COMMUNITY CAPITAL CORP /SC/, 424B1, 1997-02-11

COMMUNITY CAPITAL CORP /SC/
424B1, 1997-02-11
NATIONAL COMMERCIAL BANKS

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424b(1)
File Number 333-18457

PROSPECTUS

1,465,000 Shares

(LOGO appears here)
COMMUNITY CAPITAL CORPORATION

Common Stock

All of the shares of common stock, par value $1.00 per share (the "Common
Stock"), offered hereby (the "Offering") are being sold by Community Capital
Corporation, a South Carolina corporation (the "Company"). Prior to the
Offering, there has been only limited trading in the Common Stock, and no
reliable market for the Common Stock has existed. See "Underwriting" for the
factors considered in determining the public offering price. The Common Stock is
currently quoted on the OTC Bulletin Board and has been approved for listing on
the American Stock Exchange under the symbol "CYL," subject to notice of
issuance.

See "Risk Factors" beginning on page 6 for a discussion of certain factors
that should be considered by prospective purchasers of the Common Stock offered
hereby.
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS OR DEPOSIT ACCOUNTS OR OTHER
OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE
SAVINGS ASSOCIATION INSURANCE FUND OR THE BANK INSURANCE FUND OF THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

[CAPTION]

<TABLE>
<S> <C> <C> <C>
Price to Underwriting Proceeds to
Public Discount (1)(2) Company (3)
<S> <C> <C> <C>
Per Share........................................... $11.00 $0.57 $10.43
Total (4)........................................... $16,115,000 $842,120 $15,272,880
</TABLE>

(1) The Company has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."

(2) The Underwriting Discount has been calculated on the basis of an
underwriting discount of 7.0% with respect to an aggregate of 1,093,662
shares of Common Stock to be sold by the Company to the public, and no
underwriting discount with respect to an aggregate of 371,338 shares of
Common Stock to be sold by the Company to certain purchasers disclosed to
the Underwriters. The Underwriters shall also be paid a financial advisory
fee of $112,000. See "Underwriting."

(3) Before deducting expenses of the Offering payable by the Company (including
the Underwriters' financial advisory fee), estimated to be approximately
$400,000.

(4) The Company has granted the Underwriters an over-allotment option to
purchase up to 219,750 additional shares of Common Stock on the same terms
and conditions as set forth above. If all such shares are purchased by the
Underwriters, the total Price to Public will be $18,532,250, the total
Underwriting Discount will be $1,011,327, and the total Proceeds to the
Company will be $17,520,923. See "Underwriting."

The shares of Common Stock are offered subject to receipt and acceptance by
the several Underwriters, to prior sale, and to the Underwriters' right to
reject orders in whole or in part and to withdraw, cancel, or modify the offer
without notice. It is expected that certificates for the shares will be
available for delivery on or about February 14, 1997.

J.C. Bradford &Co. Edgar M. Norris & Co., Inc.

February 11, 1997

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(Map appears here)

IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE AMERICAN STOCK EXCHANGE OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Company's consolidated financial statements and notes
thereto appearing elsewhere in this Prospectus. Unless the context indicates
otherwise, the information in this Prospectus assumes no exercise of the
Underwriters' over-allotment option. Prospective investors should consider
carefully the information set forth under the heading "Risk Factors."
This Prospectus contains 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. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors."
The Company
Community Capital Corporation is a bank holding company headquartered in
Greenwood, South Carolina which currently operates through two community banks
and is in the process of acquiring three de novo community banks (collectively,
the "Banks") in non-metropolitan markets in the State of South Carolina. The
Company pursues a community banking business which is characterized by
personalized service and local decision-making and emphasizes the banking needs
of individuals and small to medium-sized businesses.
The Company was formed in 1988 to serve as a holding company for Greenwood
National Bank, now Greenwood Bank & Trust (the "Greenwood Bank"), principally in
response to perceived opportunities resulting from the takeovers of several
South Carolina-based banks by large southeastern regional bank holding
companies. In many cases, when these consolidations occur, local boards of
directors are dissolved and local management is relocated or terminated. The
Company believes this situation creates favorable opportunities for new
community banks with local management and local directors. Management believes
that such banks can be successful in attracting individuals and small to
medium-sized businesses as customers who wish to conduct business with a locally
owned and managed institution that demonstrates an active interest in their
business and personal financial affairs.
In 1994, the Company made the strategic decision to expand beyond the
Greenwood County area by creating an organization of independently managed
community banks that serve their respective local markets but which share a
common vision and benefit from the strength, resources, and economies of a
larger institution. In June 1995, the Company opened Clemson Bank & Trust (the
"Clemson Bank" and, together with the Greenwood Bank, the "Existing Banks") in
Clemson, South Carolina. The Company is in the process of acquiring three
additional de novo banks which are being formed in Belton, Newberry, and
Barnwell, South Carolina (the "New Banks"). The Company intends to open The Bank
of Belton (In Organization) (the "Belton Bank") and The Bank of Newberry County
(In Organization) (the "Newberry Bank") in traditional de novo fashion by
capitalizing the banks and seeking local deposits to fund loan growth. In
contrast, immediately after opening, The Bank of Barnwell County (In
Organization) (the "Barnwell Bank") will acquire certain deposits and assets
associated with five branches located in Aiken, Barnwell, and Orangeburg
Counties, South Carolina from Carolina First Bank (the "Carolina First
Branches"). As of December 31, 1996, the Carolina First Branches had
approximately $53.7 million in deposits and $15.2 million in loans. See
"Acquisition of the Carolina First Branches." The Company anticipates that the
Barnwell Bank and the Belton Bank will open during the first quarter of 1997 and
that the Newberry Bank will open during the second quarter of 1997.
As a one-bank holding company for the Greenwood Bank, the Company grew from
approximately $21.5 million in assets, $11.7 million in loans, $16.6 million in
deposits, and $4.6 million in shareholders' equity at December 31, 1989, to
approximately $65.1 million in assets, $50.6 million in loans, $49.1 million in
deposits, and $6.1 million in shareholders' equity at December 31, 1994. The
opening of the Clemson Bank in June 1995 resulted in a year-over-year decrease
of the Company's earnings per share for the year ended December 31, 1995, due to
substantial start-up expenditures, as well as the time and expense required to
attract customers, deposits, and earning assets. The Clemson Bank achieved
profitability in September 1996, and at December 31, 1996, the Company had
approximately $116.0 million in assets, $80.5 million in loans, $89.9 million in
deposits, and $13.6 million in shareholders' equity. Based upon levels at
December 31, 1996, and giving effect to this Offering and the acquisition of
certain deposits and assets associated with the Carolina First Branches, the
Company would have approximately $185.1 million in assets, $95.7 million in
loans, $143.6 million in deposits, and $28.4 million in shareholders' equity.
See "Acquisition of Carolina First Branches -- Unaudited Pro Forma Financial
Information."
The Company's strategy is to operate the Banks on a decentralized basis,
emphasizing each Bank's local board of directors and local management's
knowledge and authority to make credit decisions. The Company believes this
operating
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strategy has enabled the Existing Banks, and will enable the New Banks, to
generate high yielding loans and attract and retain core deposits which will
provide substantially all of the Banks' funding requirements. The Company
supplements its decentralized operating strategy with centralized policy
oversight, credit review, back-office support, and strategic planning. Following
the Offering, the Company intends to focus on the development of the New Banks
and the continued growth of the Existing Banks. While the Company does not
intend actively to search for opportunities to expand into additional markets,
the Company may consider opportunities that arise from time to time, most likely
through acquisitions of existing institutions or branches rather than through
the formation of additional de novo banks. The Company has no specific
acquisition plans at the current time other than the New Banks and the Carolina
First Branches.
The Offering
<TABLE>
<S> <C>
Common Stock offered........................................ 1,465,000 shares (1)
Common Stock outstanding prior to the Offering.............. 1,225,784 shares (2)
Common Stock to be outstanding after the Offering........... 2,690,784 shares (2)
Use of proceeds............................................. To capitalize and fund certain costs incurred in the
organization of the New Banks, to finance the acquisition of
the Carolina First Branches, and for other general corporate
purposes. See "Use of Proceeds."
American Stock Exchange symbol.............................. CYL
</TABLE>

(1) Excludes up to 219,750 shares of Common Stock which may be sold by the
Company upon exercise of the over-allotment option granted to the
Underwriters. See "Underwriting."
(2) Excludes 447,851 shares of Common Stock issuable upon exercise of stock
options outstanding as of the date of the Prospectus, at exercise prices
ranging from $7.92 to $12.38 per share.
Risk Factors
An investment in the securities offered hereby involves substantial risks
including, among others, the risks associated with the lack of any operating
history of each New Bank, the risks associated with the acquisition of the
Carolina First Branches, the credit risk associated with the Company's loan
portfolio, and the adequacy of the allowance for loan losses.
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SUMMARY CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended December 31,
1992 1993 1994 1995
<S> <C> <C> <C> <C>
(Dollars in thousands, except per share data)
Income Statement Data:
Net interest income.................................................. $ 1,673 $ 2,194 $ 2,647 $ 3,199
Provision for loan losses............................................ 227 80 14 112
Noninterest income................................................... 631 776 514 777
Noninterest expense.................................................. 1,787 2,121 2,261 3,069
Net income........................................................... 289 560 585 534
Balance Sheet Data:
Assets............................................................... $ 49,281 $ 58,970 $ 65,071 $ 96,100
Earning assets....................................................... 44,636 53,891 58,182 87,980
Securities (1)....................................................... 7,466 7,949 7,617 22,446
Loans (2)............................................................ 34,493 44,634 50,565 63,204
Allowance for loan losses............................................ 500 567 581 671
Deposits............................................................. 40,970 45,992 49,146 73,138
Federal Home Loan Bank advances...................................... 2,627 6,756 5,925 6,244
Shareholders' equity................................................. 4,844 5,420 6,079 12,932
Weighted Average Shares Outstanding: (3)............................... 745,272 745,645 804,822 1,070,135
Per Share Data: (3)
Net income (3)....................................................... $ 0.39 $ 0.75 $ 0.80 $ 0.55
Book value (period end) (4).......................................... 7.89 8.80 9.62 10.68
Tangible book value (period end) (4)................................. 7.73 8.71 9.58 10.64
Performance Ratios:
Return on average assets............................................. 0.66% 1.03% 0.97% 0.68%
Return on average equity............................................. 6.15 10.94 10.17 5.69
Net interest margin (5).............................................. 4.17 4.39 4.78 4.49
Efficiency (6)....................................................... 78.31 71.95 69.81 76.78
Asset Quality Ratios:
Allowance for loan losses to period end loans (2).................... 1.45% 1.27% 1.15% 1.06%
Net charge-offs to average loans..................................... 0.18 0.03 -- 0.03
Nonperforming assets to period end loans and foreclosed property
(2)(7)............................................................. 0.52 0.40 0.04 0.02
Capital and Liquidity Ratios:
Average equity to average assets..................................... 10.69% 9.39% 9.46% 11.99%
Leverage............................................................. 9.62 9.10 9.42 13.21
Risk-based capital
Tier 1............................................................. 12.17 10.89 11.04 18.46
Total.............................................................. 13.46 12.04 12.09 19.41
Average loans to average deposits.................................... 88.21 90.52 98.21 93.03
<CAPTION>

1996
<S> <C>

Income Statement Data:
Net interest income.................................................. $ 4,108
Provision for loan losses............................................ 187
Noninterest income................................................... 1,226
Noninterest expense.................................................. 4,141
Net income........................................................... 706
Balance Sheet Data:
Assets............................................................... $ 115,959
Earning assets....................................................... 104,526
Securities (1)....................................................... 23,280
Loans (2)............................................................ 80,546
Allowance for loan losses............................................ 837
Deposits............................................................. 89,862
Federal Home Loan Bank advances...................................... 4,889
Shareholders' equity................................................. 13,556
Weighted Average Shares Outstanding: (3)............................... 1,356,626
Per Share Data: (3)
Net income (3)....................................................... $ 0.54
Book value (period end) (4).......................................... 11.12
Tangible book value (period end) (4)................................. 11.08
Performance Ratios:
Return on average assets............................................. 0.67%
Return on average equity............................................. 5.41
Net interest margin (5).............................................. 4.28
Efficiency (6)....................................................... 77.28
Asset Quality Ratios:
Allowance for loan losses to period end loans (2).................... 1.04%
Net charge-offs to average loans..................................... 0.03
Nonperforming assets to period end loans and foreclosed property
(2)(7)............................................................. 0.23
Capital and Liquidity Ratios:
Average equity to average assets..................................... 12.37%
Leverage............................................................. 11.62
Risk-based capital
Tier 1............................................................. 15.58
Total.............................................................. 16.54
Average loans to average deposits.................................... 88.06
</TABLE>

