SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTER ENDED MARCH 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OT 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO ____________.
FDIC Certificate Number 26588-8
DARLINGTON COUNTY BANCSHARES, INC.
(Exact Name of Registrant as Specified in the Charter)
Incorporated in the State of South Carolina
I.R.S. Employer Identification Number 57-0805621
202 Cashua Street, Darlington, S.C. 29532
(Address of Principal Executive Offices)
(843) 395-1956
(Registrant'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 periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[ X ] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
COMMON STOCK - $.01 PAR VALUE; 158,000 SHARES OUTSTANDING ON APRIL 30, 2003
DARLINGTON COUNTY BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
MARCH 31, DECEMBER 31,
2003 2002
-------------- -------------
(in thousands) (UNAUDITED)
ASSETS
Cash and cash equivalents:
Cash and due from banks $ 1,267 $ 1,144
Federal funds sold 4,375 2,386
-------------- -------------
Total cash and cash equivalents 5,642 3,530
-------------- -------------
Securities available-for-sale 5,341 5,905
Securities held-to-maturity 641 641
Nonmarketable equity securities 50 50
-------------- -------------
Total investment securities 6,032 6,596
-------------- -------------
Loans 18,856 19,015
Less allowance for loan losses 195 206
-------------- -------------
Loans, net 18,661 18,809
Premises and equipment, net 983 1,003
Accrued interest receivable 254 282
Other assets 61 47
-------------- -------------
Total assets $ 31,633 $ 30,267
============== =============
LIABILITIES
Deposits
Demand $ 4,847 $ 4,607
Savings and NOW 16,701 15,252
Other time deposits 6,157 6,345
-------------- -------------
Total deposits 27,705 26,204
Accrued interest payable 27 29
Other liabilities 51 88
-------------- -------------
Total Liabilities 27,783 26,321
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 1,000,000 shares authorized,
158,000 shares issued and outstanding at March 31, 2003
and December 31, 2002 2 2
Capital in excess of par value of stock 1,618 1,618
Retained earnings 2,158 2,260
Accumulated other comprehensive income 72 67
-------------- -------------
Total stockholders' equity 3,850 3,946
-------------- -------------
Total liabilities and stockholders' equity $ 31,633 $ 30,267
============== =============
See notes to consolidated financial statements.
2
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
(in thousands) 2003 2002
-------------- -------------
INTEREST INCOME:
Loans, including fees $ 354 $ 338
Investment securities:
Taxable 60 102
Nontaxable 7 8
Federal funds sold 11 10
-------------- -------------
Total interest income 432 458
-------------- -------------
INTEREST EXPENSE
Deposits 93 134
-------------- -------------
Total interest expense 93 134
-------------- -------------
NET INTEREST INCOME 339 324
Provision for loan losses 18 16
-------------- -------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 321 308
-------------- -------------
NONINTEREST INCOME
Service charges on deposit accounts 81 82
Other service charges, commissions and fees 5 3
-------------- -------------
Total noninterest income 86 85
-------------- -------------
NONINTEREST EXPENSES
Salaries and employee benefits 177 161
Data processing 36 32
Occupancy 19 18
Furniture and equipment 27 21
Other 63 69
-------------- -------------
Total noninterest expense 322 301
-------------- -------------
INCOME BEFORE INCOME TAXES 85 92
Provision for income taxes 28 30
-------------- -------------
NET INCOME $ 57 $ 62
============== =============
EARNINGS PER SHARE
Average shares outstanding 158,000 158,000
============== =============
Net income $ 0.36 $ 0.39
============== =============
Dividends paid $ 1.00 $ 1.00
============== =============
See notes to consolidated financial statements.
