U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.

FORM 10-QSB

X QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
- --- OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
- --- THE SECURITIES EXCHANGE ACT OF 1934

Commission File No.: 000-30001

DARLINGTON COUNTY BANCSHARES, INC.
(Exact name of small business issuer as specified in its charter)

South Carolina 57-0805621
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

202 CASHUA STREET
DARLINGTON, SOUTH CAROLINA 29532
(Address of principal executive
offices, including zip code)

(843) 656-5000
(Issuer's telephone number, including area code)
________________________________________________

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

YES X NO
--- ---

State the number of shares outstanding of each of the issuer's classes of common
stock as of the latest practicable date.

158,000 SHARES OF COMMON STOCK, $0.01 PAR VALUE, AS OF OCTOBER 31, 2004

Transitional Small Business Disclosure Format (check one): Yes [_] No [X]

DARLINGTON COUNTY BANCSHARES, INC.

INDEX

PART I. - FINANCIAL INFORMATION PAGE NO.
- --------------------------------- --------

Item 1. Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets - September 30, 2004 and December 31, 2003 . . . . . . . . . . 3

Condensed Consolidated Statements of Operations -
Nine months ended September 30, 2004 and 2003 and three months ended September 30, 2004 and 2003 . 4

Condensed Consolidated Statements of Changes in Shareholders' Equity and Comprehensive Income -
Nine months ended September 30, 2004 and 2003. . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Condensed Consolidated Statements of Cash Flows - Nine months ended September 30, 2004 and 2003. . . 6

Notes to Condensed Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 7

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . 8-13

Item 3. Controls and Procedures . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

PART II. - OTHER INFORMATION
- -----------------------------

Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. . . . . . . . . . . . . . . . . . . . . 13

Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . . . . . . . . . . . . . . 13

Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Item 6. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

DARLINGTON COUNTY BANCSHARES, INC.

CONSOLIDATED BALANCE SHEETS

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

ITEM 1 - FINANCIAL STATEMENTS
- -----------------------------
SEPTEMBER 30, DECEMBER 31,
2004 2003
--------------- --------------
(Dollars in thousands) (UNAUDITED)

ASSETS
Cash and cash equivalents:
Cash and due from banks $ 3,555 $ 1,378
Federal funds sold 2,250 1,368
--------------- --------------
Total cash and cash equivalents 5,805 2,746
--------------- --------------
Securities available-for-sale 11,490 11,065
Securities held-to-maturity 511 85
Nonmarketable equity securities 50 50
--------------- --------------
Total investment securities 12,051 11,200
--------------- --------------
Loans 20,773 20,543
Less allowance for loan losses (234) (215)
--------------- --------------
Loans, net 20,539 20,328
Premises and equipment, net 894 940
Accrued interest receivable 266 295
Other assets 126 134
--------------- --------------
Total assets $ 39,681 $ 35,643
=============== ==============

LIABILITIES
Deposits
Demand $ 5,592 $ 6,384
Savings and NOW 24,661 19,256
Other time deposits 5,319 5,928
--------------- --------------
Total deposits 35,572 31,568

Accrued interest payable 22 23
Other liabilities 58 79
--------------- --------------
Total liabilities 35,652 31,670

STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 1,000,000 shares authorized,
158,000 shares issued and outstanding at September 30, 2004
and December 31, 2003 2 2
Capital in excess of par value of stock 1,618 1,618
Retained earnings 2,462 2,355
Accumulated other comprehensive loss (53) (2)
--------------- --------------
Total stockholders' equity 4,029 3,973
--------------- --------------
Total liabilities and stockholders' equity $ 39,681 $ 35,643
=============== ==============
<FN>
See notes to consolidated financial statements.