(1) Securities held to maturity are stated at amortized cost, and securities
available for sale are stated at fair value.
(2) Loans are stated net of unearned income, before allowance for loan losses.
(3) All share and per share data have been adjusted to reflect the 5% Common
Stock dividends in September 1993, April 1994, August 1995, and May 1996.
Net income per share is computed using the weighted average number of
outstanding shares of common stock and dilutive common stock equivalents
from stock options (using the treasury stock method).
(4) Excludes the effect of any outstanding stock options.
(5) Net interest income divided by average earning assets.
(6) Noninterest expense divided by the sum of net interest income and
noninterest income, net of gains and losses on sales of assets.
(7) Nonperforming loans and nonperforming assets do not include loans past due
90 days or more that are still accruing interest.
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RISK FACTORS
The securities offered hereby involve a high degree of risk. In addition to
the other information contained in the Prospectus, the following factors should
be considered carefully in evaluating an investment in the shares of Common
Stock offered hereby.
No Operating History for the New Banks. Each of the New Banks is currently
in the organizational stage and has no operating history. Although the Greenwood
Bank has been operating since 1989 and the Clemson Bank has been operating since
1995, because of the impact of the formation of the New Banks and the
acquisition of the Carolina First Branches, the Company's historical results of
operations are not necessarily indicative of the Company's future operations. As
a bank holding company, the Company's continued profitability will depend
entirely upon the operations of the Banks. The operations of the New Banks will
be subject to the risks inherent in the establishment of a new business and,
specifically, of a new bank. The likelihood of the success of each of the New
Banks must be considered in light of the problems, expenses, complications, and
delays frequently encountered in connection with the development of a new bank
and the competitive environment in which each New Bank will operate. Typically,
new banks incur substantial initial expenses and are not profitable for several
years after commencing business. The start-up expenditures and initial losses of
the Clemson Bank caused a year-over-year decrease in the Company's earnings per
share for the year ended December 31, 1995, and the Company anticipates that the
start-up expenditures and initial losses associated with the development of the
New Banks and the acquisition of the Carolina First Branches will have a similar
negative effect on earnings per share for the year ending December 31, 1997. To
commence business, each of the New Banks must also attract and retain additional
officers and employees. There can be no assurance that any of the New Banks will
ever operate profitably or that the impact of their respective operations will
not have a material adverse impact on the results of operations and financial
condition of the Company. The Company believes that the successful development
and initial operation of each New Bank will also be largely dependent upon the
efforts of its organizers. None of the organizers is obligated to serve as a
director of, or to otherwise remain associated with, his or her Bank. The
failure of organizers to continue to participate in the management of his or her
respective New Bank could have a material adverse effect on the operations of
such New Bank and the Company.
General Risks of the Acquisition of the Carolina First Branches. The
Company has not historically made acquisitions on the same scale as the
acquisition of the Carolina First Branches, and the performance of the Company
will depend on the success of this acquisition. The success of this acquisition
will, in turn, depend on a number of factors, including, without limitation: the
Barnwell Bank's ability to manage the commencement of operations with a
substantial amount of deposits and accountholders; its ability to limit the
outflow of deposits held by its new customers in the Carolina First Branches
beyond the amount anticipated by the Company; its success in deploying the cash
received in the acquisition into assets bearing sufficiently high yields without
incurring unacceptable credit or interest rate risk; its ability to control the
incremental noninterest expense from the Carolina First Branches; its ability to
retain and attract the appropriate personnel to staff the Carolina First
Branches; and its ability to earn acceptable levels of noninterest income from
the Carolina First Branches. No assurance can be given that the Barnwell Bank
will be able to integrate the Carolina First Branches successfully, that the
operation of the Carolina First Branches will not adversely affect the Company's
existing profitability, or that the Company or the Barnwell Bank will be able to
manage the growth resulting from the acquisition effectively. See "Acquisition
of Carolina First Branches" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Investment of Acquired Funds and Impact on Net Interest Margin. The
Barnwell Bank has agreed to assume certain deposit liabilities of the Carolina
First Branches (the "Carolina First Deposits") and purchase certain loans (the
"Carolina First Loans") and other certain assets associated with the Carolina
First Branches. The Barnwell Bank will acquire substantially more
interest-bearing liabilities than interest-earning assets and will receive
approximately $34.5 million in cash assuming the acquisition of approximately
$53.7 million in deposits. Through the Barnwell Bank, the Company intends to
deploy this cash in investment securities, loans in the market areas of the
Carolina First Branches, and loan participations purchased from other financial
institutions, principally from the Company's other Banks. See "Acquisition of
the Carolina First Branches." Prior to investing in loans, the Barnwell Bank
will invest these funds in United States government and United States agency
securities. The Company expects that these investment securities will earn
interest at rates lower than the interest rates that would be earned on loans,
and the Company's net interest margin will therefore decrease in the short- to
medium-term. There can be no assurance that the Barnwell Bank will be able to
invest the funds in loans at market rates or to earn a favorable net interest
margin through investing the funds in investment securities until loans can be
made or loan participations can be purchased. Management currently intends to
designate all of these securities as available-for-sale investments. As with any
fixed-rate investment, market value appreciation or depreciation of investment
securities will occur depending upon the movement of interest rates. Given
fluctuations in market conditions, there can be no assurance that
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management's current strategy for allocating the funds to loans and investment
securities will be the investment allocation ultimately pursued by the Company.
See "Acquisition of the Carolina First Branches."
Credit Risk; Adequacy of Allowance for Loan Losses. There are certain risks
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. Each Bank maintains 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. Management's judgment as to the adequacy of the allowance is based upon
a number of assumptions about future events which it believes to be reasonable
but which may or may not be 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.
Additions to the allowance for loan losses would result in a decrease of the
Company's net income and, possibly, its capital. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Provision and
Allowance for Loan Losses."
No Assurance of Regulatory Approvals for the New Banks. The Company must
secure the approval of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") and of the South Carolina State Board of Financial
Institutions (the "State Board") to acquire the common stock of each New Bank.
Each New Bank must also obtain approval of its charter application from the
State Board and approval of its application for deposit insurance from the
Federal Deposit Insurance Corporation (the "FDIC"). The Company anticipates that
all final regulatory approvals for the Belton Bank and the Barnwell Bank will be
received before the end of the first quarter of 1997, and the regulatory
approvals for the Newberry Bank will be received before the end of the second
quarter of 1997, although no assurances can be given as to when or whether any
or all of such approvals will be obtained. Any significant delay in the
commencement of operations by any New Bank will increase such Bank's
pre-operating expenses and may reduce such Bank's and the Company's capital and
income.
The State Board has informed the Company that final approval of the
applications for the Belton Bank, the Newberry Bank, and the Barnwell Bank will
be conditioned upon a minimum capitalization of each Bank of $3.5 million, $3.3
million, and $7.0 million, respectively. The State Board has the authority to
raise these minimum capitalization amounts and can also condition its approval
on an increase in the capitalization of the Existing Banks, and there can be no
assurance that the State Board will not do so. In such event, the Company would
likely fund the increased capitalization through the use of net proceeds from
the Offering, from dividends from the Existing Banks (to the extent available),
or through loans from third-party financial institutions (subject to obtaining
regulatory approval). There can be no assurance, however, that the Company would
be able to obtain third-party financing on acceptable terms or in amounts
sufficient to fund any increase in mandated capitalization minimums. The use by
the Company of borrowed funds for capitalization of the Banks will be less
favorable to the Company's financial condition than the use of Offering proceeds
for this purpose. See "Business" and "Government Supervision and Regulation."
Dependence on Senior Management. The Company's growth and development to
date have been largely the result of contributions of certain of the senior
executive officers of the Company and its subsidiaries, including William G.
Stevens, the Company's President and Chief Executive Officer, and James H.
Stark, the Company's Chief Financial Officer. The loss of the services of one or
more of such individuals could have a material adverse effect on the Company's
business and development. No assurance can be given that replacements for any of
these officers could be employed if these officers' services were no longer
available. The Company maintains key employee insurance on the life of Mr.
Stevens. In January 1997, James H. Stark underwent coronary surgery, and the
Company expects Mr. Stark to resume his full-time service to the Company by
March 1, 1997. See "Management."
Competition. The Existing Banks currently encounter, and the New Banks will
encounter, strong competition from the financial institutions in their
respective primary market areas. In addition, established financial institutions
not already operating in any of the Banks' primary market areas may, under South
Carolina law, open branches in such areas at future dates. In the conduct of
certain aspects of their respective banking businesses, the Banks also compete
with savings institutions, credit unions, mortgage banking companies, consumer
finance companies, insurance companies, and other institutions, some of which
are not subject to the same degree of regulation and restriction imposed upon
the Banks. Many of these competitors have substantially greater resources and
lending limits than the Banks and offer certain services that one or more of the
Banks do not currently provide. In addition, many of these competitors have
numerous branch offices located throughout their extended market areas which
provide them with a competitive advantage which the Banks do not currently have.
Furthermore, as a consequence of legislation enacted by the United States
Congress, out-of-state banks will be allowed to commence operations and compete
in the Banks' primary market areas. No assurance can be given that such
competition will not have
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an adverse impact on the financial condition and results of operations of the
Banks or that the Banks will ultimately be able to successfully compete with
other financial institutions in their respective markets. See
"Business -- Competition" and "Government Supervision and
Regulation -- Interstate Banking."
Potential Impact of Changes in Interest Rates. The Company's profitability
is dependent to a large extent on the net interest income of the Banks, which is
the difference between the respective Bank's interest income on interest-earning
assets and the Bank's interest expense on interest-bearing liabilities. The
Company, like most financial institution holding companies, will continue to be
affected by changes in general interest rate levels and other economic factors
beyond the Company's control. As of December 31, 1996, the Company had a
cumulative one-year negative gap position of 25.13% of total interest-bearing
assets, although immediately upon consummation of the assumption of the Carolina
First Deposits and the purchase of the Carolina First Loans and other assets,
the Company anticipates that it will have a one-year positive gap position. A
positive gap position would mean that the yield of the Company's
interest-earning assets will likely adjust to changes in market interest rates
at a faster rate than the cost of the Company's interest-bearing liabilities.
Consequently, the Company's net interest income could be adversely affected
during periods of rapidly decreasing interest rates. Although the Company has
structured its asset and liability management strategies to mitigate the impact
of changes in interest rates, there can be no assurance about how successful it
will be in doing so. See "Acquisition of Carolina First Branches" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Net Interest Income."

Lack of Established Trading Market and Possible Volatility of Stock Price.
Prior to this Offering, there has been no established or other active or liquid
market for the Common Stock. There can be no assurance as to the liquidity of
any markets that may develop for the Common Stock, the ability of holders of
Common Stock to sell their securities, or the price at which holders would be
able to sell their securities. The initial public offering price of the Common
Stock has been determined solely by negotiations among the Company and J.C.
Bradford & Co. and Edgar M. Norris & Co., Inc. as representatives (the
"Representatives") of the several underwriters named in this Prospectus (the
"Underwriters") and may bear no relationship to the market price of the Common
Stock after this Offering. See "Underwriting." The market price of the Common
Stock could be subject to significant fluctuations in response to variations in
quarterly and yearly operating results (which could be substantial in the near
term as a result of the expenses associated with the opening of each New Bank
and the losses expected from the Belton Bank and the Newberry Bank), general
trends in the Company's industry, and other factors. Furthermore, it is likely
that in some future quarter the Company's operating results will be below the
expectations of public market analysts and investors. In such an event, the
price of the Common Stock would likely be materially adversely affected. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." In addition, the stock market in recent years has experienced
extreme price and volume fluctuations that have often been unrelated or
disproportionate to the operating performance of affected companies. These broad
fluctuations may adversely affect the market price of the Common Stock. See
"Market for Common Stock."

Dilution. Purchasers of Common Stock in the Offering will experience
immediate dilution in the net tangible book value per share of the Common Stock
from the public offering price. Moreover, in the near-term, the Company expects
that the Offering, the acquisition of the New Banks, and the acquisition of
certain deposits and assets associated with the Carolina First Branches will
result in dilution of the Company's return on equity and earnings per share. See
"Acquisition of the Carolina First Branches," "Dilution," and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
No Dividends. The Company has never paid cash dividends on its Common Stock
and in the near-term intends to retain any future earnings to finance its
growth. As the Company's business operations will be conducted almost
exclusively through the Banks, the Company's ability to pay dividends on the
Common Stock in the future will be directly dependent on the dividends paid by
the Banks to the Company. The ability of the Banks to pay dividends to the
Company will be subject to the profitability of the Banks and to government
regulations that limit the aggregate amount of cash dividends paid to
shareholders based on then-current income levels. There can be no assurance that
the Banks' future earnings will support dividend payments to the Company.
Additionally, there is no restriction on the ability of the Company to issue
shares of stock with preferential dividend rights in the future. See "Dividend
Policy," "Government Supervision and Regulation -- Dividends," and "Description
of Securities -- Undesignated Stock."
Local Economic Conditions. The success of the Company is dependent to a
certain extent upon the general economic conditions in the geographic markets
served by the Banks. Although the Company expects that economic conditions will
continue to be favorable in these markets, no assurance can be given that these
economic conditions will continue. Adverse changes in economic conditions in the
geographic markets that the Banks serve would likely impair the Banks' ability
to
8

<PAGE>
collect loans and could otherwise have a negative effect on the financial
condition of the Company. See "Business -- Market Areas."
Shares Eligible for Future Sale. Future sales of substantial amounts of
Common Stock could adversely affect the market price of the Common Stock. Upon
consummation of the Offering, the Company will have 2,690,784 shares of Common
Stock outstanding, and all of these shares (plus any shares issued upon the
exercise of the Underwriters' over-allotment option) will be freely tradeable
without restriction or registration under the Securities Act of 1933
("Securities Act"), unless owned by an affiliate of the Company, subject to the
lock-up agreements described below, or acquired pursuant to the exercise of
stock options prior to the filing of the Form S-8 Registration Statement
described below. In addition, there are outstanding stock options that the
Company has granted to certain directors, officers, and employees of the Company
and the Banks for the purchase of an aggregate of 447,851 shares of Common
Stock, of which options for 310,801 shares are currently exercisable. The
Company's and each Bank's directors, executive officers, and organizers have
agreed with the Underwriters not to sell any Common Stock, which includes
356,084 currently outstanding shares and 378,891 shares issuable upon exercise
of options, for 180 days from the date of this Prospectus without the prior
written consent of the Representatives. The Company has filed a Form S-8
Registration Statement with the Securities and Exchange Commission registering
the issuance of the shares subject to stock options. See "Description of
Securities -- Shares Eligible for Future Sale" and "Underwriting."
Issuance of Additional Stock. Pursuant to its Articles of Incorporation,
the Company has the authority to issue additional shares of Common Stock and has
authorized 2,000,000 shares of a special class of stock which may be issued by
the Board of Directors on such terms and with such rights, preferences, and
designations as the Board of Directors may determine without any vote of the
shareholders. Issuance of such special stock, depending upon the rights,
preferences, and designations thereof, may have the effect of delaying,
deterring, or preventing a change in control of the Company. Issuance of
additional shares of Common Stock or special stock could also result in the
dilution of the voting power of the Common Stock purchased in this Offering. See
"Description of Securities -- Common Stock," " -- Undesignated Stock," and " --
Change of Control."
Anti-Takeover Provisions; Insider Control of the Company. Certain
provisions of the Company's Articles of Incorporation could delay or frustrate
the removal of incumbent directors and could make a merger, tender offer or
proxy contest involving the Company more difficult, even if such events could be
perceived as beneficial to the interests of the shareholders. The provisions
include staggered terms for the Board of Directors and requirements of
super-majority votes to approve certain business transactions. In addition,
certain provisions of state and federal law may also have the effect of
discouraging or prohibiting a future takeover attempt in which shareholders of
the Company might otherwise receive a substantial premium for their shares over
then-current market prices. Furthermore, as part of its approval of each New
Bank's application for a state bank charter, the State Board has required that
each New Bank will not enter into any agreement to merge, sell or consolidate
within five years of the date it commences operations. To the extent that these
provisions are effective in discouraging or preventing takeover attempts, they
may tend to reduce the market price for the Common Stock offered hereby.
Directors and executive officers of the Company and the Existing Banks currently
own in the aggregate approximately 29.0% of the outstanding shares of Common
Stock. In addition, based on the number of shares the Company anticipates will
be purchased in the Offering by organizers of the New Banks, following
completion of the Offering, directors, executive officers, and organizers of the
Company and the Banks are expected to own in the aggregate at least 23.8% of the
outstanding shares of Common Stock (22.0% if the Underwriters' over-allotment
option is exercised in full). Because directors and executive officers of the
Company and the Existing Banks are entitled to purchase shares in the Offering,
these percentages may actually be higher than 23.8% and 22.0%. Therefore, to the
extent they vote together, the directors and executive officers of the Company
and the Banks will have the ability to exert significant influence over the
election of the Company's Board of Directors and other corporate actions
requiring shareholder approval. See "Management -- Ownership of the Common
Stock" and "Description of Securities -- Change of Control."
Common Stock Not Insured. The shares of Common Stock offered hereby, and
the shares of common stock of each New Bank that are expected to be purchased by
the Company, are not deposits or other obligations of the Company and are not
guaranteed by the Company, will not be insured by the FDIC, and may not be used
as collateral to secure a loan from any of the Banks.
Government Regulation. The banking industry is heavily regulated. This
regulation is intended primarily for the protection of depositors of the Banks,
not shareholders, and could adversely affect the operations of the Banks, such
as their ability to make loans and attract deposits. During 1989, 1991, and 1994
the United States Congress enacted three major pieces of
9