3
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
(UNAUDITED)
(in thousands, except shares)
ACCUMULATED
CAPITAL IN OTHER
EXCESS OF COMPREHENSIVE
COMMON STOCK PAR VALUE RETAINED INCOME
SHARES AMOUNT OF STOCK EARNINGS (LOSS) TOTAL
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, JANUARY 1, 2002 158,000 $ 2 $ 1,618 $ 2,096 $ (22) $ 3,694
Net income for period - - - 62 - 62
Other comprehensive income, net of tax:
Unrealized loss on
securities available
for sale - - - - (15) (15)
------------
Comprehensive income 47
Cash dividend ($1.00
per share - - - (158) - (158)
----------- ----------- ----------- ------------ ----------- ------------
Balance, March 31, 2002 158,000 $ 2 $ 1,618 $ 2,000 $ (37) $ 3,583
=========== =========== =========== ============ =========== ============
BALANCE, JANUARY 1, 2003 158,000 $ 2 $ 1,618 $ 2,259 $ 67 $ 3,946
Net income for period - - - 57 - 57
Other comprehensive income, net of tax:
Unrealized gain on
securities available
for sale - - - - 5 5
-----------
Comprehensive income 62
Cash dividend ($1.00
per share - - - (158) - (158)
----------- ----------- ----------- ------------ ----------- ------------
Balance, March 31, 2003 158,000 $ 2 $ 1,618 $ 2,158 $ 72 $ 3,850
=========== =========== =========== ============ =========== ===========
See notes to consolidated financial statements.
4
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
(Dollars in thousands) 2003 2002
-------------- -------------
OPERATING ACTIVITIES
Net income $ 57 $ 62
Adjustments to reconcile net income to net cash
provided by operating activities
Provision for loan losses 18 16
Depreciation 20 18
(Increase) decrease in other assets 14 38
Decrease in other liabilities (39) (53)
--------------- -------------
Net cash provided by operating activities 70 81
-------------- -------------
INVESTING ACTIVITIES
(Increase) decrease in federal funds sold (1,989) 1,272
Proceeds from maturities of investment securities
available for sale 1,587 620
Purchase of investment securities available for sale (1,018) (1,000)
Net decrease in loans 130 (286)
Purchase of equipment - (1)
-------------- -------------
Net cash provided by (used for) investing activities (1,290) 605
--------------- -------------
FINANCING ACTIVITIES
Net increase in deposits 1,501 321
Cash dividends paid (158) (158)
--------------- -------------
Net cash provided by financing activities 1,343 163
-------------- -------------
Increase in cash and cash equivalents 123 849
CASH AND DUE FROM BANKS, BEGINNING OF PERIOD 1,144 315
-------------- -------------
CASH AND DUE FROM BANKS, END OF PERIOD $ 1,267 $ 1,164
============== =============
CASH PAID DURING THE PERIOD FOR
Interest $ 95,000 $ 154,900
============== =============
See notes to consolidated financial statements.
5
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 Bank does not have any instruments
which are dilutive; therefore, only basic net income per share of common stock
is presented.
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is a discussion of our financial condition as of March 31, 2003
compared to December 31, 2002, and the results of operations for the three
months ended March 31, 2003 compared to the three months ended March 31, 2002.
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, 2002.
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 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
The Company's net income for the first quarter of 2003 and 2002 was $57,000 and
$62,000, respectively. Net income per share for the first quarter of 2003 and
2002 was $.36 and $.39 per share, respectively.
6
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, (CONTINUED)
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 Bank's earnings, was $339,000 and
$324,000 for the three months ended March 31, 2003 and 2002, 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 first quarter of 2003 increased by
$93,894 or .32% over the same period in 2002, while average interest-bearing
liabilities decreased by $544,819 or 2.37% comparing the first quarter of 2003
with the first quarter of 2002.