- 3 -

DARLINGTON COUNTY BANCSHARES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------------------------
(Dollars in thousands) 2004 2003 2004 2003
--------- ---------- --------- -----------

INTEREST INCOME:
Loans, including fees $ 1,050 $ 1,090 $ 353 $ 377
Investment securities:
Taxable 264 184 91 63
Nontaxable 14 20 4 7
Nonmarketable equity securities 1 - - -
Federal funds sold 24 27 9 7
--------- ---------- --------- -----------
Total interest income 1,353 1,321 457 454
--------- ---------- --------- -----------

INTEREST EXPENSE:
Deposits 246 284 82 98
--------- ---------- --------- -----------
Total interest expense 246 284 82 98
--------- ---------- --------- -----------
NET INTEREST INCOME 1,107 1,037 375 356
Provision for loan losses 54 72 18 30
--------- ---------- --------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,053 965 357 326
--------- ---------- --------- -----------

NONINTEREST INCOME:
Service charges on deposit accounts 257 240 87 78
Gains on sales of securities available-for-sale - 20 - -
Other service charges, commissions and fees 32 17 13 6
--------- ---------- --------- -----------
Total 289 277 100 84
--------- ---------- --------- -----------

NONINTEREST EXPENSES:
Salaries and employee benefits 503 539 171 183
Net occupancy expense 63 62 23 21
Furniture and equipment expense 85 83 29 29
Other operating expenses 293 276 106 94
--------- ---------- --------- -----------
Total 944 960 329 327
--------- ---------- --------- -----------

INCOME BEFORE INCOME TAXES 398 282 128 83
Income tax provision 133 94 43 29
--------- ---------- --------- -----------

NET INCOME $ 265 $ 188 $ 85 $ 54
========= ========== ========= ===========

PER SHARE
AVERAGE SHARES OUTSTANDING 158,000 158,000 158,000 158,000
========= ========== ========= ===========
NET INCOME $ 1.68 $ 1.19 $ 0.54 $ 0.34
========= ========== ========= ===========
DIVIDENDS PAID $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========== ========= ===========
<FN>
See notes to consolidated financial statements.

- 4 -

DARLINGTON COUNTY BANCSHARES, INC.

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

ACCUMULATED
OTHER
COMPRE-
COMMON STOCK ADDITIONAL HENSIVE
---------------- PAID-IN RETAINED INCOME
(Dollars in thousands) 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 188 188

Comprehensive income, net of tax (179) (179)
-------

Comprehensive income 9
-------

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

BALANCE, SEPTEMBER 30, 2003 158,000 $ 2 $ 1,618 $ 2,290 $ (112) $3,798
======= ======= =========== ========== ============= =======

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

Net income for the period 265 265

Comprehensive income, net of tax (51) (51)
-------

Comprehensive income 214
-------

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

BALANCE, SEPTEMBER 30, 2004 158,000 $ 2 $ 1,618 $ 2,462 $ (53) $4,029
======= ======= =========== ========== ============= =======
<FN>
See notes to consolidated financial statements.

- 5 -

DARLINGTON COUNTY BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
(Dollars in thousands) 2004 2003
---------- -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 265 $ 188
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 65 61
Provision for loan losses 54 72
Amortization less accretion on investments 34 31
Gain on sales of securities available-for-sale - (16)
Loss on sale of equipment 2 -
(Increase) decrease in other assets 15 (103)
Increase (decrease) in other liabilities (22) 75
---------- -----------
Net cash provided by operating activities 413 308
---------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of securities held-to-maturity 85 560
Proceeds from sales of investment securities available-for-sale - 835
Proceeds from calls and maturities of securities available-for-sale 4,597 3,794
Purchase of investment securities available-for-sale (5,084) (7,245)
Purchase of investment securities held-to-maturity (512) -
Net increase in loans (265) (1,723)
Purchase of equipment (22) (17)
Proceeds from sale of equipment 1 -
---------- -----------
Net cash provided (used) by investing activities (1,200) (3,796)
---------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposit accounts 4,004 6,307
Cash dividends paid (158) (158)
---------- -----------
Net cash provided (used) for financing activities 3,846 6,149
---------- -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS 3,059 2,661

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,746 3,530
---------- -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,805 $ 6,191
========== ===========

CASH PAID FOR
Interest $ 246 $ 288
========== ===========

Income taxes $ 78 $ 113
========== ===========
<FN>
See notes to consolidated financial statements.