<PAGE>
banking legislation: The Financial Institutions Reform, Recovery and Enforcement
Act of 1989, the Federal Deposit Insurance Corporation Improvement Act of 1991,
and the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994.
These three Acts have significantly changed the commercial banking industry
through, among other things, revising and limiting the types and amounts of
investment authority, significantly increasing minimum regulatory capital
requirements, broadening the scope and power of federal bank and thrift
regulators over financial institutions and affiliated persons in order to
protect the deposit insurance funds and depositors, and significantly enhancing
the abilities of banks and bank holding companies to engage in interstate bank
acquisition and branching activities. Additional legislation affecting financial
institutions has been proposed and may be enacted, and regulations now affecting
the Company and the Banks may be modified at any time. There can be no assurance
that such new legislation or modifications would not adversely affect the
business of the Company and the Banks. The Banks are also affected by the
Federal Reserve's monetary policies, and there can be no assurance that actions
by the Federal Reserve will not have an adverse effect on the deposit levels,
loan demand, or the business and earnings of any of the Banks. See "Government
Supervision and Regulation."
THE COMPANY
The Company is a bank holding company headquartered in Greenwood, South
Carolina which currently operates through two community banks and is in the
process of acquiring three de novo community banks in non-metropolitan markets
in the State of South Carolina. The Company pursues a community banking business
which is characterized by personalized service and local decision-making and
emphasizes the banking needs of individuals and small to medium-sized
businesses.
The Company was formed in 1988 to serve as a holding company for the
Greenwood Bank, principally in response to perceived opportunities resulting
from the takeovers of several South Carolina-based banks by large southeastern
regional bank holding companies. In many cases, when these consolidations occur,
local boards of directors are dissolved and local management is relocated or
terminated. The Company believes this situation creates favorable opportunities
for new community banks with local management and local directors. Management
believes that such banks can be successful in attracting individuals and small
to medium-sized businesses as customers who wish to conduct business with a
locally owned and managed institution that demonstrates an active interest in
their business and personal financial affairs. The Company anticipates that the
Barnwell Bank and the Belton Bank will open during the first quarter of 1997 and
that the Newberry Bank will open during the second quarter of 1997.
In 1994, the Company made the strategic decision to expand beyond the
Greenwood County area by creating an organization of independently managed
community banks that serve their respective local markets but which share a
common vision and benefit from the strength, resources, and economies of a
larger institution. In June 1995, the Company opened the Clemson Bank in
Clemson, South Carolina. The Company is in the process of acquiring three
additional de novo banks which are being formed in Belton, Newberry, and
Barnwell, South Carolina. The Company intends to open the Belton Bank and the
Newberry Bank in traditional de novo fashion by capitalizing the banks and
seeking local deposits to fund loan growth. Immediately upon opening, however,
the Barnwell Bank will acquire certain deposits and assets associated with the
Carolina First Branches. As of December 31, 1996, the Carolina First Branches
had approximately $53.7 million in deposits and $15.2 million in loans.
The address of the Company's principal executive offices is 109 Montague
Street, Greenwood, South Carolina 29646, and the Company's telephone number at
such address is (864) 941-8200.
ACQUISITION OF THE CAROLINA FIRST BRANCHES
Description of the Acquisition
The Company, the Barnwell Bank, and Carolina First Bank ("Carolina First")
entered into a Purchase and Assumption Agreement dated January 21, 1997 (the
"Agreement") for the acquisition by the Barnwell Bank from Carolina First of
certain assets and the assumption of certain liabilities (the "Acquisition")
relating to the five Carolina First Branches, which are located in the
communities of Barnwell, Blackville, Salley, Springfield, and Williston, South
Carolina. The Company anticipates that the Acquisition will close during the
first quarter of 1997. At the closing, and subject to the terms of the
Agreement, the Barnwell Bank is expected to assume the Carolina First Deposits
and pay Carolina First a premium of 5.25% on the assumed Carolina First Deposits
other than certificates of deposit with a balance in excess of $100,000 (the
"Carolina First Core Deposits"). As of December 31, 1996, the Carolina First
Deposits totaled $53.7 million and the Carolina First Core Deposits totaled
$47.5 million. In addition, the Agreement contemplates that the Barnwell Bank
will acquire the Carolina
10

<PAGE>
First Loans, as well as the real property owned or leased by Carolina First for
operation of the Carolina First Branches and related furniture, equipment, and
other fixed operating assets (the "Carolina First Assets"). The Barnwell Bank
also expects to retain all of the Carolina First employees currently associated
with the Carolina First Branches. The Agreement provides the Company and the
Barnwell Bank the right to reject any loans. In connection with the evaluation
of the Acquisition, the Company is examining the Carolina First Loans using
substantially the same underwriting criteria, analyses, and collateral
evaluations that the Company has traditionally used in the ordinary course of
its business.
The Acquisition will be accounted for as a purchase, with the 5.25% premium
to be attributed to the value of the Carolina First Core Deposits and amortized
over a fifteen-year period on a straight-line basis. The Barnwell Bank will
acquire the Carolina First Loans at face value and the Carolina First Assets at
Carolina First Bank's book value, which approximates fair value. The face value
of the Carolina First Loans as of December 31, 1996, was approximately $15.2
million, and the total purchase price of the Carolina First Assets is
approximately $1.9 million. Payment of the premium on the Carolina First Core
Deposits, as well as the purchase price for the Carolina First Loans and
Carolina First Assets, will be effectuated through an appropriate reduction of
the cash received to fund deposits assumed by the Barnwell Bank. Accordingly,
the Barnwell Bank expects to receive approximately $34.5 million in cash from
Carolina First at the closing in connection with its assumption of Carolina
First Deposits of $53.7 million (plus accrued interest payable of $554,000) as
of December 31, 1996, after deduction of (a) the deposit premium of
approximately $2.5 million, (b) the purchase price of the Carolina First Loans
of approximately $15.4 million (including accrued interest on the loans), and
(c) the purchase price of the Carolina First Assets of approximately $1.9
million.
The closing of the Acquisition is contingent upon receipt by the parties of
all necessary regulatory approvals, including approval of the State Board. The
Company expects the State Board to grant approval for the Acquisition on the
condition that the Company contribute at least $7.0 million in capital to the
Barnwell Bank. See "Use of Proceeds." However, there can be no assurance that
the Company and the Barnwell Bank will obtain approval of the State Board.
Effect of the Acquisition
Management believes that the Acquisition will benefit the Company because
it will help the Company achieve its goal of forming a network of independently
operated community banks that serve their respective local markets but which
share a common vision and benefit from the strength, resources, and economies of
a larger institution. The Carolina First Branches are located in
non-metropolitan markets similar to the Company's existing markets. The Carolina
First Branches are ranked either first or second in deposit market share as of
June 30, 1996, in all five of the communities in which they are located, and the
Carolina First Branch is the only commercial bank in three of the communities
(Blackville, Salley, and Springfield). Based on the Barnwell Bank's local
management and responsive approach to loan applications, personalized service,
and knowledge of these markets, the Company believes that these markets offer
significant future growth opportunities.
The Company believes that the Carolina First Deposits are largely stable
core deposit funds, similar to the Existing Banks' deposit bases. After
providing for purchased loans, branch facilities and equipment, and the deposit
premium, the Barnwell Bank will receive approximately $34.5 million in cash
(assuming the acquisition of approximately $53.7 million in deposits), which
will be temporarily placed in the Barnwell Bank's investment portfolio. As a
result of the addition of the core deposits of the Carolina First Branches and
the initial investment of proceeds from the Acquisition into short-term
investments, the interest rate risk profile of the Company will change from
being liability sensitive prior to the Acquisition to being asset sensitive
following the Acquisition. Through the Barnwell Bank, the Company intends to
deploy this cash in investment securities, loans in the market areas of the
Carolina First Branches, and loan participations purchased from other financial
institutions, principally from the Company's other Banks. Prior to investing in
loans, the Barnwell Bank will invest the acquired funds in United States
government or United States agency securities. The Company expects that these
investment securities will earn interest at rates lower than the interest rates
that would be earned on loans, and the Company's net interest margin will
therefore decrease in the short to medium-term. The Company believes that the
net interest margin will increase over the long-term as the Barnwell Bank
invests the acquired funds in loans at market rates. There can be no assurance,
however, that the Barnwell Bank will be able to invest the acquired funds in
loans at market rates or that the Barnwell Bank will be able to earn a favorable
net interest margin through investing the acquired funds in investment
securities until loans can be made or loan participations can be purchased. As
with any fixed-rate investment, market value appreciation or depreciation of
investment securities will occur depending upon the movement of interest rates.
Given fluctuations in market conditions, there can be no assurance that
management's current strategy for allocating the acquired funds to loans and
investment securities will be the investment allocation ultimately pursued by
the Company.
11

<PAGE>
Unaudited Pro Forma Financial Information
The following unaudited pro forma balance sheet has been derived from the
historical balance sheet of the Company, adjusted to give effect to the proposed
acquisition of selected assets and the assumption of selected liabilities in
connection with the acquisition of the Carolina First Branches by the Barnwell
Bank, the issuance and sale of Common Stock through the Offering, and the
purchase of all of each New Bank's common stock as though such transactions had
occurred on December 31, 1996. The unaudited pro forma balance sheet is not
necessarily indicative of the financial position that would have been achieved
had the transactions reflected therein occurred on such date. The pro forma
adjustments with respect to the acquisition of the Carolina First Branches
reflect December 31, 1996, balances which are in accordance with the terms of
the Agreement and are subject to change prior to the closing date in accordance
with the terms of the Agreement. The unaudited pro forma balance sheet also does
not purport to project the financial position of the Company as of the period
shown or for any future period.
PRO FORMA CONSOLIDATED BALANCE SHEET
PENDING ACQUISITION AND OFFERING
(UNAUDITED)

<TABLE>
<CAPTION>
Pro Forma Adjustments as of
December 31, 1996
As
Reported Acquisition (1) Offering (2)
<S> <C> <C> <C>
(Dollars in thousands)
Assets:
Cash and cash equivalents................................................. $ 4,627 $34,489(3) $ 13,323
Securities available-for-sale............................................. 23,280 -- --
Loans..................................................................... 80,546 15,152 --
Less allowance for loan losses.......................................... (837 ) -- --
Loans, net............................................................ 79,709 15,152
Premises, furniture & equipment, net...................................... 3,523 1,892 950
Accrued interest receivable............................................... 1,114 238 --
Intangible assets, net.................................................... 47 2,491(4) 600(5)
Other assets.............................................................. 3,659 -- --
Total assets........................................................ $115,959 $54,262 $ 14,873
Liabilities and Shareholders' Equity:
Deposits:
Noninterest bearing..................................................... $12,226 $ 4,936 $ --
Interest bearing........................................................ 77,636 48,772 --
Total deposits........................................................ 89,862 53,708
Federal funds purchased and securities sold under agreements to
repurchase.............................................................. 6,783 -- --
Advances from the Federal Home Loan Bank.................................. 4,889 -- --
Accrued interest payable.................................................. 462 554 --
Other liabilities......................................................... 407 -- --
Total liabilities................................................... 102,403 54,262 --
Shareholders' equity:
Common stock............................................................ 1,219 -- 1,465
Surplus................................................................. 12,004 -- 13,408
Unrealized gain (loss) on securities available-for-sale, net of deferred
taxes................................................................. 35 -- --
Retained earnings....................................................... 298 -- --
Total shareholders' equity.......................................... 13,556 -- 14,873
Total liabilities and shareholders' equity.......................... $115,959 $54,262 $ 14,873
<CAPTION>
Pro
Forma
<S> <C>
Assets:
Cash and cash equivalents................................................. $ 52,439
Securities available-for-sale............................................. 23,280
Loans..................................................................... 95,698
Less allowance for loan losses.......................................... (837)
Loans, net............................................................ 94,861
Premises, furniture & equipment, net...................................... 6,365
Accrued interest receivable............................................... 1,352
Intangible assets, net.................................................... 3,138
Other assets.............................................................. 3,659
Total assets........................................................ $185,094
Liabilities and Shareholders' Equity:
Deposits:
Noninterest bearing..................................................... $ 17,162
Interest bearing........................................................ 126,408
Total deposits........................................................ 143,570
Federal funds purchased and securities sold under agreements to
repurchase.............................................................. 6,783
Advances from the Federal Home Loan Bank.................................. 4,889
Accrued interest payable.................................................. 1,016
Other liabilities......................................................... 407
Total liabilities................................................... 156,665
Shareholders' equity:
Common stock............................................................ 2,684
Surplus................................................................. 25,412
Unrealized gain (loss) on securities available-for-sale, net of deferred
taxes................................................................. 35
Retained earnings....................................................... 298
Total shareholders' equity.......................................... 28,429
Total liabilities and shareholders' equity.......................... $185,094
</TABLE>