AVERAGE BALANCES, INCOME AND EXPENSES, AND RATES
---------------------------------------------------------------------------------------
FOR THE THREE MONTHS ENDED MARCH 31,
---------------------------------------------------------------------------------------
2003 2002
----------------------------------------- -------------------------------------------
AVERAGE INCOME/ ANNUALIZED AVERAGE INCOME/ ANNUALIZED
BALANCE EXPENSE YIELD/RATE BALANCE EXPENSE YIELD/RATE
Federal funds sold $ 3,758,544 $ 11,000 1.17% $ 2,374,667 $ 10,000 1.68%
Investment securities 6,361,498 67,000 4.22% 9,187,311 110,000 4.79%
Loans 19,034,743 354,000 7.46% 17,498,913 338,000 7.73%
------------- ----------- ------------- -----------
Total earning assets $ 29,154,785 432,000 5.94% $ 29,060,891 458,000 6.30%
============= =============
Total interest bearing
liabilities $ 22,436,690 93,000 1.66% $ 22,981,509 134,000 2.36%
============= ----------- ----------- ============= ----------- --------
Net interest spread 4.28% 3.94%
Net interest income/margin $ 339,000 4.66% $ 324,000 4.46%
=========== =========== ========
As reflected above, for the first three months of 2003 the average yield on
earning assets amounts amounted to 5.94%, while the average cost of
interest-bearing liabilities was 1.66%. For the same period of 2002, the average
yield on earning assets was 6.30% and the average cost of interest-bearing
liabilities was 2.36%. The decrease in the yield on earning assets is
attributable to a decrease in the yields 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 March 31, 2003 was 4.66% and for 2002 was
4.46%. This slight increase was the result of a greater decrease in the rate on
interest-bearing deposits than the rates earned on average interest-earning
assets.
The following table represents changes in the Company's net interest income
which are primarily a result of changes in volume and rates of its
interest-earning assets and interest-bearing liabilities. The increase in net
interest income is due to increased volume of earning assets and interest
bearing liabilities and a decrease in rates on earning assets with a slightly
larger decrease in rates on interest bearing liabilities.
Analysis of changes in net interest income
For the three months ended
March 31, 2003 versus 2002
Volume Rate Net Change
------ ---- ----------
Federal fund sold $ 4,684 $ (3,684) $ 1,000
Investment securities (30,872) (12,128) (43,000)
Loans 28,958 (12,958) 16,000
------------- --------------- -------------
Total earning assets 2,770 (28,770) (26,000)
Total interest on interest-bearing liabilities (147,415) (105,415) (42,000)
-------------- --------------- --------------
Net interest income $ 150,185 $ (134,185) $ 16,000
============= =============== =============
7
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, (CONTINUED)
NONINTEREST INCOME
Noninterest income was $86,000 and $85,000 for the three months ended March 31,
2003 and 2002. Noninterest income increased slightly due to an increase in other
service charges, commission and fees.
NONINTEREST EXPENSES
Noninterest expenses for the three months ended March 31, 2003 and 2002 were
$322,000 and $301,000, respectively. Noninterest expenses increased primarily
due to the cost of living pay increases to employees and an increase in health
insurance costs.
PROVISION FOR LOAN LOSSES
The allowance for loan losses was 1.03% of loans, net of unearned income, as of
March 31, 2003 compared to 1.08% as of December 31, 2002. The provision for loan
losses was $18,000 and $16,000 for the three months ended March 31, 2003 and
2002, respectively. Management reviews the adequacy of the allowance on an
ongoing basis and believes it is adequate.
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. Individual and
commercial deposits are the Bank's primary source of funds for credit
activities. Management believes that the Company's liquidity sources are
adequate to meet its operating needs.
LOANS
Loans decreased slightly during the first three months of 2003. Net loans
decreased $148,000, or .78%, during the period. As shown below, the main
component of growth in the loan portfolio was commercial and industrial loans
which increased 9.06%, or $334,000 from December 31, 2002 to March 31, 2003.
