columbia, South Carolina
January 9, 2004

F-2

DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY
The accompanying notes are an integral part of these consolidated financial
statements.

CONSOLIDATED BALANCE SHEETS

DECEMBER 31,
--------------------------
2003 2002
------------ ------------

ASSETS

Cash and due from banks $ 1,378,221 $ 1,144,161

Federal funds sold 1,368,000 2,386,000

Investment securities held to maturity
(fair value $86,567 in 2003 and $653,556 in 2002) 85,353 641,054

Investment securities available for sale 11,064,750 5,904,573

Other investments, at cost 50,405 50,405

Loans 20,542,916 19,015,019

Less allowance for loan losses (214,621) (205,728)
------------ ------------

Net loans 20,328,295 18,809,291

Premises and equipment 940,060 1,002,578

Accrued interest receivable 294,530 282,438

Other assets 133,859 47,021
------------ ------------

Total assets $ 35,643,473 $30,267,521
============ ============

Liabilities and stockholders' equity
Deposits
Demand $ 6,384,380 4,606,528
Savings and NOW 19,255,759 15,252,327
Other time 5,928,466 6,344,674
------------ ------------

Total deposits 31,568,605 26,203,529

Other liabilities 101,788 118,311
------------ ------------

Total liabilities 31,670,393 26,321,840
------------ ------------

Commitments and contingencies - Notes 9 and 14

Stockholders' equity
Common stock - $.01 par value, 1,000,000 shares authorized,
158,000 shares issued and outstanding 1,580 1,580
Capital in excess of par value of stock 1,617,920 1,617,920
Retained earnings 2,355,919 2,259,503
Accumulated other comprehensive income (loss) (2,339) 66,678
------------ ------------

Total stockholders' equity 3,973,080 3,945,681
------------ ------------

Total liabilities and stockholders' equity $ 35,643,473 $30,267,521
============ ============

F-3

DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
2003 2002 2001
---------- ---------- ----------

INTEREST INCOME
Loans $1,453,502 $1,427,972 $1,536,015
---------- ---------- ----------
Investment securities
Taxable 275,830 339,127 285,394
Exempt from federal income taxes 21,346 28,617 31,130
---------- ---------- ----------
Total interest on investment securities 297,176 367,744 316,524

Federal funds sold 31,394 28,964 163,260
Other 905 1,104 1,822
---------- ---------- ----------
Total interest income 1,782,977 1,825,784 2,017,621

INTEREST EXPENSE
Deposits 374,529 467,994 791,742
---------- ---------- ----------
Net interest income 1,408,448 1,357,790 1,225,879

Provision for loan losses 108,000 70,000 59,992
---------- ---------- ----------
Net interest income after provision
for loan losses 1,300,448 1,287,790 1,165,887

NONINTEREST INCOME
Service charges on deposit accounts 315,104 357,094 309,082
Gain on sale of available for sale securities 24,765 - -
Other service charges and fees 10,687 23,241 27,685
---------- ---------- ----------
Total noninterest income 350,556 380,335 336,767
NONINTEREST EXPENSES
Salaries and employee benefits 685,596 663,244 630,724
Occupancy 77,322 73,550 69,472
Furniture and equipment 123,721 96,032 80,147
Office supplies 55,276 44,997 46,664
Data processing fees 108,885 146,384 104,622
Other operating 206,882 171,409 211,477
---------- ---------- ----------
Total noninterest expenses 1,257,682 1,195,616 1,143,106
---------- ---------- ----------
Income before income taxes 393,322 472,509 359,548
PROVISION FOR INCOME TAXES 138,906 151,280 109,100
---------- ---------- ----------
Net income $ 254,416 $ 321,229 $ 250,448
========== ========== ==========
NET INCOME PER SHARE OF COMMON STOCK $ 1.61 $ 2.03 $ 1.59
========== ========== ==========

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

F-4

DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

CAPITAL IN ACCUMULATED TOTAL
COMMON STOCK EXCESS OF OTHER COM- STOCK-
----------------- PAR VALUE RETAINED PREHENSIVE HOLDERS'
SHARES AMOUNT OF STOCK EARNINGS INCOME (LOSS) EQUITY
------- -------- ----------- ----------- -------------- -----------

BALANCE, DECEMBER 31, 2000 158,000 $ 1,580 $ 1,617,920 $2,003,826 $ (36,369) $3,586,957
-----------
Net income 250,448 250,448
Other comprehensive income, net of
income taxes of $7,715:
Unrealized gain on securities
available for sale 14,982 14,982
-----------
Comprehensive income 265,430
Cash dividend, $1.00 per share (158,000) (158,000)
------- -------- ----------- ----------- -------------- -----------
BALANCE, DECEMBER 31, 2001 158,000 1,580 1,617,920 2,096,274 (21,387) 3,694,387
-----------
Net income 321,229 321,229
Other comprehensive income, net of
income tax of $45,367:
Unrealized gain on securities
available for sale 88,065 88,065
-----------
Comprehensive income 409,294
Cash dividend, $1.00 per share (158,000) (158,000)
------- -------- ----------- ----------- -------------- -----------