The accompanying notes are an integral part of the pro forma consolidated
balance sheet.
(1) Reflects pending acquisition of certain deposits and assets associated with
the Carolina First Branches after giving effect to the consummation of the
Acquisition and related purchase accounting adjustments by the Company as if
they occurred on December 31, 1996. Assumes that the book value of the
assets to be acquired and the liabilities to be assumed approximates their
respective fair values.
(2) Reflects the sale of 1,465,000 shares of Common Stock in the Offering at
$11.00 per share, less estimated offering expenses, underwriting discounts,
and advisory fees of approximately $1.2 million. The proceeds of the
Offering will be used to acquire all of the issued common stock of the New
Banks.
(3) Consideration received from Carolina First in connection with the
Acquisition in accordance with the Agreement.
(4) Core deposit premium of $2.5 million to be amortized on a straight-line
basis over 15 years.
(5) Organizational and pre-opening costs totaling $600,000 to be amortized on a
straight-line basis over five years.
12

<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of 1,465,000 shares of Common
Stock in the Offering are estimated to be approximately $14.9 million ($17.1
million if the Underwriters' over-allotment option is exercised in full), based
upon the public offering price of $11.00 per share and after deducting the
underwriting discount and expenses payable by the Company. Of these net
proceeds, the Company intends to use $7.0 million to capitalize the Barnwell
Bank, $3.5 million to capitalize the Belton Bank, and $3.3 million to capitalize
the Newberry Bank, in each case upon receipt of final regulatory approvals. As
soon as reasonably possible after the formation and capitalization of the
Barnwell Bank, the Barnwell Bank will purchase the Carolina First Branches,
paying a premium on the Carolina First Core Deposits (estimated to be $47.5
million) of approximately $2.5 million from the $7.0 million capitalization
received by the Barnwell Bank from the Company. See "Acquisition of Carolina
First Branches."

Any remaining balance of the net proceeds from the Offering will be
available for general corporate purposes aimed primarily at the expansion of the
Company's business. While the Company does not intend actively to search for
opportunities to expand into additional markets, the Company may consider
opportunities that arise from time to time, most likely through acquisitions of
existing institutions or branches rather than through the formation of
additional de novo banks. The Company has no specific acquisition plans at the
current time other than the New Banks and the Carolina First Branches. See
"Business -- Growth Strategy."
The Company has entered into development agreements with the organizers of
each of the New Banks which obligate the Company to pay or reimburse the
organizers for the organizational and pre-opening expenses relating to each New
Bank only upon the Company's acquisition of that Bank's stock. Consequently, of
the capital received by each New Bank from the sale of all of its common stock
to the Company, approximately $350,000 to $600,000 is expected to be used by
each New Bank to repay all of the loans obtained by such New Bank's organizers
from the Greenwood Bank in order to finance equipment and furnishings, land
costs associated with the main office location, and organizational and
pre-opening expenses of such New Bank. Of the $7.0 million total capitalization
received by the Barnwell Bank, approximately $2.5 million will be used to fund
the premium on the Carolina First Core Deposits (estimated to be $47.5 million)
in connection with the acquisition of the Carolina First Branches. The balance
of each New Bank's proceeds from the sale of the common stock to the Company
will be commingled with funds obtained by such New Bank from other sources,
principally expected to be customer deposits, and will be employed in banking
operations, including making loans to customers, making investments, and, until
operations begin to generate income, payment of current operating expenses
(including management salaries). The amount and manner in which these funds will
be used will be subject to the discretion of the management of each New Bank
based upon current market conditions and, therefore, cannot currently be
definitively quantified.
MARKET FOR COMMON STOCK

DIVIDEND POLICY
The Company has not declared or distributed any cash dividends to its
shareholders since its organization in 1988, and it is not likely that any cash
dividends will be declared in the near term. The Board of Directors of the
Company intends to follow a policy of retaining any earnings to provide funds to
operate and expand the business of the Company and the Banks for the foreseeable
future. The future dividend policy of the Company is subject to the discretion
of the Board of Directors and will depend upon a number of factors, including
future earnings, financial condition, cash requirements, and general business
conditions. The Company's ability to distribute cash dividends will depend
entirely upon the Banks' abilities to distribute dividends to the Company. As
state banks, the Banks are subject to legal limitations on the amount of
dividends each is permitted to pay. In particular, the Banks must receive the
approval of the State Board prior to paying dividends to the Company.
Furthermore, neither the Banks nor the Company may declare or pay a cash
dividend on any of their capital stock if they are insolvent or if the payment
of the dividend would render them insolvent or unable to pay their obligations
as they become due in the ordinary course of business. See "Government
Supervision and Regulation -- Dividends."
13

<PAGE>
DILUTION

At December 31, 1996, the Company had a net tangible book value of
approximately $13.5 million, or $11.08 per share. Net tangible book value per
share represents the amount of the Company's shareholders' equity, less
intangible assets, divided by the number of shares of Common Stock outstanding.
Dilution per share to new investors represents the difference between the amount
per share paid by purchasers of shares of Common Stock in the Offering made
hereby and the pro forma net tangible book value per share of Common Stock
immediately after completion of the Offering. After (i) giving effect to the
sale by the Company of 1,465,000 shares of Common Stock offered hereby at the
public offering price of $11.00 per share, (ii) deducting estimated offering
expenses, and (iii) giving effect to the application of the estimated net
proceeds as set forth under "Use of Proceeds," the pro forma net tangible book
value of the Company at December 31, 1996 would have been approximately $25.3
million, or $9.42 per share. This represents an immediate decrease in net
tangible book value of $1.66 per share to existing shareholders and an immediate
dilution of $1.58 per share to new investors. The following table illustrates
this per share dilution:

<TABLE>
<S> <C> <C>
Public offering price per share............................................................................ $11.00
Net tangible book value per share at December 31, 1996................................................... $11.08
Decrease per share attributable to new investors......................................................... (.51)
Decrease per share attributable to acquisition of intangible assets...................................... (1.15)
Pro forma net tangible book value per share after the Offering............................................. 9.42
Dilution per share to new investors........................................................................ $ 1.58
</TABLE>

Assuming the Underwriters' over-allotment option is exercised in full, pro
forma net tangible book value upon completion of the Offering would be $9.48 per
share, the immediate decrease in pro forma net tangible book value of shares to
existing shareholders would be $1.60 per share, and the immediate dilution to
new investors would be $1.52 per share.

The following table sets forth on a pro forma basis, as of December 31,
1996 (a) the number of shares of Common Stock purchased from the Company prior
to the Offering and the number of shares purchased in the Offering, and (b) the
total consideration and average price per share paid to the Company with respect
to Common Stock held by the existing shareholders of the Company and to be paid
by new investors in the Offering.

<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average Price
Number(1) Percent Amount Percent Per Share(1)
<S> <C> <C> <C> <C> <C>
Existing shareholders........................................... 1,219,109 45.4% $11,523,106 41.7% $ 9.45
New investors................................................... 1,465,000 54.6 16,115,000 58.3 11.00
Total......................................................... 2,684,109 100.0% $27,638,106 100.0%
</TABLE>

(1) Adjusted for the 5% Common Stock dividends in September 1993, April 1994,
August 1995, and May 1996.

The foregoing tables assume no exercise of outstanding stock options. As of
the date of this Prospectus, there are outstanding options to purchase an
aggregate of 447,851 shares of Common Stock at exercise prices ranging from
$7.92 to $12.38. To the extent outstanding options are exercised, or shares
reserved for future issuance are issued, there will be further dilution to new
investors. These tables also exclude 6,675 shares issued upon exercise of stock
options in January 1997 at an average price per share of $7.10.

<PAGE>
CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Company at December 31, 1996, and as adjusted to reflect the sale of 1,465,000
shares of Common Stock pursuant to the Offering at the public offering price of
$11.00 per share and the application of the net proceeds therefrom as set forth
under "Use of Proceeds."

<TABLE>
<CAPTION>
December 31, 1996
Actual As Adjusted
<S> <C> <C>
(In thousands)
Long-term debt:
Federal Home Loan Bank advance (maturity exceeding one year)........................................ $ 150 $ 150
Shareholders' equity:
Common stock, $1.00 par value; 10,000,000 shares authorized, 1,219,109 shares issued and
outstanding -- actual; 2,684,109 shares issued and outstanding -- as adjusted (1)................ 1,219 2,684
Capital surplus..................................................................................... 12,004 25,412
Retained earnings................................................................................... 298 298
Unrealized gain (loss) on securities available for sale, net of taxes............................... 35 35
Total shareholders' equity....................................................................... 13,556 28,429
Total capitalization........................................................................... $ 13,706 $28,579
</TABLE>

(1) Excludes 447,851 shares of Common Stock issuable upon exercise of stock
options outstanding as of the date of the Prospectus, at exercise prices
ranging from $7.92 to $12.38 per share. Also excludes 6,675 shares issued
upon exercise of stock options in January 1997.
15

<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data for the five years ended
December 31, 1996 are derived from the consolidated financial statements and
other data of the Company. The consolidated financial statements for the year
ended December 31, 1992 through 1996, were audited by Tourville, Simpson &
Henderson, independent auditors. The selected consolidated financial data should
be read in conjunction with the consolidated financial statements of the
Company, including the accompanying notes, included elsewhere herein.
<TABLE>
<CAPTION>
Year Ended December 31,
1992 1993 1994 1995
<S> <C> <C> <C> <C>
(Dollars in thousands)
Income Statement Data:
Interest income...................................................... $ 3,315 $ 3,794 $ 4,430 $ 6,147
Interest expense..................................................... 1,642 1,600 1,693 2,948
Net interest income.................................................. 1,673 2,194 2,647 3,199
Provision for loan losses............................................ 227 80 14 112
Net interest income after provision for loan losses.................. 1,446 2,114 2,633 3,087
Net securities gains (losses)........................................ 21 22 (79) (22)
Noninterest income................................................... 610 754 593 799
Noninterest expense.................................................. 1,787 2,121 2,261 3,069
Income before income taxes, extraordinary credit and accounting
change............................................................. 290 769 886 795
Applicable income taxes.............................................. 103 256 301 261
Income before extraordinary credit and accounting change............. 187 513 585 534
Extraordinary credit................................................. 102 -- -- --
Accounting change.................................................... -- 47 -- --
Net income........................................................... $ 289 $ 560 $ 585 $ 534
Balance Sheet Data:
Assets............................................................... $ 49,281 $ 58,970 $ 65,071 $ 96,100
Earning assets....................................................... 44,636 53,891 58,182 87,980
Securities (1)....................................................... 7,466 7,949 7,617 22,446
Loans (2)............................................................ 34,493 44,634 50,565 63,204
Allowance for loan losses............................................ 500 567 581 671
Deposits............................................................. 40,970 45,992 49,146 73,138
Federal Home Loan Bank advances...................................... 2,627 6,756 5,925 6,244
Shareholders' equity................................................. 4,844 5,420 6,079 12,932
Weighted Average Shares Outstanding (3)................................ 745,272 745,645 804,822 1,070,135
Per Share Data (3):
Net income (3)....................................................... $ 0.39 $ 0.75 $ 0.80 $ 0.55
Book value (period end) (4).......................................... 7.89 8.80 9.62 10.68
Tangible book value (period end) (4)................................. 7.73 8.71 9.58 10.64
Performance Ratios:
Return on average assets............................................. 0.66% 1.03% 0.97% 0.68%
Return on average equity............................................. 6.15 10.94 10.17 5.69
Net interest margin (5).............................................. 4.17 4.39 4.78 4.49
Efficiency (6)....................................................... 78.31 71.95 69.81 76.78
Asset Quality Ratios:
Allowance for loan losses to period end loans (2).................... 1.45% 1.27% 1.15% 1.06%
Net charge-offs to average loans..................................... 0.18 0.03 -- 0.03
Nonperforming assets to period end loans and foreclosed property
(2)(7)............................................................. 0.52 0.40 0.04 0.02
Capital and Liquidity Ratios:
Average equity to average assets..................................... 10.69% 9.39% 9.46% 11.99%
Leverage (4.00% required minimum).................................... 9.62 9.10 9.42 13.21
Risk-based capital
Tier 1............................................................. 12.17 10.89 11.04 18.46
Total.............................................................. 13.46 12.04 12.09 19.41
Average loans to average deposits.................................... 88.21 90.52 98.21 93.03
<CAPTION>

1996
<S> <C>

Income Statement Data:
Interest income...................................................... $ 8,114
Interest expense..................................................... 4,006
Net interest income.................................................. 4,108
Provision for loan losses............................................ 187
Net interest income after provision for loan losses.................. 3,921
Net securities gains (losses)........................................ 17
Noninterest income................................................... 1,209
Noninterest expense.................................................. 4,141
Income before income taxes, extraordinary credit and accounting
change............................................................. 1,006
Applicable income taxes.............................................. 300
Income before extraordinary credit and accounting change............. 706
Extraordinary credit................................................. --
Accounting change.................................................... --
Net income........................................................... $ 706
Balance Sheet Data:
Assets............................................................... $ 115,959
Earning assets....................................................... 104,526
Securities (1)....................................................... 23,280
Loans (2)............................................................ 80,546
Allowance for loan losses............................................ 837
Deposits............................................................. 89,862
Federal Home Loan Bank advances...................................... 4,889
Shareholders' equity................................................. 13,556
Weighted Average Shares Outstanding (3)................................ 1,356,626
Per Share Data (3):
Net income (3)....................................................... $ 0.54
Book value (period end) (4).......................................... 11.12
Tangible book value (period end) (4)................................. 11.08
Performance Ratios:
Return on average assets............................................. 0.67%
Return on average equity............................................. 5.41
Net interest margin (5).............................................. 4.28
Efficiency (6)....................................................... 77.28
Asset Quality Ratios:
Allowance for loan losses to period end loans (2).................... 1.04%
Net charge-offs to average loans..................................... 0.03
Nonperforming assets to period end loans and foreclosed property
(2)(7)............................................................. 0.23
Capital and Liquidity Ratios:
Average equity to average assets..................................... 12.37%
Leverage (4.00% required minimum).................................... 11.62
Risk-based capital
Tier 1............................................................. 15.58
Total.............................................................. 16.54
Average loans to average deposits.................................... 88.06
</TABLE>