- 6 -

DARLINGTON COUNTY BANCSHARES, INC.

NOTES TO 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." The Company does not have any
instruments which are dilutive; therefore, only basic net income per share of
common stock is presented.

NOTE 3 - RECENTLY ISSUED ACCOUNTING STANDARDS
- ---------------------------------------------

No recent authoritative pronouncements that affect accounting, reporting, and
disclosure of financial information by us have occurred during the quarter
ending September 30, 2004, other than the items described below.

In November 2003, the Emerging Issues Task Force ("EITF") reached a consensus
that certain quantitative and qualitative disclosures should be required for
debt and marketable equity securities classified as available for sale or held
to maturity under SFAS No. 115 and SFAS No. 124 that are impaired at the balance
sheet date but for which other-than-temporary impairment has not been
recognized. Accordingly EITF issued EITF No. 03-1, "The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments."
This issue addresses the meaning of other-than-temporary impairment and its
application to investments classified as either available for sale or held to
maturity under SFAS No. 115 and provides guidance determining the amount of
impairment and additional quantitative and qualitative disclosures. The guidance
for determining the amount of impairment was scheduled to be effective for
periods ending after June 15, 2004, but has been delayed indefinitely pending
implementation guidance by the FASB. The disclosure provisions of EITF No.
03-1 were effective for fiscal years ending after December 15, 2003. Adopting
the disclosure provisions of EITF No. 03-1 did not have any impact on the
Company's financial position or results of operations.

Other accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies that do not require adoption until a future date
are not expected to have a material impact on the consolidated financial
statements upon adoption.

- 7 -

DARLINGTON COUNTY BANCSHARES, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- -------------------------------------------------------------------------------
OF OPERATIONS
- -------------

The following discussion and analysis should be read in conjunction with the
financial statements and related notes appearing in the 2003 Annual Report of
Darlington County Bancshares, Inc. Results of operations for the nine months
ending September 30, 2004 are not necessarily indicative of the results to be
attained for any other period. The following information may contain
forward-looking statements that involve risks and uncertainties. The Company's
actual results may differ materially from the results discussed in the
forward-looking statements.

This report contains "forward-looking statements" relating to, without
limitation, future economic performance, plans and objectives of management for
future operations, and projections of revenues and other financial items that
are based on the beliefs of our management, as well as assumptions made by and
information currently available to our management. The words "expect,"
"estimate," "anticipate," and "believe," as well as similar expressions, are
intended to identify forward-looking statements. Our actual results may differ
materially from the results discussed in the forward-looking statements, and our
operating performance each quarter is subject to various risks and
uncertainties. The Private Securities Litigation Reform Act of 1995 provides a
safe harbor for forward-looking statements. In order to comply with terms of
the safe harbor, the Company notes that a variety of factors could cause the
Company's actual results and experience to differ materially from the
anticipated results or other expectations expressed in the Company's
forward-looking statements. The risks and uncertainties that may affect the
operations, performances, development and results of the Company's business
include, but are not limited to, the following: risks from changes in economic
and industry conditions; changes in interest rates; risks inherent in making
loans including repayment risks and value of collateral; dependence on senior
management; and recently-enacted or proposed legislation. Statements contained
in this filing regarding the demand for the Company's products and services,
changing economic conditions, interest rates, consumer spending and numerous
other factors may be forward-looking statements and are subject to uncertainties
and risks. When relying on forward-looking statements to make decisions with
respect to the Company, investors and others are cautioned to consider these and
other risks and uncertainties.