BALANCE, DECEMBER 31, 2002 158,000 1,580 1,617,920 2,259,503 66,678 3,945,681
-----------
Net income 254,416 254,416
Other comprehensive income, net of
income tax benefit of $1,205:
Unrealized loss on securities
available for sale (53,415) (53,415)
Plus reclassification adjustments
for gains included in net income (15,602) (15,602)
-----------
Comprehensive income 185,399
Cash dividend, $1.00 per share (158,000) (158,000)
------- -------- ----------- ----------- -------------- -----------
BALANCE, DECEMBER 31, 2003 158,000 $ 1,580 $ 1,617,920 $2,355,919 $ (2,339) $3,973,080
======= ======== =========== =========== ============== ===========

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

F-5

DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------
2003 2002 2001
------------- ------------ --------------

OPERATING ACTIVITIES
Net income $ 254,416 $ 321,229 $ 250,448
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation 84,466 75,845 70,598
Amortization and accretion 47,211 16,172 5,161
Provision for loan losses 108,000 70,000 59,992
Gain on sale of securities available for sale (24,765) - -
Loss on sale of premises and equipment - - 4,057
Deferred income taxes 22,350 22,000 36,000
Changes in assets and liabilities:
(Increase) decrease in accrued interest receivable (12,092) (28,725) 167,667
Decrease (increase) in other assets (109,188) 94,108 (60,611)
Increase (decrease) in other liabilities 7,474 (1,102) (40,729)
------------- ------------ --------------
Cash provided by operating activities 377,872 569,527 492,583
------------- ------------ --------------

INVESTING ACTIVITIES
Decrease in federal funds sold 1,018,000 1,127,000 907,000
Proceeds from calls and maturities of investment
securities held to maturity 560,000 75,000 -
Proceeds from calls and maturities of investment
securities available for sale 4,117,823 7,963,135 6,686,060
Proceeds from sales of securities available for sale 1,340,360 - -
Purchase of investment securities available for sale (10,738,119) (6,122,031) (9,642,485)
Net increase in loans (1,627,004) (1,454,561) (1,406,085)
Proceeds from sale of premises and equipment - - 7,384
Purchases of premises and equipment (21,948) (15,039) (270,372)
------------- ------------ --------------
Cash provided by (used for) investing activities (5,350,888) 1,573,504 (3,718,498)
------------- ------------ --------------

FINANCING ACTIVITIES
Dividends paid (158,000) (158,000) (158,000)
Increase (decrease) in deposits 5,365,076 (1,155,583) 2,609,031
------------- ------------ --------------
Cash provided by (used for) financing activities 5,207,076 (1,313,583) 2,451,031
------------- ------------ --------------

Increase (decrease) in cash and due from banks 234,060 829,448 (774,884)

CASH AND DUE FROM BANKS, BEGINNING OF YEAR 1,144,161 314,713 1,089,597
------------- ------------ --------------

CASH AND DUE FROM BANKS, END OF YEAR $ 1,378,221 $ 1,144,161 $ 314,713
============= ============ ==============

SUPPLEMENTAL DISCLOSURES
Cash paid for:
Interest $ 380,875 $ 510,806 $ 825,097
============= ============ ==============

Income taxes $ 151,200 $ 7,799 $ 175,967
============= ============ ==============

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

F-6

DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES
- ---------------------------------------------------------------------------

PRINCIPLES OF CONSOLIDATION AND NATURE OF OPERATIONS - Darlington County
- ----------------------------------------------------------
Bancshares, Inc. (the "Company") was organized in July 1999 for the purpose of
being the holding company for Darlington County Bank (the "Bank"). The Company
presently engages in no other business than that of owning the Bank, has no
employees and operates as one business segment. The Company is subject to
regulation by the Federal Reserve Board. The consolidated financial statements
include the accounts of the Company and the Bank with all intercompany balances
and transactions having been eliminated.

The Bank operates under a state charter and provides full banking services to
its customers. The Bank is subject to regulation by the South Carolina State
Board of Financial Institutions and the Federal Deposit Insurance Corporation.
The Bank makes commercial and personal loans to individuals and small businesses
located primarily in the South Carolina midlands region. The Bank has a
diversified loan portfolio and the borrowers' ability to repay their loans is
not dependent upon any specific economic sector.

USE OF ESTIMATES IN FINANCIAL STATEMENT PREPARATION -The preparation of
- ---------------------------------------------------------
consolidated financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as of the dates
of the balance sheets and the statements of income for the periods covered.
Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS - For purposes of the statement of cash flows, cash
- ----------------------------
and cash equivalents are defined as those amounts included in the balance sheet
caption "Cash and Due from Banks." Cash and cash equivalents have an original
maturity of three months or less.

INVESTMENT SECURITIES - The Bank accounts for investment securities in
- ----------------------
accordance with Statement of Financial Accounting Standards ("SFAS") No. 115
"Accounting for Certain Investments in Debt and Equity Securities." Debt
securities are classified upon purchase as available for sale, held to maturity
or trading. Such assets classified as available for sale are carried at fair
value. Unrealized gains or losses are reported as a component of stockholders'
equity, accumulated other comprehensive loss, net of deferred income taxes.
Securities classified as held to maturity are carried at cost, adjusted for the
amortization of premiums and the accretion of discounts. In order to qualify as
held to maturity, the Bank must have the ability and intent to hold the
securities to maturity. Trading securities are carried at market value. The
Bank has no trading securities. Gains or losses on disposition of securities
are based on the difference between the net proceeds and the adjusted carrying
amount of the securities sold, using the specific identification method.