(1) Securities held to maturity are stated at amortized cost, and securities
available for sale are stated at fair value.
(2) Loans are stated net of unearned income, before allowance for loan losses.
(3) All share and per share data have been adjusted to reflect the 5% Common
Stock dividends in September 1993, April 1994, August 1995, and May 1996.
Net income per share is computed using the weighted average number of
outstanding shares of Common Stock and dilutive common stock equivalents
from stock options (using treasury stock method).
(4) Excludes the effect of any outstanding stock options.
(5) Net interest income divided by average earning assets.
(6) Noninterest expense divided by the sum of net interest income and
noninterest income, net of gains and losses on sales of assets.
(7) Nonperforming loans and nonperforming assets do not include loans past due
90 days or more that are still accruing interest.
16

<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Basis of Presentation
The following discussion should be read in conjunction with the preceding
"Selected Financial Data" and the Company's Financial Statements and the Notes
thereto and the other financial data included elsewhere in this Prospectus. The
financial information provided below has been rounded in order to simplify its
presentation. However, the ratios and percentages provided below are calculated
using the detailed financial information contained in the Financial Statements,
the Notes thereto and the other financial data included elsewhere in this
Prospectus.
General
The Company is a bank holding company headquartered in Greenwood, South
Carolina which currently operates through two community banks and is in the
process of acquiring three de novo community banks in non-metropolitan markets
in the State of South Carolina. The Company pursues a community banking business
which is characterized by personalized service and local decision-making and
emphasizes the banking needs of individuals and small to medium-sized
businesses.
The Company was formed in 1988 to serve as a holding company for the
Greenwood Bank. In June 1995, the Company opened the Clemson Bank in Clemson,
South Carolina. The Company is in the process of acquiring the New Banks and
intends to open the Belton Bank and Newberry Bank in traditional de novo fashion
by capitalizing the banks and seeking local deposits to fund loan growth. In
contrast, immediately after it is capitalized, the Barnwell Bank will acquire
certain deposits and assets associated with the Carolina First Branches. As of
December 31, 1996, the Carolina First Branches had $53.7 million in deposits and
$15.2 million in loans. See "Acquisition of Carolina First Branches."
As a one-bank holding company for the Greenwood Bank, the Company grew from
$21.5 million in assets, $11.7 million in loans, $16.6 million in deposits, and
$4.6 million in shareholders' equity at December 31, 1989, to $65.1 million in
assets, $50.6 million in loans, $49.1 million in deposits, and $6.1 million in
shareholders' equity at December 31, 1994. The opening of the Clemson Bank in
June 1995 resulted in a year-over-year decrease in the Company's earnings per
share for the year ended December 31, 1995, due to substantial start-up
expenditures, as well as the time and expense required to attract customers,
deposits, and earning assets. The Clemson Bank achieved profitability in
September 1996, and at December 31, 1996, the Company had $116.0 million in
assets, $80.5 million in loans, $89.9 million in deposits, and $13.6 million in
shareholders' equity. Based upon levels at December 31, 1996, and giving effect
to this Offering and the acquisition of certain deposits and assets associated
with the Carolina First Branches, the Company would have $185.1 million in
assets, $95.7 million in loans, $143.6 million in deposits, and $28.4 million in
shareholders' equity. See "Acquisition of the Carolina First
Branches -- Unaudited Pro Forma Financial Information."
Management has emphasized maintaining strong asset quality through a credit
underwriting and review system which includes both bank level and centralized
controls. Over the five-year period ended December 31, 1996, the Company had an
average net charge-off ratio of 0.05%. At December 31, 1996, nonperforming
assets as a percentage of total loans was 0.23%.
Net income for the year ended December 31, 1996 was negatively affected by
expenditures associated with the development and organization of the New Banks.
Management also expects that net income for the year ending December 31, 1997
will be negatively affected by losses expected from the Belton Bank and Newberry
Bank while these New Banks are achieving their critical mass and generating
customers, deposits, and earning assets. Due to the acquisition of certain
deposits and assets associated with the Carolina First Branches, management
anticipates that the Barnwell Bank will be profitable for the year ending
December 31, 1997; however, there can be no assurance that the Barnwell Bank
will be profitable.
In the near term, the Company expects that, as a result of the increased
number of shares of Common Stock after the Offering, the expenses incurred in
connection with the acquisition of the New Banks, and the losses expected from
the Belton Bank and Newberry Bank, the Company will experience a dilution of its
return on equity and earnings per share. In addition, tangible book will be
negatively affected by the intangibles associated with the acquisition of the
Carolina First Branches. The Company believes that the dilution of earnings per
share, return on equity, and tangible book value per share will be outweighed by
the long-term benefits and shareholder value the Company expects to derive from
the purchase of the New Banks and the acquisition of the Carolina First
Branches. However, there can be no assurance that the Company will be able to
achieve these goals.
17

<PAGE>
Results of Operations
Year ended December 31, 1996, compared with year ended December 31, 1995
Net interest income increased $909,000, or 28.4%, to $4.1 million in 1996
from $3.2 million in 1995. The increase in net interest income was due primarily
to an increase in average earning assets. Average earning assets increased $24.8
million, or 34.8%, primarily as a result of the opening of the Clemson Bank in
June 1995, the opening of a new Greenwood Bank branch in February 1995, and the
continuing growth of the Greenwood Bank.
The Company's net interest spread and net interest margin were 3.50% and
4.28%, respectively, in 1996 as compared to 3.72% and 4.49% in 1995. The
decrease in the net interest spread and the net interest margin was primarily
the result of the growth in the volume of investment securities, traditionally
lower yielding assets than loans, as a percentage of average earning assets in
order to improve liquidity and lower the loans-to-assets ratio.
The provision for loan losses was $187,000 in 1996 compared to $112,000 in
1995. The increase in the provision was primarily the result of general growth
in the Company's loan portfolio. The Company experienced net charge-offs of
$21,000 in 1996, resulting in a ratio of net charge-offs to average loans of
0.03%.
Noninterest income increased $449,000, or 57.8%, to $1.2 million in 1996
from $777,000 in 1995, primarily attributable to increased service charges on
deposit accounts, increased fees from mortgage loan originations, and increased
commissions on sales of mutual funds. In 1996, the Company's mortgage loan
origination fees increased due to the decrease in mortgage lending rates. During
1996, the Company originated $8.7 million of mortgage loans held for sale
compared to $4.8 million in 1995, resulting in a $92,000 increase in residential
mortgage origination fees to $207,000 in 1996 from $115,000 in 1995.
Noninterest expense increased $1.1 million, or 34.9%, to $4.1 million in
1996 from $3.1 million in 1995. The primary component of noninterest expense is
salaries and benefits, which increased $549,000, or 38.9%, to $2.0 million in
1996 from $1.4 million in 1995. The increase is primarily attributable to an
increase in the number of employees due to the opening in 1995 of the Clemson
Bank and the Greenwood Bank's trust and mutual funds departments. The Company
has also hired additional employees in anticipation of opening the New Banks.
Net occupancy expense for 1996 was $287,000, an increase of $105,000 compared to
$182,000 in 1995, and furniture and equipment expense increased $65,000 to
$305,000 in 1996 from $240,000 in 1995. The increase is attributable to
increased depreciation charges due to the purchase of a new operations center
during the first quarter of 1996 and the upgrade and acquisition of computer
equipment during 1995 and 1996. Management believes that these investments have
positioned the Company for the acquisition of the New Banks. The Company's
efficiency ratio in 1996 was 77.28%, compared to 76.78% in 1995.
Net income increased $172,000, or 32.2%, to $706,000 in 1996 from $534,000
in 1995. The increase in net income was due primarily to increases in net
interest income and noninterest income. Return on average assets during 1996 was
0.67% compared to 0.68% during 1995, and return on average equity was 5.41%
during 1996 compared to 5.69% during 1995.
Year ended December 31, 1995, compared with year ended December 31, 1994
Net interest income increased $552,000, or 20.9%, to $3.2 million in 1995
from $2.6 million in 1994. The increase in net interest income was due primarily
to an increase in average earning assets. Average earning assets increased $15.8
million, or 28.7%, primarily as a result of the opening of the Clemson Bank in
June 1995 and the opening of a new Greenwood Bank branch in February 1995.
The Company's net interest spread and net interest margin were 3.72% and
4.49%, respectively, in 1995, as compared to 4.32% and 4.78% in 1994. These key
ratios were affected by higher costs of deposits due to rising short-term
interest rates and increased competition for deposits in the Existing Bank's
market areas. These ratios were also affected by strategies to improve liquidity
and reduce the loans-to-funds and loans-to-assets ratios.
The provision for loan losses was $112,000 in 1995, compared to $14,000 in
1994. The increase in the provision was primarily the result of general growth
in the Company's loan portfolio. The Company experienced net charge-offs of
$21,000 in 1995, resulting in a ratio of net charge-offs to average loans of
0.03%.
18

<PAGE>
Noninterest income increased $264,000, or 51.3%, to $777,000 in 1995 from
$514,000 in 1994, primarily attributable to increased service charges on deposit
accounts and commissions on sales of mutual funds by the Greenwood Bank's mutual
funds department which was established in 1995.
Noninterest expense increased $808,000, or 35.7%, to $3.1 million in 1995
from $2.3 million in 1994. The primary component of noninterest expense is
salaries and benefits, which increased $303,000, or 27.3%, in 1995 compared to
1994. The increase is attributable to an increase in the employee base due to
the opening of the Clemson Bank and the opening of the Greenwood Bank's trust
and mutual funds departments. The total of net occupancy expense and furniture
and equipment expense increased $185,000, or 78.1%, to $422,000 in 1995, from
$237,000 in 1994. This increase is attributable to an increase in depreciation
expense resulting from additions to premises and equipment in preparation for
opening the Clemson Bank and a new Greenwood Bank branch. The Company's
efficiency ratio in 1995 was 76.78%, compared to 69.81% in 1994.
Net income decreased $51,000, or 8.7%, to $534,000 in 1995 from $585,000 in
1994. The decrease in net income was due to the increase in noninterest expense
associated primarily with the organization of the Clemson Bank. Return on
average assets during 1995 was 0.68% compared to 0.97% during 1994, and return
on average equity was 5.69% during 1995 compared to 10.17% during 1994. The
decrease in return on average equity was attributable to the issuance of 520,422
additional shares of Common Stock in connection with the capitalization of the
Clemson Bank.
Net Interest Income
General. The largest component of the Company's net income is its net
interest income, which is the difference between the income earned on assets and
interest paid on deposits and borrowings used to support such assets. Net
interest income is determined by the yields earned on the Company's
interest-earning assets and the rates paid on its interest-bearing liabilities,
the relative amounts of interest-earning assets and interest-bearing
liabilities, and the degree of mismatch and the maturity and repricing
characteristics of its interest-earning assets and interest-bearing liabilities.
Net interest income divided by average interest-earning assets represents the
Company's net interest margin.
19

<PAGE>
Average Balances, Income and Expenses and Rates. The following table sets
forth, for the periods indicated, certain information related to the Company'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. Average balances
have been derived from the daily balances throughout the periods indicated.
Average Balances, Income and Expenses and Rates
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1995 1996
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate Balance Expense Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(Dollars in thousands)
Assets:
Earning Assets
Loans (1)................................. $46,305 $ 3,909 8.44 % $55,018 $ 5,146 9.35 % $ 71,298 $ 6,622 9.29 %
Investment securities (2)................. 7,801 383 4.91 14,419 894 6.21 23,188 1,402 6.05
Funds sold and other...................... 1,238 48 3.88 1,777 107 6.02 1,538 90 5.85
Total earning assets.................... 55,344 4,340 7.84 71,214 6,147 8.63 96,024 8,114 8.45
Cash and due from banks..................... 2,006 2,758 3,080
Premises and equipment...................... 1,760 2,288 3,408
Other assets................................ 2,053 2,646 3,776
Allowance for loan losses................... (569) (601) (746)
Total assets............................ $60,594 $78,305 $105,542
Liabilities:
Interest-Bearing Liabilities
Interest-bearing transaction accounts..... $ 5,597 103 1.84 $ 6,136 113 1.84 $ 7,719 151 1.96
Savings deposits.......................... 11,805 324 2.74 14,693 590 4.02 21,175 928 4.38
Time deposits............................. 23,518 937 3.98 30,053 1,719 5.72 41,476 2,346 5.66
Other short-term borrowings............... 683 31 4.54 2,479 145 5.73 5,070 283 5.58
Federal Home Loan Bank advances........... 6,501 298 4.58 6,655 381 5.73 5,436 298 5.48
Total interest-bearing liabilities...... 48,104 1,693 3.52 60,016 2,948 4.91 80,876 4,006 4.95
Demand deposits............................. 6,228 8,258 10,591
Accrued interest and other liabilities...... 530 643 1,015
Shareholders' equity........................ 5,732 9,388 13,060
Total liabilities and shareholders'
equity................................ $60,594 $78,305 $105,542
Net interest spread......................... 4.32 % 3.72 % 3.50 %
Net interest income......................... $ 2,647 $ 3,199 $ 4,108
Net interest margin......................... 4.78 % 4.49 % 4.28 %
</TABLE>

(1) The effect of loans in nonaccrual status and fees collected is not
significant to the computations. All loans and deposits are domestic.
(2) Average investment securities include the valuation allowance on securities
available for sale.
20