Such forward-looking statements speak only as of the date on which such
statements are made. We undertake no obligation to update any forward-looking
statement to reflect events or circumstances after the date on which such
statement is made to reflect the occurrence of unanticipated events. In
addition, certain statements in future filings by the Company with the
Securities and Exchange Commission, in press releases and in oral and written
statements made by or with the approval of the Company which are not statements
of historical fact constitute forward-looking statements.

RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 2004
- ------------------------------------------------------------

The Company's net income for the nine months ended September 30, 2004 was
$265,000 or $1.68 per share as compared to $188,000 or $1.19 per share for the
nine months ended September 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 the Company's earnings, was $1,107,000
and $1,037,000 for the nine months ended September 30, 2004 and 2003,
respectively. The increase was attributable to an increase in the volume of
earning assets and lower cost of funds.

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.

- 8 -

DARLINGTON COUNTY BANCSHARES, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- -------------------------------------------------------------------------------
OF OPERATIONS - continued
- -------------

Average interest-earning assets during the nine months ended September 30, 2004
increased by $7,569,533 or 25.1% over the same period in 2003, while average
interest-bearing liabilities increased by $3,567,743 or 15.2% comparing the nine
months ended September 30, 2004 and 2003.

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

Federal funds sold $ 3,087,299 $ 24,000 1.04%
Investment securities 14,529,000 279,000 2.56%
Loans 20,103,032 1,050,000 6.96%
------------------ ---------------
Total earning assets $ 37,719,331 1,353,000 4.78%
==================
Total interest bearing liabilities $ 27,109,141 246,000 1.21%
================== --------------- -----------------
Net interest spread 3.57%

Net interest income/margin $ 1,107,000 3.91%
=============== =================

AVERAGE BALANCES, INCOME AND EXPENSES, AND RATES
NINE MONTHS ENDED SEPTEMBER 30, 2003
------------------------------------------------------
AVERAGE INCOME/ ANNUALIZED
BALANCE EXPENSE YIELD/RATE
------------------ --------------- ------------------

Federal funds sold $ 3,343,217 $ 27,000 1.08%
Investment securities 7,248,599 204,000 3.73%
Loans 19,557,982 1,090,000 7.43%
------------------ ---------------

Total earning assets $ 30,149,798 1,321,000 5.83%
==================
Total interest bearing liabilities $ 23,541,398 284,000 1.61%
================== --------------- ------------------

Net interest spread 4.22%

Net interest income/margin $ 1,037,000 4.59%
================== ===============

As reflected above, for the nine months of 2004 the average yield on earning
assets amounts amounted to 4.78%, while the average cost of interest-bearing
liabilities was 1.21%. For the same period of 2003, the average yield on
earning assets was 5.83% and the average cost of interest-bearing liabilities
was 1.61%. 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 September 30, 2004 was 3.91% and for 2003 was 4.59%.

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

Noninterest income for the nine months ended September 30, 2004 and 2003 was
$289,000 and $277,000, respectively. Service charges on deposit accounts
increased $17,000 or 7.1% to $257,000 when comparing the nine months ended
September 30, 2004 to 2003. This increase was a result of the increase in the
volume of deposits over the two periods. Other service charges, commissions and
fees also increased $15,000 or 88.2% when comparing the nine months ended
September 30, 2004 to 2003. There were no gains on sales of securities during
the nine months ended September 30, 2004 as compared to $20,000 during the same
period in 2003.

- 9 -

DARLINGTON COUNTY BANCSHARES, INC.

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

Noninterest expenses for the nine months ended September 30, 2004 and 2003 was
$944,000 and $960,000, respectively. Noninterest expenses decreased due to
decreases in salaries and employee benefits expense, which were lower primarily
as a result of the retirement of our former president at the end of 2003 who was
replaced by our executive vice president. Other operating expenses increased by
$17,000 during the nine months ended September 30, 2004 when compared to 2003.
This increase was primarily a result of costs associated with our efforts to go
private.