LOANS - Interest on loans is accrued into income based upon the interest method.
- -----
Loan origination and commitment fees and direct loan origination costs are
deferred and amortized over the contractual life of the related loans or
commitments as an adjustment of the related loan yields.

ALLOWANCE FOR LOAN LOSSES - The allowance for loan losses is based on
- ----------------------------
management's ongoing evaluation of the loan portfolio and reflects an amount
that, in management's opinion, is adequate to absorb losses in the existing
portfolio. In evaluating the portfolio, management takes into consideration
numerous factors, including current economic conditions, prior loan loss
experience, the composition of the loan portfolio, and management's estimate of
anticipated credit losses. Loans are charged against the allowance at such time
as they are determined to be losses. Subsequent recoveries are credited to the
allowance. Management considers the year-end allowance appropriate and adequate
to cover possible losses in the loan portfolio; however, management's judgment
is based upon a number of assumptions about future events, which are believed to
be reasonable, but which may or may not prove valid. Thus, there can be no
assurance that charge-offs in future periods will not exceed the allowance for
loan losses or that additional increases in the allowance for loan losses will
not be required. Allowances for loan losses are subject to review by various
regulatory authorities and may be subject to adjustment upon their examination.

F-7

DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES - continued
- --------------------------------------------------------------------

ACCOUNTING FOR IMPAIRED LOANS - The Bank accounts for impaired loans in
- --------------------------------
accordance with SFAS No. 114,"Accounting by Creditors for Impairment of a Loan".
This standard requires that all creditors value loans at the loan's fair value
if it is probable that the creditor will be unable to collect all amounts due
according to the terms of the loan agreement. Fair value may be determined based
upon the present value of expected cash flows, market price of the loan, if
available, or value of the underlying collateral. Expected cash flows are
required to be discounted at the loan's effective interest rate. SFAS No. 114
was amended by SFAS No. 118 to allow a creditor to use existing methods for
recognizing interest income on an impaired loan and by requiring additional
disclosures about how a creditor recognizes interest income on an impaired loan.
When the ultimate collectibility of an impaired loan's principal is in doubt,
wholly or partially, all cash receiptsare applied to principal.When this doubt
does not exist, cash receipts are applied under the contractual terms of the
loan agreement. Once the recorded principal balance has been reduced to zero,
future cash receipts are applied to interest income, to the extent that any
interest has been foregone. Further cash receipts are recorded as recoveries of
any amounts previously charged off.

PREMISES AND EQUIPMENT - Premises and equipment are stated at cost, less
- ------------------------
accumulated depreciation. The provision for depreciation is computed by the
straight-line method, based on the estimated useful lives for furniture and
equipment of 5 to 7 years and buildings of 40 years. The cost of assets sold or
otherwise disposed of and the related allowance for depreciation are eliminated
from the accounts and the resulting gains or losses are reflected in the income
statement when incurred. Maintenance and repairs are charged to current
expense. The costs of major renewals and improvements are capitalized.

NON-PERFORMING ASSETS - Loans are placed in a non-accrual status when, in the
- ----------------------
opinion of management, the collection of additional interest is questionable.
Thereafter, no interest is taken into income unless received in cash or until
such time as the borrower demonstrates the ability to pay principal and
interest.

FORECLOSED REAL ESTATE -Foreclosed real estate is stated at the lower of cost or
- ----------------------
estimated fair value less estimated costs to sell. Any accrued interest on the
related loan at the date of acquisition is charged to operations. Costs
relating to the development and improvement of property are capitalized to the
extent that such costs do not exceed the estimated fair value less selling costs
of the property, whereas those relating to holding the property are charged to
expense.

INCOME TAXES - The Company accounts for income taxes under SFAS No. 109,
- -------------
"Accounting for Income Taxes." Certain items of income and expense for
financial reporting (principally provision for loan losses and depreciation) are
recognized differently for income tax purposes. Provisions for deferred taxes
are made in recognition of such temporary differences.

ADVERTISING EXPENSE - Advertising and public relations costs are generally
- --------------------
expensed as incurred. External costs incurred in producing media advertising
are expensed the first time the advertising takes place. External costs
relating to direct mailing costs are expended in the period in which the direct
mailings are sent. Advertising and public relations costs of $7,474 and
$11,072, were included in the Company's results of operations for 2003 and 2002.

NET INCOME PER SHARE - Net income per share is computed on the basis of the
- -----------------------
weighted average number of common shares outstanding, 158,000 shares in 2003,
2002 and 2001. The Company has no instruments which are dilutive; therefore,
only basic net income per share of common stock is presented.