<PAGE>
Analysis of Changes in Net Interest Income. The following table sets forth
the effect which the varying levels of earning assets and interest-bearing
liabilities and the applicable rates have had on changes in net interest income
from 1994 to 1995 and 1995 to 1996.
Analysis of Changes in Net Interest Income
<TABLE>
<CAPTION>
Year Ended December 31,
1995 Compared With 1994 1996 Compared With 1995
Variance Due to Variance Due to
Volume (1) Rate (1) Total Volume Rate Total
<S> <C> <C> <C> <C> <C> <C>
(Dollars in thousands)
Earning Assets
Loans.................................................... $ 787 $ 450 $1,237 $1,512 $(36) $1,476
Investment securities.................................... 389 122 511 532 (24) 508
Funds sold and other..................................... 32 27 59 (14) (3) (17)
Total interest income............................... 1,208 599 1,807 2,030 (63) 1,967
Interest-Bearing Liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts................. 10 -- 10 31 7 38
Savings and market rate investments................... 92 174 266 280 58 338
Certificates and other time deposits.................. 304 478 782 646 (19) 627
Total interest-bearing deposits..................... 406 652 1,058 957 46 1,003
Other short-term borrowings.............................. 103 11 114 145 (7) 138
Federal Home Loan Bank advances.......................... 7 76 83 (68) (15) (83)
Total interest expense.............................. 516 739 1,255 1,034 24 1,058
Net interest income................................. $ 692 $ (140) $ 552 $ 996 $(87) $ 909
</TABLE>

(1) Volume-rate changes have been allocated to each category based on the
percentage of the total change.
21

<PAGE>
Interest Sensitivity. The Company monitors and manages the pricing and
maturity of its assets and liabilities in order to diminish the potential
adverse impact that changes in interest rates could have on its net interest
income. The principal monitoring technique employed by the Company is the
measurement of the Company's interest sensitivity "gap," which is the positive
or negative dollar difference between assets and liabilities that are subject to
interest rate repricing within a given period of time. Interest rate sensitivity
can be managed by repricing assets or liabilities, selling securities
available-for-sale, replacing an asset or liability at maturity, or adjusting
the interest rate during the life of an asset or liability. Managing the amount
of assets and liabilities repricing in this same time interval helps to hedge
the risk and minimize the impact on net interest income of rising or falling
interest rates.
The following table sets forth the Company's interest rate sensitivity at
December 31, 1996.
Interest Sensitivity Analysis
<TABLE>
<CAPTION>
December 31, 1996
After One After Three Greater Than
Within Through Through Within One Year or
One Month Three Months Twelve Months One Year Nonsensitive Total
<S> <C> <C> <C> <C> <C> <C>
(Dollars in thousands)
Assets
Earning Assets
Loans (1)............................... $ 35,146 $ 7,008 $ 12,747 $ 54,901 $ 25,459 $80,360
Securities (2).......................... 502 1,010 1,027 2,539 20,741 23,280
Funds sold and other.................... 700 -- -- 700 -- 700
Total earning assets.................. 36,348 8,018 13,774 58,140 46,200 104,340
Liabilities
Interest-bearing liabilities
Interest-bearing deposits
Demand deposits....................... 8,296 -- -- 8,296 -- 8,296
Savings deposits...................... 22,716 -- -- 22,716 -- 22,716
Time deposits......................... 11,494 6,527 23,807 41,828 4,796 46,624
Total interest-bearing deposits....... 42,506 6,527 23,807 72,840 4,796 77,636
Other short-term borrowings............. 6,783 -- -- 6,783 -- 6,783
Federal Home Loan Bank advances......... 2,600 1,674 465 4,739 150 4,889
Total interest-bearing liabilities.... 51,889 8,201 24,272 84,362 4,946 89,308
Period gap................................... $(15,541 ) $ (183) $ (10,498) $(26,222) $ 41,254
Cumulative gap............................... $(15,541 ) $(15,724) $ (26,222) $(26,222) $ 15,032
Ratio of cumulative gap to total earning
assets....................................... (14.89 )% (15.07)% (25.13)% (25.13)% 14.41%
</TABLE>

(1) Excludes nonaccrual loans.
(2) Excludes investment in the Federal Home Loan Bank and Federal Reserve Bank
stock and other nonmarketable equity securities included in other assets
totaling approximately $2.2 million.
The above table reflects the balances of interest-earning assets and
interest-bearing liabilities at the earlier of their repricing or maturity
dates. Overnight federal funds are reflected at the earliest pricing interval
due to the immediately available nature of the instruments. Debt securities are
reflected at each instrument's ultimate maturity date. Scheduled payment amounts
of fixed rate amortizing loans are reflected at each scheduled payment date.
Scheduled payment amounts of variable rate amortizing loans are reflected at
each scheduled payment date until the loan may be repriced contractually; the
unamortized balance is reflected at that point. Interest-bearing liabilities
with no contractual maturity, such as savings deposits and interest-bearing
transaction accounts, are reflected in the earliest repricing period due to
contractual arrangements which give the Company the opportunity to vary the
rates paid on those deposits within a thirty-day or shorter period. Fixed rate
time deposits, principally certificates of deposit, are reflected at their
contractual maturity date.
The Company generally would benefit from increasing market rates of
interest when it has an asset-sensitive gap position and generally would benefit
from decreasing market rates of interest when it is liability-sensitive. The
Company is
22

<PAGE>
liability sensitive over the one month, three month, and one year time frames.
However, the Company's gap analysis is not a precise indicator of its interest
sensitivity position. The analysis presents only a static view of the timing of
maturities and repricing opportunities, without taking into consideration that
changes in interest rates do not affect all assets and liabilities equally. For
example, rates paid on a substantial portion of core deposits may change
contractually within a relatively short time frame, but those rates are viewed
by management as significantly less interest-sensitive than market-based rates
such as those paid on non-core deposits. Accordingly, management believes a
liability-sensitive gap position is not as indicative of the Company's true
interest sensitivity as it would be for an organization which depends to a
greater extent on purchased funds to support earning assets. Net interest income
may be impacted by other significant factors in a given interest rate
environment, including changes in the volume and mix of earning assets and
interest-bearing liabilities.
Provision and Allowance for Loan Losses
General. The Company has developed policies and procedures for evaluating
the overall quality of its credit portfolio and the timely identification of
potential problem credits. On a quarterly basis, each Existing Bank's Board of
Directors reviews and approves the appropriate level for that Bank's allowance
for loan losses based upon management's recommendations, the results of the
internal monitoring and reporting system, analysis of economic conditions in its
markets, and a review of historical statistical data for both the Company and
other financial institutions.
Additions to the allowance for loan losses, which are expensed as the
provision for loan losses on the Company's income statement, are made
periodically to maintain the allowance at an appropriate level based on
management's analysis of the potential risk in the loan portfolio. Loan losses
and recoveries are charged or credited directly to the allowance. The amount of
the provision is a function of the level of loans outstanding, the level of
nonperforming loans, historical loan loss experience, the amount of loan losses
actually charged against the reserve during a given period, and current and
anticipated economic conditions.
The Company's allowance for loan losses is based upon judgments and
assumptions of risk elements in the portfolio, future economic conditions and
other factors affecting borrowers. The process includes identification and
analysis of loss potential in various portfolio segments utilizing a credit risk
grading process and specific reviews and evaluations of significant problem
credits. In addition, management monitors the overall portfolio quality through
observable trends in delinquency, charge-offs, and general and economic
conditions in the service area. The adequacy of the allowance for loan losses
and the effectiveness of the Company's monitoring and analysis system are also
reviewed periodically by the banking regulators and the Company's independent
auditors.
Based on present information and an ongoing evaluation, management
considers the allowance for loan losses to be adequate to meet presently known
and inherent risks in the loan portfolio. Management's judgment as to the
adequacy of the allowance is based upon a number of assumptions about future
events which it believes to be reasonable but which may or may not be 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 Company does not allocate
the allowance for loan losses to specific categories of loans but evaluates the
adequacy on an overall portfolio basis utilizing a risk grading system. See
"Potential Problem Loans."
23

<PAGE>
The following table sets forth certain information with respect to the
Company's allowance for loan losses and the composition of charge-offs and
recoveries for each of the last five years.
Allowance for Loan Losses
<TABLE>
<CAPTION>
Year Ended December 31,
1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C>
(Dollars in thousands)
Total loans outstanding at end of period, net of unearned income........... $34,493 $44,634 $50,565 $63,204 $80,546
Average loans outstanding, net of unearned income.......................... $32,190 $39,641 $46,305 $55,018 $71,298
Balance of allowance for loan losses at beginning of period................ $ 331 $ 500 $ 567 $ 581 $ 671
Loan losses:
Commercial, financial and agricultural................................... 48 5 -- 17 --
Real estate -- mortgage.................................................. -- -- -- -- --
Consumer................................................................. 10 12 4 4 21
Total loan losses...................................................... 58 17 4 21 21
Recoveries of previous loan losses:
Commercial, financial and agricultural................................... -- -- -- -- --
Real estate -- mortgage.................................................. -- -- -- -- --
Consumer................................................................. -- 4 4 -- --
Total recoveries....................................................... -- 4 4 -- --
Net loan losses............................................................ 58 13 -- 21 21
Provision for loan losses.................................................. 227 80 14 112 187
Balance of allowance for loan losses at end of period...................... $ 500 $ 567 $ 581 $ 671 $ 837
Allowance for loan losses to period end loans.............................. 1.45% 1.27% 1.15% 1.06% 1.04%
Net charge-offs to average loans........................................... 0.18 0.03 -- 0.03 0.03
</TABLE>

Nonperforming Assets. The following table sets forth the Company's
nonperforming assets for the dates indicated.
Nonperforming Assets
<TABLE>
<CAPTION>
December 31,
1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C>
(Dollars in thousands)
Nonaccrual loans........................................................................ $ 85 $179 $ 3 $ 13 $ 186
Restructured or impaired loans.......................................................... -- -- -- -- --
Total nonperforming loans........................................................... 85 179 3 13 186
Other real estate owned................................................................. 97 -- 19 -- --
Total nonperforming assets.......................................................... $182 $179 $ 22 $ 13 $ 186
Loans 90 days or more past due and still
accruing interest..................................................................... $ -- $ -- $ 39 $ 60 $ 54
Nonperforming assets to period end loans and
foreclosed property................................................................... 0.52% 0.40% 0.04% 0.02% 0.23%
</TABLE>

Accrual of interest is discontinued on a loan when management believes,
after considering economic and business conditions and collection efforts, that
the borrower's financial condition is such that the collection of interest is
doubtful. A delinquent loan is generally placed in nonaccrual status when it
becomes 90 days or more past due. When a loan is placed in nonaccrual status,
all interest which has been accrued on the loan but remains unpaid is reversed
and deducted from earnings as a reduction of reported interest income. No
additional interest is accrued on the loan balance until the collection of both
principal and interest becomes reasonably certain. When a problem loan is
finally resolved, there may ultimately be an actual writedown or charge-off of
the principal balance of the loan which would necessitate additional charges to
earnings. For all periods presented, the additional interest income, which would
have been recognized into earnings if the Company's nonaccrual loans had been
current in accordance with their original terms, is immaterial.
Total nonperforming assets increased $173,000 to $186,000 at December 31,
1996, from $13,000 at December 31, 1995. This increase was primarily due to a
$122,000 loan collateralized by a second mortgage that was placed in nonaccrual
status in January 1996. Nonperforming assets were 0.23% of total loans and
foreclosed property at December 31, 1996. The allowance for loan losses to
period end nonperforming assets was 450.00% at December 31, 1996.
24

<PAGE>
Potential Problem Loans. At December 31, 1996, through their internal
review mechanisms the Existing Banks had identified $985,000 of criticized loans
and $2.6 million of classified loans. The results of this internal review
process are the primary determining factor in management's assessment of the
adequacy of the allowance for loan losses. See "Provision and Allowance for Loan
Losses."
Noninterest Income and Expense
Noninterest Income. The largest component of noninterest income is service
charges on deposit accounts, which totaled $515,000 in 1996, a 31.0% increase
over the 1995 level of $393,000. The increase in other noninterest income was
primarily due to the growth of the Greenwood Bank and increased fee income from
the origination of residential mortgage loans and from sales of mutual funds by
the mutual funds department which was formed in 1995.
The following table sets forth, for the periods indicated, the principal
components of noninterest income:
Noninterest Income
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1995 1996
<S> <C> <C> <C>
(Dollars in thousands)
Service charges on deposit accounts............................................................... $305 $393 $ 515
Residential mortgage origination fees............................................................. 114 115 207
Securities gains (losses)......................................................................... (79) (22) 17
Fees from sales of mutual funds................................................................... -- 49 132
Other............................................................................................. 174 242 355
Total noninterest income................................................................... $514 $777 $1,226
</TABLE>

Noninterest Expense. The following table sets forth, for the periods
indicated, the primary components of noninterest expense:
Noninterest Expense
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1995 1996
<S> <C> <C> <C>
(Dollars in thousands)
Salaries and employee benefits................................................................... $1,108 $1,411 $1,960
Net occupancy expense............................................................................ 116 182 287
Furniture and equipment expense.................................................................. 121 240 305
Director and committee fees...................................................................... 90 72 114
Amortization of intangibles and other assets..................................................... 31 33 14
Data processing and supplies..................................................................... 37 110 176
Mortgage loan department expense................................................................. 40 44 80
Banking assessments.............................................................................. 109 59 3
Professional fees................................................................................ 92 116 132
Postage and freight and carriers................................................................. 51 90 117
Supplies......................................................................................... 96 186 228
Credit card expenses............................................................................. 44 65 94
Other............................................................................................ 326 461 631
Total noninterest expense................................................................. $2,261 $3,069 $4,141
Efficiency ratio................................................................................. 69.81% 76.78% 77.28%
</TABLE>