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

The allowance for loan losses was 1.13% of loans, as of September 30, 2004
compared to 1.05% at December 31, 2003. The provision for loan losses was
$54,000 and $72,000 for the nine months ended September 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 September 30, 2004 to meet presently known and
inherent risks in the loan portfolio.

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

The Company's net income for the third quarter of 2004 was $85,000 or $0.54 per
share compared to $54,000 or $0.34 per share for the third 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 the Company's earnings, was $375,000
and $356,000 for the quarters ended September 30, 2004 and 2003, respectively.

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

Noninterest income for the three months ended September 30, 2004 and 2003 were
$100,000 and $84,000, respectively. Noninterest income increased due to an
increase in service charges on deposit accounts from $78,000 for the three
months ended September 30, 2003 to $87,000 for the same period in 2004 and a
$7,000 increase in other service charges, commissions and fees. The increase in
service charges was a result of an increase in the volume of deposits over the
two periods.

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

Noninterest expenses for the three months ended September 30, 2004 and 2003 were
$329,000 and $327,000, respectively. Noninterest expenses increased due to
increased occupancy expense and other operating expenses. These increases were
due to the normal growth of the Bank.

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

The provision for loan losses was $18,000 and $30,000 for the three months ended
September 30, 2004 and 2003, respectively. The provision was higher during the
third quarter of 2003 as management identified some potential problem loans.

- 10 -

DARLINGTON COUNTY BANCSHARES, INC.

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.
The Company manages both assets and liabilities to achieve appropriate levels of
liquidity. Cash and short-term investments are the Company's 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 the
Bank's principal source of secondary asset liquidity. However, the availability
of this source of funds is influenced by market conditions. Management believes
that the Company's liquidity sources are adequate to meet its 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 September 30,
2004, we had issued commitments to extend credit of $4,782,000 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, 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 increased $851,000 during the first nine months of
2004. This increase was due to an increase in securities available for sale of
$425,000, and an increase in securities held-to-maturity of $426,000. A portion
of excess funds generated from deposit growth were invested in securities
available for sale and securities held-to-maturity.

LOANS
- -----

Loans increased slightly during the first nine months of 2004. Net loans
increased $211,000, or 1.04%, during the period. As shown below, the main
components of growth in the loan portfolio were real estate-construction loans
which increased 37.9%, or $467,000, and real estate mortgage loans which
increased $162,000, or 1.7%, from December 31, 2003 to September 30, 2004.
Balances within the major loans receivable categories as of September 30, 2004
and December 31, 2003 are as follows:

SEPTEMBER 30, DECEMBER 31,
2004 2003
-------------- -------------

Real estate - construction $ 1,698,000 $ 1,231,000
Real estate - mortgage 9,673,000 9,511,000
Commercial and industrial 3,428,000 3,755,000
Agriculture 1,040,000 931,000
Consumer and other 4,934,000 5,115,000
-------------- -------------
$ 20,773,000 $ 20,543,000
============== =============

- 11 -

DARLINGTON COUNTY BANCSHARES, INC.

DEPOSITS
- --------

Total deposits increased $4,004,000 or 12.7% to $35,572,000 during the first
nine months of 2004. The largest increase was in savings and NOW accounts which
increased $5,405,000 to $24,661,000 at September 30, 2004. We offer a higher
interest rate on money market accounts than do our competitors. Money market
account are an important source of our deposits and we anticipate continuing to
offer competitive rates on such deposits in the near future.

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

The capital base for the Company increased by $56,000 during the first nine
months of 2004. This net change includes an increase to equity for net income
of $265,000 offset by a decrease in unrealized gains on investment securities of
$51,000 and cash dividends paid of $158,000.