F-8

DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES - continued
- --------------------------------------------------------------------

RECENTLY ISSUED ACCOUNTING STANDARDS - In December 2002, the Financial
- ---------------------------------------
Accounting Standards Board ("FASB") issued Statement of Financial Accounting
Standards ("SFAS") No. 148, "Accounting for Stock-based Compensation -
Transition and Disclosure," an amendment of FASB Statement No. 123, "Accounting
for Stock-Based Compensation", to provide alternative methods of transition for
a voluntary change to the fair value based method of accounting for stock-based
employee compensation. SFAS No. 148 also amends the disclosure provisions of
SFAS No. 123 and Accounting Pronouncement Board ("APB") Opinion No. 28, "Interim
Financial Reporting", to require disclosure in the summary of significant
accounting policies of the effects of an entity's accounting policy with respect
to stock-based employee compensation on reported net income and earnings per
share in annual and interim financial statements. While SFAS No. 148 does not
amend SFAS No. 123 to require companies to account for employee stock options
using the fair value method, the disclosure provisions of SFAS No. 148 are
applicable to all companies with stock-based employee compensation, regardless
of whether they account for that compensation using the fair value method of
SFAS No. 123 or the intrinsic value method of APB Opinion No. 25. The
provisions of SFAS No. 148 are effective for annual financial statements for
fiscal years ending after December 15, 2002, and for financial reports
containing condensed financial statements for interim periods beginning after
December 15, 2002. The disclosure-only provisions of SFAS No. 148 had no impact
on the financial condition of the Company.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities." SFAS No. 149 amends and
clarifies accounting for derivative instruments, including certain derivative
instruments embedded in other contracts and loan commitments that relate to the
origination of mortgage loans held for sale, and for hedging activities under
SFAS No. 133. SFAS No. 149 is generally effective for contracts entered into or
modified after June 30, 2003. The adoption of SFAS No. 149 did not have any
impact on the financial condition or operating results of the Company.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150
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. SFAS No. 150 is generally effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period beginning after June
15, 2003. The adoption of SFAS No. 150 did not have any impact on the financial
condition or operating results of the Company.

In November 2002, the FASB issued Interpretation ("FIN") No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others". FIN No. 45 requires a company, at the
time it issues a guarantee, to recognize an initial liability for the fair value
of obligations assumed under the guarantee and elaborates on existing disclosure
requirements related to guarantees and warranties. The initial recognition
requirements of FIN No. 45 are effective for guarantees issued or modified after
December 31, 2002. The disclosure requirements are effective for financial
statements of periods ending after December 15, 2002. The adoption of FIN No.
45 did not have any effect on the Company's financial position or results of
operations.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities." FIN No. 46 requires a variable interest entity to be consolidated by
a company if that company is subject to a majority of the risk of loss from the
variable interest entity's activities or entitled to receive a majority of the
entity's residual returns, or both. FIN No. 46 also requires disclosures about
variable interest entities that a company is not required to consolidate, but in
which it has a significant variable interest. FIN No. 46 provides guidance for
determining whether an entity qualifies as a variable interest entity by
considering, among other considerations, whether the entity lacks sufficient
equity or its equity holders lack adequate decision-making ability. The
consolidation requirements of FIN No. 46 apply immediately to variable interest
entities created after January 31, 2003. The consolidation requirements apply to
existing entities in the first fiscal year or interim period beginning after
June 15, 2003. Certain of the disclosure requirements apply in all financial
statements issued after January 31, 2003, regardless of when the variable
interest entity was established. The adoption of FIN No. 46 did not have any
effect on the Company's financial position or results of operations.

RECLASSIFICATIONS - Certain previously reported amounts have been reclassified
- -----------------
to conform to the current year presentation. Such changes had no effect on
previously reported net income or stockholders' equity.

F-9

DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES- continued
- ---------------------------------------------------------------------

RISKS AND UNCERTAINTIES - In the normal course of its business, the Company
- -------------------------
encounters two significant types of risks: economic and regulatory. There are
three main components of economic risk: interest rate risk, credit risk and
market risk. The Company is subject to interest rate risk to the degree that its
interest-bearing liabilities mature or reprice at different speeds, or on
different basis, than its interest-earning assets. Credit risk is the risk of
default on the Company's loan portfolio that results from borrower's inability
or unwillingness to make contractually required payments. Market risk reflects
changes in the value of collateral underlying loans receivable and the valuation
of real estate held by the Company.

The Company is subject to the regulations of various governmental agencies.
These regulations can and do change significantly from period to period. The
Company also undergoes periodic examinations by the regulatory agencies, which
may subject it to further changes with respect to asset valuations, amounts of
required loss allowances and operating restrictions from the regulators'
judgments based on information available to them at the time of their
examination.

NOTE 2 - RESTRICTIONS ON CASH AND DUE FROM BANKS
- ---------------------------------------------------------

The Bank is required to maintain average reserve balances either at the Bank or
on deposit with the Federal Reserve Bank. The average amounts of these reserve
balances for the years ended December 31, 2003 and 2002 were approximately
$227,000 and $191,000, respectively.