Salaries and employee benefits increased $549,000, or 38.9%, to $2.0
million in 1996 from $1.4 million in 1995, primarily as a result of an increase
in the number of employees due to the opening in 1995 of the Clemson Bank, a
Greenwood Bank branch office, and the Greenwood Bank's trust and mutual funds
departments. The Company has also hired new employees in anticipation of opening
the New Banks. In addition, the Company continued to upgrade its data processing
operations in order to service both the Greenwood Bank and the Clemson Bank, as
well as to position the Company to pursue its strategy of forming a network of
independently managed community banks. In December 1994, the Company installed a
new mainframe-based computer system. In 1996, the Company purchased a separate
facility to use for data processing and bookkeeping. The Company also purchased
imaging equipment and software that will allow the Banks to provide better
service to their customers and assist employees in performing their day-to-day
duties. The Company is amortizing the cost of
25

<PAGE>
the imaging equipment and software and the computer over five years. The factors
above, combined with an increase in the cost of computer supplies, resulted in
increases in net occupancy expense, furniture and equipment expense, and data
processing and supplies expense. The Company's efficiency ratio, which is
noninterest expense as a percentage of the total of net interest income plus
noninterest income, net of gains and losses on the sale of assets, was 77.28% in
1996 compared to 76.78% in 1995 and 69.81% in 1994.
Earning Assets
Loans. Loans are the largest category of earning assets and typically
provide higher yields than the other types of earning assets. Associated with
the higher loan yields are the inherent credit and liquidity risks which
management attempts to control and counterbalance. Loans averaged $71.3 million
in 1996 compared to $55.0 million in 1995, an increase of $16.3 million, or
29.6%. At December 31, 1996, total loans were $80.5 million, compared to $63.2
million at December 31, 1995.
The increase in loans during 1996 was primarily due to the continued demand
for real estate loans in the Greenwood market, the loan growth at the Clemson
Bank, and an increase in the Greenwood Bank's customer base resulting from the
purchase of a local financial institution by an out-of-state competitor and the
closing or sale of local branches by large regional banks. The following table
sets forth the composition of the loan portfolio by category at the dates
indicated and highlights the Company's general emphasis on mortgage lending.
Composition of Loan Portfolio
<TABLE>
<CAPTION>
December 31,
1992 1993 1994 1995 1996
Percent Percent Percent Percent
Amount of Total Amount of Total Amount of Total Amount of Total Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(Dollars in thousands)
Commercial, financial and
agricultural.............. $8,933 25.90% $10,684 23.94% $12,231 24.19% $13,349 21.12% $15,348
Real estate
Construction.............. 2,236 6.48 11,556 25.89 5,906 11.68 8,483 13.42 9,962
Mortgage -- residential... 11,148 32.32 11,258 25.22 14,978 29.62 22,515 35.62 31,519
Mortgage -- nonresidential... 9,586 27.79 7,504 16.81 13,436 26.57 14,190 22.45 17,616
Consumer.................... 2,535 7.35 3,585 8.03 3,953 7.82 4,591 7.27 5,947
Other....................... 55 0.16 47 0.11 61 0.12 76 0.12 154
Total loans............... 34,493 100.00% 44,634 100.00% 50,565 100.00% 63,204 100.00% 80,546
Allowance for loan losses... (500 ) (567 ) (581 ) (671 ) (837)
Net loans................. $33,993 $44,067 $49,984 $62,533 $79,709
<CAPTION>
Percent
of Total
<S> <C>
Commercial, financial and
agricultural.............. 19.05%
Real estate
Construction.............. 12.37
Mortgage -- residential... 39.13
Mortgage -- nonresidential 21.87
Consumer.................... 7.38
Other....................... 0.20
Total loans............... 100.00
Allowance for loan losses...
Net loans.................
</TABLE>

The principal component of the Company's loan portfolio is real estate
mortgage loans. At December 31, 1996, this category totaled $49.1 million and
represented 61.0% of the total loan portfolio, compared to $36.7 million, or
58.1%, at December 31, 1995.
In the context of this discussion, a "real estate mortgage loan" is defined
as any loan, other than loans for construction purposes, secured by real estate,
regardless of the purpose of the loan. It is common practice for financial
institutions in the Company's market areas to obtain a security interest in real
estate whenever possible, in addition to any other available collateral. This
collateral is taken to reinforce the likelihood of the ultimate repayment of the
loan and tends to increase the magnitude of the real estate loan portfolio
component.
Residential mortgage loans, which is the largest category of the Company's
loans, increased $9.0 million, or 40.0%, to $31.5 million at December 31, 1996,
from $22.5 million at December 31, 1995. Residential real estate loans consist
of first and second mortgages on single or multi-family residential dwellings.
Nonresidential mortgage loans, which include commercial loans and other loans
secured by multi-family properties and farmland and is the second largest
category of the Company's loans, increased $3.4 million, or 24.1%, to $17.6
million at December 31, 1996, from $14.2 million at December 31, 1995. The
increase in real estate lending was attributable to the continued demand for
residential and commercial real estate loans in the Greenwood market, the
Company's ability to attract new customers from a local competitor that was
acquired by an out-of-state bank in 1996 and from local branch offices of large
regional banks that were closed during the year, continued increases in
residential construction lending, and loan growth at the Clemson Bank, which had
$7.8 million in real estate loans as of December 31, 1996 compared to $4.2
million as of December 31, 1995. The Existing Banks have been able to compete
favorably for residential mortgage loans with other financial institutions by
offering fixed rate products having three and five year call provisions.
Generally, the Existing Banks limit their loan-to-value ratios to 80%.
26

<PAGE>
Commercial, financial and agricultural loans increased $2.0 million, or
15.0%, to $15.3 million at December 31, 1996, from $13.3 million at December 31,
1995. This increase was primarily attributable to the continued economic
development in Greenwood County and the growth of the Clemson Bank.
Consumer loans increased $1.4 million, or 29.5%, to $5.9 million at
December 31, 1996, from $4.6 million at December 31, 1995. The growth in
consumer loans is primarily attributable to overall growth in the Company's loan
portfolio.
The Company's loan portfolio reflects the diversity of its markets. The
home office and branch offices of the Greenwood Bank are located in Greenwood
County, South Carolina. The economy of Greenwood contains elements of medium and
light manufacturing, higher education, regional healthcare, and distribution
facilities. The Clemson Bank office is currently located in a temporary facility
in Clemson, South Carolina. Due to its proximity to a major interstate highway
and Clemson University, a state-supported university, management expects the
area to remain stable with continued growth. Outside the incorporated city
limits of Greenwood and Clemson, the economy includes manufacturing,
agriculture, timber, and recreational activities. The Company does not engage in
foreign lending.
The repayment of loans in the loan portfolio as they mature is also a
source of liquidity for the Company. The following table sets forth the
Company's loans maturing within specified intervals at December 31, 1996.
Loan Maturity Schedule and Sensitivity to Changes in Interest Rates
<TABLE>
<CAPTION>
December 31, 1996
Over One Year
One Year Through Over Five
or Less Five Years Years Total
<S> <C> <C> <C> <C>
(Dollars in thousands)
Commercial, financial and agricultural...................................... $ 11,503 $ 3,845 $ -- $15,348
Real estate................................................................. 35,642 22,578 877 59,097
Consumer and other.......................................................... 4,351 1,655 95 6,101
Loans maturing after one year with:
Fixed interest rates............................................................................................... $26,135
Floating interest rates............................................................................................ 2,915
$29,050
</TABLE>

The information presented in the above table is based on the contractual
maturities of the individual loans, including loans which may be subject to
renewal at their contractual maturity. Renewal of such loans is subject to
review and credit approval, as well as modification of terms upon their
maturity. Consequently, management believes this treatment presents fairly the
maturity and repricing structure of the loan portfolio shown on the above table.
Investment Securities. The investment securities portfolio is a significant
component of the Company's total earning assets. Total securities averaged $23.2
million in 1996, compared to $14.4 million in 1995 and $7.8 million in 1994. At
December 31, 1996, the total securities portfolio was $23.3 million, and all
securities were designated as available-for-sale and were recorded at estimated
fair market value. The increase in the portfolio during 1996 was primarily due
to strategies implemented by management in 1995 and maintained in 1996 to
improve liquidity and lower the loans-to-assets ratio.
The following table sets forth the book value of the securities held by the
Company at the dates indicated.
Book Value of Securities
<TABLE>
<CAPTION>
December 31,
1994 1995 1996
<S> <C> <C> <C>
(Dollars in thousands)
U.S. Treasury................................................................................. $4,889 $ 5,952 $ 6,420
U.S. government agencies...................................................................... 1,044 11,546 11,150
State, county and municipal securities........................................................ 1,684 4,550 5,367
Mortgage-backed securities.................................................................... -- 398 343
Total securities....................................................................... $7,617 $22,446 $23,280
</TABLE>

<PAGE>
The following table sets forth the scheduled maturities and average yields
of securities held at December 31, 1996.
Investment Securities Maturity Distribution and Yields
<TABLE>
<CAPTION>
December 31, 1996
After One But After Five But
Within One Year Within Five Within Ten
Years Years After Ten Years
Amount Yield Amount Yield Amount Yield Amount Yield
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(Dollars in thousands)
U.S. Treasury.......................................... $1,605 6.52 % $ 4,815 6.00 % $ -- -- % $ -- -- %
U.S. government agencies............................... -- -- 5,127 6.24 6,023 6.79
State and political subdivisions....................... 934 4.32 902 4.50 1,105 4.72 2,426 5.00
Total (1)....................................... $2,539 5.71 % $10,844 6.00 % $7,128 6.47 % $2,426 5.00 %
</TABLE>

(1) Excludes mortgage-backed securities totaling $343,000 with a yield of 6.91%.
Other attributes of the securities portfolio, including yields and
maturities, are discussed above in " -- Net Interest Income -- Interest
Sensitivity."
Short-Term Investments. Short-term investments, which consist primarily of
federal funds sold and interest-bearing deposits with other banks, averaged $1.5
million in 1996, compared to $1.8 million in 1995 and $1.2 million in 1994. At
December 31, 1996, short-term investments totaled $700,000. These funds are a
primary source of the Existing Banks' liquidity and are generally invested in an
earning capacity on an overnight basis.
Deposits and Other Interest-Bearing Liabilities
Average interest-bearing liabilities increased $20.9 million, or 34.8%, to
$80.9 million in 1996, from $60.0 million in 1995. Average interest-bearing
deposits increased $19.5 million, or 38.3%, to $70.4 million in 1996, from $50.9
million in 1995. These increases resulted from increases in most categories of
interest-bearing liabilities, primarily as a result of the opening of the
Clemson Bank and the Greenwood Bank branch. The Company has also been able to
attract new accounts from former South Carolina-based banks that have been
acquired by large southeastern regional bank holding companies and from local
branches of regional banks which have been closed or sold.
Deposits. Average total deposits increased $21.8 million, or 36.9%, to
$81.0 million during 1996, from $59.1 million during 1995. At December 31, 1996,
total deposits were $89.9 million compared to $73.1 million a year earlier, an
increase of 22.9%.
The following table sets forth the deposits of the Company by category at
the dates indicated.
Deposits
<TABLE>
<CAPTION>
December 31,
1992 1993 1994 1995 1996
Percent Percent Percent Percent
of of of of
Amount Deposits Amount Deposits Amount Deposits Amount Deposits Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(Dollars in thousands)
Demand deposit
accounts............... $4,620 11.28% $4,974 10.81% $6,968 14.18% $9,447 12.92% $12,226
NOW accounts............. 5,161 12.60 5,050 10.98 7,158 14.56 8,028 10.98 8,296
Money market accounts.... 6,179 15.08 5,679 12.35 4,815 9.80 9,498 12.98 14,035
Savings accounts......... 5,009 12.22 6,360 13.83 6,818 13.87 7,922 10.83 8,681
Time deposits less than
$100,000............... 14,193 34.64 15,503 33.71 15,893 32.34 26,161 35.77 34,745
Time deposits of $100,000
or over................ 5,808 14.18 8,426 18.32 7,494 15.25 12,082 16.52 11,879
Total deposits..... $40,970 100.00% $45,992 100.00% $49,146 100.00% $73,138 100.00% $89,862
<CAPTION>

December 31,
1996

Percent
of
Deposits
<S> <C>
Demand deposit
accounts............... 13.61%
NOW accounts............. 9.23
Money market accounts.... 15.62
Savings accounts......... 9.66
Time deposits less than
$100,000............... 38.66
Time deposits of $100,000
or over................ 13.22
Total deposits..... 100.00%
</TABLE>

Core deposits, which exclude certificates of deposit of $100,000 or more,
provide a relatively stable funding source for the Company's loan portfolio and
other earning assets. The Company's core deposits increased $16.8 million in
1996, primarily as a result of the opening of the Clemson Bank and a Greenwood
Bank branch in Ninety Six, South Carolina and
28

<PAGE>
deposit runoff from a locally-owned financial institution which was acquired by
an out-of-state regional bank. Management also believes the Company's focus on
quality service has contributed to the growth.
Deposits, and particularly core deposits, have historically been the
Company's primary source of funding and have enabled the Company to meet
successfully both its short-term and long-term liquidity needs. Management
anticipates that such deposits will continue to be the Company's primary source
of funding in the future. The Company's loan-to-deposit ratio was 89.6% at
December 31, 1996, and 86.4% at the end of 1995, and the ratio averaged 88.1%
during 1996. The maturity distribution of the Company's time deposits over
$100,000 at December 31, 1996, is set forth in the following table.
Maturities of Certificates of Deposit
of $100,000 or More
<TABLE>
<CAPTION>
December 31, 1996
After Three After Six
Within Three Through Through After Twelve
Months Six Months Twelve Months Months Total
<S> <C> <C> <C> <C> <C>
(Dollars in thousands)
Certificates of deposit of $100,000 or more.............. $4,517 $ 2,772 $ 3,785 $805 $11,879
</TABLE>