However, decreases in real estate mortgage loans and agriculture loans offset
the increase. Balances within the major loans receivable categories as of March
31, 2003 and December 31, 2002 are as follows:
March 31, December 31,
2003 2002
---------------- -----------------
Real estate - construction $ 1,085,000 $ 732,000
Real estate - mortgage 7,981,000 8,714,000
Commercial and industrial 4,141,000 3,797,000
Agriculture 799,000 1,034,000
Consumer and other 4,850,000 4,738,000
----------- ------------
$18,856,000 $ 19,015,000
=========== ============
8
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, (CONTINUED)
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, 2002 as
filed on 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 are based on the historical experience and other factors, which we believe
to be reasonable under the circumstances. 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 2002 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, 2002.
CAPITAL RESOURCES
The capital base for the Company decreased by $96,000 for the first three months
of 2003. This net change includes an increase to equity for net income of
$57,000 and an increase in unrealized gain on investment securities of $5,000
offset by cash dividends of $158,000. The Company's equity to asset ratio was
12.17% on March 31, 2003, as compared to 13.0% on December 31, 2002.
The Federal Deposit Insurance Corporation has issued guidelines for risk-based
capital requirements. As of March 31, 2003, the Bank exceeds the capital
requirement levels that are required to be maintained.
CAPITAL RATIOS (AMOUNTS IN THOUSANDS)
----------------------------------------------------------------------------------------
WELL CAPITALIZED ADEQUATELY CAPITALIZED
ACTUAL REQUIREMENT REQUIREMENT
--------------------------- -------------------------- --------------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------ ----- ------ ----- ------ -----
Total capital (to risk
weighted assets) $ 3,948 18.63% $ 2,119 10.0% $ 1,695 8.0%
Tier 1 capital (to risk
weighted assets) $ 3,753 17.71% $ 1,271 6.0% $ 848 4.0%
Tier 1 capital (to
average assets) $ 3,753 11.95% $ 1,571 5.0% $ 1,256 4.0%
ASSET QUALITY
Nonperforming assets as a percentage of loans and foreclosed property totaled
..24% and .31% as of March 31, 2003 and December 31, 2002, respectively.
Nonperforming assets were $45,000 as of March 31, 2003 and $58,800 at December
31, 2002.
EFFECTS OF REGULATORY ACTION
The management of the Company 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
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.
9
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, (CONTINUED)
RECENTLY ISSUED ACCOUNTING STANDARDS
Accounting pronouncements recently issued or proposed by the Financial
Accounting Standards Board are not expected to have a material effect on the
financial position of the Company.
ITEM 3. CONTROLS AND PROCEDURES
Based on their evaluation of the issuer's disclosure controls and procedures (as
defined in 17 C.F.R. Sections 240.13a-14(c) and 240.15d-14(c)) as of a date
within 90 days prior to the filing of this quarterly report, the issuer's chief
executive officer and chief financial officer concluded that the effectiveness
of such controls and procedures was adequate.
There were no significant changes in the issuer's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
10
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company or its
subsidiary party or of which any of their property is the subject.
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to security holders for a vote during the three
months ended March 31, 2003.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K
99.1 Certificate of The Chief Executive Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
99.2 Certificate of The Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
11
SIGNATURES
Under 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/ W. B. McCown, III Date: May 15, 2003
------------------------------------------- ---------------
W. B. McCown, III, President and
Chief Executive Officer
By: /s/ Henry M. Funderburk Date: May 15, 2003
------------------------------------------- ---------------
Henry M. Funderburk
Executive Vice President & Chief Financial Officer
12
CERTIFICATION
I, W.B. McCown, III, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Darlington County
Bancshares, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
4. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
5. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 15, 2003 /s/ W.B. McCown, III
-------------- ---------------------------
W.B. McCown, III
President, Chief Executive Officer
13
CERTIFICATION
I, Henry M. Funderburk, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Darlington County
Bancshares, Inc.;
2. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
3. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
4. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
5. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 15, 2003 /s/ Henry M. Funderburk
-------------- -----------------------
Henry M. Funderburk
Executive Vice President &
Chief Financial Officer
14