NOTE 3 - INVESTMENT SECURITIES
- ------------------------------

The amortized cost and approximate fair value of investment securities,
including maturities, are summarized as follows at December 31:

2003
----------------------------------------------
GROSS UNREALIZED
AMORTIZED -------------------- FAIR
COST GAINS LOSSES VALUE
----------- -------- ---------- -----------

AVAILABLE FOR SALE
- -----------------------------
Federal Agencies
One to five years $ 4,496,151 $ 8,125 $ 1,776 $ 4,502,500
----------- -------- ---------- -----------

Mortgage backed
One to five year 885,627 - 5,682 879,945
Five to ten years 5,163,956 16,158 14,573 5,165,541
After ten years 522,559 422 6,217 516,764
----------- -------- ---------- -----------
6,572,142 16,580 26,472 6,562,250
----------- -------- ---------- -----------
Total available for sale $11,068,293 $ 24,705 $ 28,248 $11,064,750
=========== ======== ========== ===========

HELD TO MATURITY
- -----------------------------
State, county and municipal
Less than one year $ 85,353 $ 1,214 $ - $ 86,567
One to five years -
Five to ten years -
----------- -------- ---------- -----------
Total held to maturity $ 85,353 $ 1,214 $ - $ 86,567
=========== ======== ========== ===========

F-10

DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - INVESTMENT SECURITIES - continued
- ------------------------------

2002
--------------------------------------------
GROSS UNREALIZED
AMORTIZED -------------------- FAIR
COST GAINS LOSSES VALUE
---------- -------- ---------- ----------

AVAILABLE FOR SALE
- -----------------------------
Federal Agencies
One to five years $2,595,000 $ 27,266 $ - $2,622,266
---------- -------- ---------- ----------

Mortgage backed
Less than one year $ 368,524 $ 7,640 $ - $ 376,164
Five to ten years 1,487,534 15,792 - 1,503,326
After ten years 1,364,048 38,769 - 1,402,817
---------- -------- ---------- ----------
3,220,106 62,201 - 3,282,307
---------- -------- ---------- ----------
Total available for sale $5,815,106 $ 89,467 $ - $5,904,573
========== ======== ========== ==========

HELD TO MATURITY
- -----------------------------
State, county and municipal
Less than one year $ 80,364 $ 1,069 $ - $ 81,433
One to five years 86,411 3,941 - 90,352
Five to ten years 474,279 7,492 - 481,771
---------- -------- ---------- ----------
Total held to maturity $ 641,054 $ 12,502 $ - $ 653,556
========== ======== ========== ==========

The following table shows gross unrealized losses and fair value, aggregated by
investment category, and length of time that individual securities have been in
a continuous unrealized loss position, at December 31, 2003.

AVAILABLE FOR SALE
- --------------------

LESS THAN TWELVE MONTHS
TWELVE MONTHS OR MORE TOTAL
------------------------ ------------------------ ------------------------
UNREALIZED UNREALIZED UNREALIZED
FAIR VALUE LOSSES FAIR VALUE LOSSES FAIR VALUE LOSSES
----------- ----------- ----------- ----------- ----------- -----------

Federal agencies $ 996,151 $ 1,776 $ - $ - $ 996,151 $ 1,776
Mortgage-backed securities 6,562,250 26,472 - - 6,562,250 26,472
----------- ----------- ----------- ----------- ----------- -----------
Total available for sale $ 7,558,401 $ 28,248 $ - $ - $ 7,558,401 $ 28,248
=========== =========== =========== =========== =========== ===========

Investment securities with an aggregate amortized cost of approximately
$1,500,896 ($1,496,602 fair value) at December 31, 2003 and $1,200,000
($1,205,000 fair value) at December 31, 2002, were pledged to secure public
deposits and for other purposes. Fair value of investment securities is
determined using quoted market prices.

F-11

DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES
- ----------------------------------------------------

Following is a summary of loans by major classification:

DECEMBER 31,
------------------------
2003 2002
----------- -----------

Real estate - mortgage $ 9,511,000 $ 8,714,000
Real estate - construction 1,231,000 732,000
Commercial and industrial 3,755,000 3,797,000
Loans to individuals for household, family and other consumer expenditures 3,955,000 4,001,000
Agriculture 931,000 1,034,000
All other loans, including overdrafts 1,139,526 718,541
Deferred loan origination costs 20,390 18,478
----------- -----------
$20,542,916 $19,015,019
=========== ===========

Changes in the allowance for loan losses are summarized as follows for the years
ended December 31:

2003 2002 2001
---------- --------- ----------

Balance, beginning of year $ 205,728 $187,808 $ 252,219
Recoveries of loans previously charged against
the allowance 16,277 786 118,465
Provision for loan losses 108,000 70,000 59,992
Loans charged against the allowance (115,384) (52,866) (242,868)
---------- --------- ----------

Balance, end of year $ 214,621 $205,728 $ 187,808
========== ========= ==========

At December 31, 2003 and 2002, non-accrual loans totaled approximately $71,097
and $58,800, respectively. The gross interest income which would have been
recorded under the original terms of the non-accrual loans amounted to $5,731 in
2003, $3,900 in 2002, and $1,364 in 2001. No interest was recorded on
nonaccrual loans in 2003, 2002 and 2001. As of December 31, 2003 and 2002 the
Bank had no impaired loans.