The Federal Deposit Insurance Corporation has issued guidelines for risk-based
capital requirements. As of September 30, 2004, the Bank exceeds 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) $ 4,284 17.32% $ 2,473 10.0% $ 1,978 8.0%

Tier 1 capital (to risk weighted assets) $ 4,050 16.38% $ 1,484 6.0% $ 989 .0%

Tier 1 capital (to average assets) $ 4,050 10.89% $ 1,860 5.0% $ 1,488 4.0%

Pursuant to an Agreement and Plan of Reoganization dated September 1, 2004, we
are effecting a reorganization that will take the Company private by reducing
its number of shareholders of record below 300. Under the Plan, record holders
of fewer than 100 shares of our common stock will receive $31.00 per share in
cash for their shares, while holders of 100 or more shares will retain their
shares. We anticipate that we will save approximately $100,000 per year in
direct and indirect SEC reporting costs as a result of the Reorganization. We
also anticipate that we will incur approximately $62,000 in transaction expenses
in effecting the Reorganization, with approximately $161,355 being required to
pay for the shares of common stock exchanged for cash. We plan to pay the
transaction expenses and capital cost of the Reorganization out of available
cash.

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.

IMPACT OF INFLATION
- -------------------

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DARLINGTON COUNTY BANCSHARES, INC.

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.

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DARLINGTON COUNTY BANCSHARES, INC.

ITEM 3. CONTROLS AND PROCEDURES
- -------------------------------

Our management, with the participation of our chief executive officer and our
chief financial officer, has evaluated the effectiveness of our disclosure
controls and procedures (as defined in 17 C.F.R. Sections 240.13a-15(e) and
240.15d-15(e)) as of September 30, 2004, and, based on such evaluation, our
chief executive officer and chief financial officer concluded that such controls
and procedures were effective as of September 30, 2004.

There were no significant changes in our internal controls over financial
reporting or in other factors during the fiscal quarter ended September 30, 2004
that have materially affected, or are reasonably likely to materially affect,
our internal controls over financial reporting, and there have been no
corrective actions with respect to significant deficiencies or material
weaknesses.

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DARLINGTON COUNTY BANCSHARES, INC.

PART II - OTHER INFORMATION
- ---------------------------

ITEM 1. LEGAL PROCEEDINGS
- -------------------------

There are no material pending legal proceedings to which the Company or its
subsidiary is a party to which any of their property is the subject.

ITEM 2.UNREGISTERED SALES OF EQUITYSECURITIES AND USE OF PROCEEDS
- -----------------------------------------------------------------

The Company does not have, and did not terminate, an existing stock repurchase
program and did not repurchase any of its shares of common stock during the
third quarter of 2004.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
- ---------------------------------------

Not Applicable

ITEM 4. SUBMISSION OFMATTERS TO AVOTE OFSECURITYHOLDERS
- -------------------------------------------------------

Note Applicable

ITEM 5. OTHER INFORMATION
- -------------------------

None

ITEM 6. EXHIBITS
- ----------------

2.1 Agreement and Plan of Reorganization dated September 1, 2004 between
Darlington County Bancshares, Inc. and Darlington Interim Corporation
(incorporated by reference to the Definitive Proxy Statement on Schedule 14A
filed with the Commission on November 10, 2004, File No. 000-30001).

31.1 Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002

31.2 Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002

32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002

- 15 -

DARLINGTON COUNTY BANCSHARES, INC.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the
Bank has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

DARLINGTON COUNTY BANCSHARES, INC.
- ----------------------------------
Name of Bank

By: /s/HENRY M. FUNDERBURK Date: November 12, 2004
---------------------------- -----------------
Henry M. Funderburk, President and
Chief Executive Officer

By: /s/ELLEN BERRY Date: November 12, 2004
---------------------------- -----------------
Ellen Berry
Vice President and Cashier (Controller)
Darlington County Bank

By: /s/CHARLES A. HARDIN Date: November 12, 2004
---------------------------- -----------------
Charles A. Hardin, Vice President
Darlington County Bank
(Performing the Functions of Chief Financial
Officer of Darlington County Bancshares, Inc.)

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