NOTE 5 - PREMISES AND EQUIPMENT
- ------------------------------------

Premises and equipment at December 31 is summarized as follows:

2003 2002
---------- ----------

Land and buildings $ 971,923 $ 965,625
Furniture, fixtures and equipment 767,175 768,585
---------- ----------
1,739,098 1,734,210
Less accumulated depreciation and amortization 799,038 731,632
---------- ----------
$ 940,060 $1,002,578
========== ==========

Depreciation and amortization of bank premises and equipment charged to
operating expense totaled $84,466 in 2003, $75,845 in 2002, and $70,598 in 2001,
respectively.

F-12

DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - DEPOSITS
- --------------------

At December 31, 2003 and 2002, certificates of deposit of $100,000 or more
totaled approximately $906,887 and $773,000, respectively. Interest expense on
these deposits was $16,020 in 2003, $30,448 in 2002, and $80,153 in 2001.

At December 31, 2003, the scheduled maturities of certificates of deposit are as
follows:

2004 $5,848,469
2005 74,671
2006 and thereafter 5,326
----------
$5,928,466
==========

NOTE 7 - UNUSED LINES OF CREDIT
- -------------------------------------

At December 31, 2003, the Bank has an unused short-term line of credit to
purchase Federal funds from an unrelated bank totaling $2,500,000. This line of
credit is available on a one to fourteen day basis for general corporate
purposes of the Bank. The lender has reserved the right to withdraw this line
at its option.

NOTE 8 - INCOME TAXES
- -------------------------

The following summary of the provision for income taxes includes tax deferrals
which arise from temporary differences in the recognition of certain items of
revenue and expense for tax and financial reporting purposes for the years ended
December 31:

2003 2002 2001
--------- -------- --------

Income taxes currently payable
Federal $110,878 $121,278 $ 63,400
State 11,449 15,336 9,700
--------- -------- --------
122,327 136,614 73,100
--------- -------- --------
Tax consequences of differences
Loan losses 23,875 2,358 13,448
Depreciation 2,330 11,360 9,968
Other (9,626) 948 12,584
--------- -------- --------
16,579 14,666 36,000
--------- -------- --------
Provision $138,906 $151,280 $109,100
========= ======== ========

The income tax effect of cumulative temporary differences at December 31, are as
follows:

DEFERRED TAX ASSET (LIABILITY)
-----------------------------------
2003 2002
----------------- ----------------

Allowance for loan losses $ 46,073 $ 69,948
Accumulated depreciation (58,163) (55,833)
Unrealized gain (loss) on investment securities 2,665 (28,664)
Other, net (4,390) (14,016)
----------------- ----------------
$ (13,815) $ (28,565)
================= ================

The net deferred tax asset (liability) is reported in the category of other
assets in the balance sheets at December 31, 2003 and 2002.

F-13

DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - INCOME TAXES - continued
- -------------------------

The provision for income taxes is reconciled to the amount of income tax
computed at the federal statutory rate on income before income taxes for the
years ended December 31, as follows:

2003 2002 2001
----------------- ----------------- ----------------
AMOUNT % AMOUNT % AMOUNT %

Tax expense at statutory rate $133,729 34.0% $159,700 33.8% $122,246 34.0%
Increase (decrease) in taxes resulting from:
Tax exempt interest (1,123) (0.28) (9,700) (2.05) (15,600) (4.32)
State bank tax (net of federal benefit) 7,556 1.92 10,200 2.16 10,000 2.77
Other - net (1,256) (0.32) (8,920) (1.89) (7,546) (2.21)
--------- ------ --------- ------ --------- ------
Tax provision $138,906 35.32% $151,280 32.02% $109,100 30.24%
========= ====== ========= ====== ========= =======

NOTE 9 - FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK
- -------------------------------------------------------------------

The Bank is a party to financial instruments with off balance sheet risk in the
normal course of business to meet the financing needs of its customers. These
financial instruments include available credit on credit lines and commitments
to extend credit. Those instruments involve, to varying degrees, elements of
credit and interest rate risk in excess of the amount recognized in the
statements of financial position. The contract amounts of these instruments
reflect the extent of involvement the Bank has in particular classes of
financial instruments. The Bank uses the same credit policies in making
commitments and conditional obligations as it does for on balance sheet
instruments.

CONTRACT
AMOUNT
----------

Financial instruments whose contract amounts
represent credit risk at December 31, 2003:

Commitments to extend credit $4,793,976
==========

Of these commitments to extend credit, $3,443,012 are at variable rates and
$1,350,964 are at fixed rates.

NOTE 10 - CARRYING AMOUNTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS
- ----------------------------------------------------------------------------

SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," requires
disclosure of fair value information, whether or not recognized in the balance
sheets, when it is practical to estimate the fair value. SFAS No. 107 defines a
financial instrument as cash, evidence of an ownership interest in an entity, or
contractual obligations which require the exchange of cash or other financial
instruments. Certain items are specifically excluded from the disclosure
requirements, including the Company's common stock, premises and equipment,
accrued interest receivable and payable and other assets and liabilities.

For cash and due from banks, Federal funds sold, and other investments, the
carrying value is a reasonable estimate of fair value.

For investment securities held to maturity and available for sale, fair value is
based on available quoted market prices or quoted market prices for similar
securities if a quoted market price is not available.

F-14

DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - CARRYING AMOUNTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS - continued
- --------------------------------------------------------------------

The fair value of loans is estimated based upon discounted future cash flows at
the weighted average rates in the portfolio compared to discounted future cash
flows using discount rates comparable to rates currently offered for such loans.

The fair value of deposits is estimated by discounting the amounts payable at
the rates currently offered for deposits of similar account types.

The carrying amounts and fair values of the Company's financial instruments are
as follows:

DECEMBER 31,
--------------------------------------------------
2003 2002
------------------------ ------------------------
CARRYING CARRYING
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
----------- ----------- ----------- -----------

Financial assets:
Cash and due from banks $ 1,378,221 $ 1,378,221 $ 1,144,161 $ 1,144,161
Federal funds sold 1,368,000 1,368,000 2,386,000 2,386,000
Investment securities held to maturity 85,353 86,567 641,054 653,556
Investment securities available for sale 11,064,750 11,064,750 5,904,573 5,904,573
Other investments 50,405 50,405 50,405 50,405
Loans, gross 20,542,916 20,319,467 19,015,019 19,082,901

Financial liabilities:
Deposits $31,568,605 $31,577,036 $26,203,529 $26,218,041

NOTIONAL FAIR NOTIONAL FAIR
AMOUNT VALUE AMOUNT VALUE
----------- ----------- ----------- -----------
Commitments to extend credit $ 4,793,976 $ - $ 3,511,000 $ -

The Company had $4,793,976 of off-balance sheet financial commitments, which are
commitments to originate loans and unused lines of credit. Since these
obligations are based on current market rates, the carrying amount is considered
to be a reasonable estimate of fair value.

Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates do not reflect any premium or discount that could result from offering
for sale the Company's entire holdings of a particular financial instrument.
Because no active market exists for a significant portion of the Company's
financial instruments, fair value estimates are based on judgments regarding
future expected loss experience, current economic conditions, current interest
rates and prepayment trends, risk characteristics of various financial
instruments and other factors. These estimates are subjective in nature and
involve uncertainties and matters of significant judgment and therefore cannot
be determined with precision. Changes in any of these assumptions used in
calculating fair value would also significantly affect the estimates. Further,
the fair value estimates were calculated as of December 31, 2003 and 2002.
Changes in market interest rates and prepayment assumptions could significantly
change the fair value. Therefore, management believes that the foregoing
information is of limited value and has no basis for determining whether the
fair value presented would be indicative of the value which could be negotiated
during an actual sale.

Fair value estimates are based on existing on and off-balance sheet financial
instruments without attempting to estimate the value of anticipated future
business and the value of assets and liabilities that are not considered
financial instruments. For example, the Company has assets and liabilities that
are not considered financial assets or liabilities including deposit franchise
value, deferred tax assets and liabilities and premises and equipment. In
addition, the tax ramifications related to the realization of the unrealized
gains and losses can have a significant effect on fair value estimates and have
not been considered in any of these estimates.

F-15

DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 - RESTRICTIONS ON DIVIDENDS
- ----------------------------------------

NOTE 12 - TRANSACTIONS WITH DIRECTORS, OFFICERS AND ASSOCIATES
- ----------------------------------------------------------------------

Directors and officers of the Company and associates of such persons are
customers of and had transactions with the Bank in the ordinary course of
business. Additional transactions may be expected to take place in the future.
Also, included in the loan transactions are outstanding loans and commitments,
all of which were made on comparable terms, including interest rates and
collateral, as those prevailing at the time for other customers of the Bank, and
did not involve more than normal risk of collectibility or present other
unfavorable features. Total loans to all officers and directors, including
immediate family and business interests, at December 31, 2003 and 2002, were
$1,013,954 and $933,807, respectively. During 2003, $253,261 in new loans were
made to this group and repayments of $173,114 were received. Deposits by
directors, officers and their related interests, as of December 31, 2003 and
2002, approximated $592,995 and $916,348, respectively.

NOTE 13 - RETIREMENT PLAN
- -----------------------------

The Bank sponsors Simplified Employee Pension (SEP) individual retirement
accounts for all officers and employees meeting certain age and service
requirements. Contributions are at the discretion of and determined annually by
the Board of Directors and are not to exceed the maximum amount deductible under
the applicable section of the Internal Revenue Code. Included in expenses are
contributions to the retirement plan of $24,152, $24,936, and $26,000 for the
years ended December 31, 2003, 2002 and 2001, respectively.

NOTE 14 - COMMITMENTS AND CONTINGENCIES
- --------------------------------------------

In the ordinary course of business, the Company may, from time to time, become a
party to legal claims and disputes. At December 31, 2003, management and legal
counsel are not aware of any pending or threatened litigation or unasserted
claims or assessments that could result in losses, if any, that would be
material to the consolidated financial statements.

NOTE 15 - REGULATORY MATTERS
- --------------------------------

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 classifications are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier I capital to risk-weighted assets, and of Tier I
capital to average assets. Management believes, as of December 31, 2003, that
the Bank meets all capital adequacy requirements to which it is subject.

F-16

DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 - REGULATORY MATTERS - continued
- --------------------------------

As of December 31, 2003, the most recent notification from the FDIC categorized
the Bank as well capitalized under the regulatory framework for prompt
corrective action. There are no conditions or events since that notification
that management believes have changed the institution's category. The Bank's
actual capital amounts and ratios and minimum regulatory amounts and ratios are
presented as follows:

TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL PROMPT CORRECTIVE
ADEQUACY PURPOSES ACTION PROVISIONS
-------------------- ---------------------
ACTUAL MINIMUM MINIMUM
--------------- -------------------- ---------------------
(Dollars in thousands) AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ------ --------- --------- --------- ----------

AS OF DECEMBER 31, 2003
Total capital (to risk weighted assets) $ 4,190 17.49% $ 1,916 8.00% $ 2,395 10.0%
Tier 1 capital (to risk weighted assets) assets) 3,976 16.60 958 4.00 1,437 6.00
Tier 1 capital (to average assets) 3,976 11.11 1,432 4.00 1,789 5.00

AS OF DECEMBER 31, 2002
Total capital (to risk weighted assets) $ 4,062 19.67% $ 1,653 8.00% $ 2,067 10.0%
Tier 1 capital (to risk weighted assets) assets) 3,857 18.66 827 4.00 1,240 6.00
Tier 1 capital (to average assets) 3,857 12.51 1,233 4.00 1,541 5.00

NOTE 16 - PARENT COMPANY FINANCIAL INFORMATION
- ----------------------------------------------------

Following is condensed financial information of Darlington County Bancshares,
Inc. (parent company only):

CONDENSED BALANCE SHEETS
------------------------

DECEMBER 31,
----------------------
2003 2002
---------- ----------

ASSETS
Investment in Bank subsidiary $3,973,080 $3,945,681
========== ==========

STOCKHOLDERS' EQUITY $3,973,080 $3,945,681
========== ==========

CONDENSED STATEMENTS OF INCOME
------------------------------

FOR THE YEARS ENDED
DECEMBER 31,
-----------------------
2003 2002
---------- -----------

Dividend from bank subsidiary before equity in
Undistributed net income of bank subsidiary $ 158,000 $ 158,000

Equity in undistributed net income of
Bank subsidiary 96,416 163,229
---------- -----------
Net income $ 254,416 $ 321,229
========== ===========

F-17

DARLINGTON COUNTY BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16 - PARENT COMPANY FINANCIAL INFORMATION - continued
- ----------------------------------------------------

CONDENSED STATEMENTS OF CASH FLOWS
----------------------------------

FOR THE YEARS ENDED
DECEMBER 31,
-------------------------
2003 2002
----------- ------------

OPERATING ACTIVITIES
Net income $ 254,416 $ 321,229
Adjustments to reconcile net income to net cash
provided by operating activities
Equity in undistributed net income of Bank subsidiary (96,416) (163,229)
----------- ------------

Net cash provided by operating activities 158,000 158,000

FINANCING ACTIVITY
Dividends paid (158,000) (158,000)

CASH AND DUE FROM BANKS, BEGINNING OF YEAR - -
----------- ------------

CASH AND DUE FROM BANKS, END OF YEAR $ - $ -
=========== ============

F-18

Preliminary
Copy
PROXY
DARLINGTON COUNTY BANCSHARES, INC.
SPECIAL MEETING OF SHAREHOLDERS

The undersigned hereby constitutes and appoints Henry M. Funderburk, III,
Ellen Barry and Chares A. Hardin, or any of them, as proxies, each with full
power of substitution, to vote the number of shares of common stock of
Darlington County Bancshares, Inc. ("Darlington"), which the undersigned would
be entitled to vote if personally present at the Special Meeting of Shareholders
to be held at Darlington County Bank, 202 Cashua Street, Darlington, South
Carolina on __________, 2004 at __________, local time, and at any adjournment
or postponement thereof (the "Special Meeting") upon the proposal described in
the Proxy Statement and the Notice of Special Meeting of Shareholders, dated
____________, 2004, the receipt of which is acknowledged in the manner specified
below.

1. To vote on an Agreement and Plan of Reorganization (the "Plan")
providing for the merger of Darlington Interim Corporation with and
into Darlington, with Darlington surviving the merger and the holders
of fewer than _____ shares of Darlington common stock receiving $_____
in cash in exchange for each of their shares of such stock.
FOR [ ] AGAINST [ ] ABSTAIN [ ]

2. To vote on the adjournment of the special meeting to another time and
date if such action is necessary for the board of directors to solicit
additional proxies or attendance at the meeting.
FOR [ ] AGAINST [ ] ABSTAIN [ ]

3. In the discretion of the proxies on such other matters that are
unknown to us as of a reasonable time prior to this solicitation and
that properly come before the Special Meeting or any adjournments
thereof.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2 ABOVE AND IN THE DISCRETION OF THE PROXIES ON
SUCH OTHER MATTERS THAT ARE UNKNOWN TO US AS OF A REASONABLE TIME PRIOR TO THIS
SOLICITATION AND THAT PROPERLY COME BEFORE THE SPECIAL MEETING OR ANY
ADJOURNMENTS THEREOF.

Please sign this proxy exactly as your name appears herein. When shares are
held jointly, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.

DATED:_________ , 2004 ---------------------------------------
Signature
---------------------------------------
Signature if held jointly

THIS PROXY IS SOLICITED BY DARLINGTON'S BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE.

Optional: I _____do _____ do not plan to attend the Special Meeting.