Approximately 38.0% of the Company's time deposits over $100,000 had
scheduled maturities within three months and more than 60.0% had maturities
within six months. Large certificate of deposit customers tend to be extremely
sensitive to interest rate levels, making these deposits less reliable sources
of funding for liquidity planning purposes than core deposits. Some financial
institutions partially fund their balance sheets using large certificates of
deposit obtained through brokers. These brokered deposits are generally
expensive and are unreliable as long-term funding sources. Accordingly, the
Company does not solicit brokered deposits.
Borrowed Funds. Borrowed funds consist primarily of short-term borrowings
in the form of federal funds purchased from correspondent banks, securities sold
under agreements to repurchase, and advances from the Federal Home Loan Bank.
Average short-term borrowings were $5.1 million in 1996, an increase of
$2.6 million from 1995. The increase is primarily due to the Company's increased
use of repurchase agreements with an unrelated financial institution. Average
borrowings under this agreement were $2.8 million in 1996 compared to $226,000
in 1995. Average Federal Home Loan Bank advances during 1996 were $5.4 million
compared to $6.7 million during 1995, a decrease of $1.3 million. Although
management expects to continue using short-term borrowing and Federal Home Loan
Bank advances as secondary funding sources, core deposits will continue to be
the Company's primary funding source.
Capital
The Federal Reserve Board and bank regulatory agencies require bank holding
companies and financial institutions to maintain capital at adequate levels
based on a percentage of assets and off-balance sheet exposures, adjusted for
risk weights ranging from 0% to 100%. Under the risk-based standard, capital is
classified into two tiers. The Federal Reserve guidelines contain an exemption
from the capital requirements for bank holding companies with less than $150
million in consolidated assets. Prior to the Offering, the Company has had less
than $150 million in assets and, consequently, has not been subject to these
rules. Following the Offering and the Acquisition, however, the Company expects
to have in excess of $150 million, in which case the Federal Reserve's
requirements will apply to the Company. Tier 1 capital of the Company consists
of common shareholders' equity, excluding the unrealized gain (loss) on
available-for-sale securities, minus certain intangible assets. The Company's
Tier 2 capital consists of general reserve for loan losses subject to certain
limitations. A bank holding company's qualifying capital base for purposes of
its risk-based capital ratio consists of the sum of its Tier 1 and Tier 2
capital. The regulatory minimum requirements are 4% for Tier 1 and 8% for total
risk-based capital.
The holding company and banking subsidiaries are also required to maintain
capital at a minimum level based on total assets, which is known as the leverage
ratio. Only the strongest bank holding companies and banks are allowed to
maintain capital at the minimum requirement. All others are subject to
maintaining ratios 100 to 200 basis points above the minimum.
29

<PAGE>
The Company exceeded the Federal Reserve's fully phased-in regulatory
capital ratios at December 31, 1994, 1995 and 1996, as set forth in the
following table.
Analysis of Capital
<TABLE>
<CAPTION>
December 31,
1994 1995 1996
<S> <C> <C> <C>
(Dollars in thousands)
Tier 1 capital........................................................................... $ 6,131 $12,693 $13,474
Tier 2 capital........................................................................... 580 671 837
Total qualifying capital............................................................... $ 6,711 $13,364 $14,311
Risk-adjusted total assets (including
off-balance sheet exposures)........................................................... $55,516 $68,743 $86,512
Tier 1 risk-based capital ratio.......................................................... 11.04% 18.46% 15.58%
Total risk-based capital ratio........................................................... 12.09 19.41 16.54
Tier 1 leverage ratio.................................................................... 9.42 13.21 11.62
</TABLE>

Each of the Existing Banks is required to maintain risk-based and leverage
ratios similar to those required for the Company. Each of the Existing Banks
exceeded these regulatory capital ratios at December 31, 1996, as set forth in
the following table.
Bank Capital Ratios
<TABLE>
<CAPTION>
December 31, 1996
Tier 1 Total Tier 1
Risk-Based Risk-Based Leverage
<S> <C> <C> <C>
Greenwood Bank............................................................................ 9.97% 10.91% 7.34%
Clemson Bank.............................................................................. 30.76 32.01 23.60
</TABLE>

Following the purchase of the New Banks and the assumption of the Carolina
First Deposits and the purchase of the Carolina First Loans and Carolina First
Assets associated with the Carolina First Branches, and assuming net proceeds of
$14.9 million from the Offering, the Company's Tier 1 leverage ratio will
increase from 11.62% to 13.88% and its tangible book value per share will
decrease from $11.08 to $9.42, and the capital ratios of the Existing Banks will
not be affected.
Liquidity Management and Capital Resources
Liquidity management involves monitoring the Company's sources and uses of
funds in order to meet its day-to-day cash flow requirements while maximizing
profits. Liquidity represents the ability of a company to convert assets into
cash or cash equivalents without significant loss and to raise additional funds
by increasing liabilities. Without proper liquidity management, the Company
would not be able to perform the primary function of a financial intermediary
and would, therefore, not be able to meet the needs of the communities it
serves.
Liquidity management is made more complex because different balance sheet
components are subject to varying degrees of management control. For example,
the timing of maturities of the investment portfolio is very predictable and
subject to a high degree of control at the time investment decisions are made.
However, net deposit inflows and outflows are far less predictable and are not
subject to nearly the same degree of control.
During 1995, management implemented strategies to decrease the
loans-to-assets and loans-to-funds ratios. The Company continues to operate
within the recommendations of the Board of Directors with a loans-to-assets
ratio of 69.5% and a loans-to-funds ratio of 79.3% as of December 31, 1996.
Although the amount of advances from the FHLB has decreased approximately $1.4
million from the December 31, 1995 balance of approximately $6.2 million,
management expects to continue using these advances as a source of funding.
Additionally, the Company has approximately $9.3 million of unused lines of
credit for federal funds purchases and a $5.0 million line of credit from
another financial institution. The Company also has approximately $23.3 million
of securities available for sale as a secondary source of liquidity.
The Company depends on dividends from the Existing Banks as its primary
source of liquidity. The ability of the Banks to pay dividends is subject to
general regulatory restrictions which may, but are not expected to, have a
material negative impact on the liquidity available to the Company. The Company
does not plan to pay cash dividends for the near term. The Company has paid
stock dividends in September 1993, April 1994, August 1995, and May 1996 and may
do so in the future.
30

<PAGE>
The Company financed the formation of the Greenwood Bank and the Company's
initial operations with the proceeds of a $5.0 million offering of Common Stock
in 1988, of which $4.0 million was used to capitalize the Greenwood Bank. In
addition, the Company raised approximately $6.25 million through an offering of
Common Stock in 1995. The Company used $4.5 million of the proceeds of this
offering to capitalize the Clemson Bank and used the balance to purchase
computer and other equipment, to open a new branch in Ninety Six, South
Carolina, and for general working capital. The Company intends to use the net
proceeds of the Offering to capitalize each of the New Banks. See "Use of
Proceeds." The Company anticipates that the net proceeds of the Offering will be
adequate for the capitalization of each New Bank and the Company's capital needs
for the foreseeable future. However, the State Board could require the Company
to increase the capitalization of any of the Banks. See "Risk Factors." In such
event, the Company would likely fund the increased capitalization through the
use of any remaining net proceeds of the Offering, from dividends from the
Existing Banks (to the extent available), or through loans from third parties
(subject to obtaining regulatory approval). See "Government Supervision and
Regulation -- Dividends."
Accounting Rule Changes
Accounting for Stock-Based Compensation. In October 1995, the Financial
Accounting Standards Board ("FASB") issued Statement of Financial Accounting
Standards ("SFAS") 123, "Accounting for Stock-Based Compensation," effective for
transactions entered into in fiscal years that begin after December 15, 1995.
SFAS 123 recommends that companies account for stock compensation on a fair
value based method which requires compensation cost to be measured at the grant
date based on the value of the award and to be recognized over the service
period. As an alternative, companies may continue to record compensation cost
based on the excess, if any, of the quoted market price of the stock at the
grant date (or other measurement date) over the amount an employee must pay to
acquire the stock. However, if a company elects this method, it must include in
the financial statements certain disclosures which reflect pro forma amounts as
if the fair value method had been used. As permitted by SFAS 123, the Company
continued its current method of accounting for stock options with pro forma
amounts for 1995 and 1996 disclosed in the 1996 financial statements.
Impact of Inflation
Unlike most industrial companies, the assets and liabilities of financial
institutions such as the Company and its subsidiaries are primarily monetary in
nature. Therefore, interest rates have a more significant effect on the
Company's performance than do the effects of changes in the general rate of
inflation and change in prices. In addition, interest rates do not necessarily
move in the same direction or 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 interest rate fluctuations, including those resulting from inflation. See
" -- Net Interest Income -- Interest Sensitivity" and "Risk
Factors -- Government Regulation."
Industry Developments
Certain recently enacted and proposed legislation could have an effect on
both the costs of doing business and the competitive factors facing the
financial institutions industry. The Company is unable at this time to assess
the impact of this legislation on its financial condition or results of
operations. See "Government Supervision and Regulation -- General."
31

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BUSINESS
General
The Company is a bank holding company headquartered in Greenwood, South
Carolina which currently operates through two community banks and is in the
process of acquiring three de novo community banks in non-metropolitan markets
in the State of South Carolina. The Company pursues a community banking business
which is characterized by personalized service and local decision-making and
emphasizes the banking needs of individuals and small to medium-sized
businesses.
The Company was formed in 1988 to serve as a holding company for the
Greenwood Bank, principally in response to perceived opportunities resulting
from the takeovers of several South Carolina-based banks by large southeastern
regional bank holding companies. In many cases, when these consolidations occur,
local boards of directors are dissolved and local management is relocated or
terminated. The Company believes this situation creates favorable opportunities
for new community banks with local management and local directors. Management
believes that such banks can be successful in attracting individuals and small
to medium-sized businesses as customers who wish to conduct business with a
locally owned and managed institution that demonstrates an active interest in
their business and personal financial affairs.
In 1994, the Company made the strategic decision to expand beyond the
Greenwood County area by creating an organization of independently managed
community banks that serve their respective local markets but which share a
common vision and benefit from the strength, resources, and economies of a
larger institution. In June 1995, the Company opened the Clemson Bank in
Clemson, South Carolina. The Company is in the process of acquiring the three
New Banks which are being formed in Belton, Barnwell, and Newberry, South
Carolina. The Company intends to open the Belton Bank and Newberry Bank in
traditional de novo fashion by capitalizing the banks and seeking local deposits
to fund loan growth. In contrast, immediately after opening, the Barnwell Bank
will acquire certain deposits and assets associated with the Carolina First
Branches. As of December 31, 1996, the Carolina First Branches had approximately
$53.7 million in deposits and $15.2 million in loans. The Company anticipates
that the Barnwell Bank and the Belton Bank will open during the first quarter of
1997, and that the Newberry Bank will open in the second quarter of 1997.
As a one-bank holding company for the Greenwood Bank, the Company grew from
approximately $21.5 million in assets, $11.7 million in loans, $16.6 million in
deposits, and $4.6 million in shareholders' equity at December 31, 1989, to
approximately $65.1 million in assets, $50.6 million in loans, $49.1 million in
deposits, and $6.1 million in shareholders' equity at December 31, 1994. The
opening of the Clemson Bank in June 1995 resulted in a lowering of the Company's
earnings per share for the year ended December 31, 1995, due to substantial
start-up expenditures, as well as the time required to attract customers,
deposits, and earning assets. The Clemson Bank achieved profitability in
September 1996, and at December 31, 1996, the Company had approximately $116.0
million in assets, $80.5 million in loans, $89.9 million in deposits, and $13.6
million in shareholders' equity. Based upon levels at December 31, 1996, and
giving effect to this Offering and the acquisition of certain deposits and
assets associated with the Carolina First Branches, the Company would have
approximately $185.1 million in assets, $95.7 million in loans, $143.6 million
in deposits, and $28.4 million in shareholders' equity.
Operating Strategy
Independent Community Banks. The foundation of the Company's strategy is to
operate a multi-community bank organization which emphasizes decision-making at
the local Bank level combined with strong corporate technological, marketing,
and managerial support. The Company's operating model is for each Bank to
operate with independent management and Boards of Directors consisting of
individuals with extensive knowledge of the local community and the authority to
make credit decisions. The Company believes this operating strategy has enabled
the Existing Banks, and will enable the New Banks, to attract customers who wish
to conduct their business with a locally owned and managed institution with
strong ties and an active commitment to the community.
Centralized Corporate Support. The Company intends to provide the Banks
with strong support from its corporate office, including centralized policy
oversight, back-office support, credit review, and strategic planning. This
corporate support system will enable the Company to achieve administrative
economies of scale while capitalizing on the responsiveness to client needs of
its decentralized community bank network. With the support from its significant
investment in infrastructure, particularly a management information system which
will link the Company to the Banks and facilitate data processing, compliance,
and reporting requirements, the Company believes it has the operational and
administrative capacity to accommodate the addition of the New Banks and
effectively manage the Company's growth for the foreseeable future.
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Local Ownership. The management of each Bank believes that each Bank's
ability to compete with other financial institutions in its respective market
area is enhanced by its posture as a locally managed bank with a broad base of
local ownership. The organizers of each of the New Banks, all of whom reside in
the market area in which their respective Bank operates, have indicated that
they each intend to purchase a significant amount of Common Stock in the
Offering. In addition, the Company anticipates a significant percentage of the
remaining shares of Common Stock sold in the Offering will be sold to
individuals residing in the areas served by the Banks. The Company believes that
local ownership of the Company's Common Stock is a highly effective means of
attracting customers, fostering loyalty to the Banks, and maintaining asset
quality.
Outstanding Asset Quality. The Company believes that the outstanding asset
quality it has experienced to date is principally due to the closeness of the
lenders, senior officers, and directors of the Existing Banks to their customers
and their significant knowledge of the communities in which they reside. Over
the five year period ended December 31, 1996, the Company had an average net
charge-off ratio of 0.05%. The Company believes that it has assembled a team of
highly skilled, experienced bankers to operate the New Banks and anticipates
that these senior officers, combined with committed Boards of Directors with
significant ownership interest in the Company, will enable the New Banks to
maintain the excellent asset quality the Company has experienced.
Growth Strategy
Following the Offering, the Company intends to focus on the development of
the New Banks and the continued growth of the Existing Banks. Each Bank's growth
is expected to come primarily from within such Bank's primary market area
through increased loan and deposit business. The Company will continue to focus
on acquiring market share, particularly from the large southeastern regional
bank holding companies, by emphasizing local management and decision-making and
personal services to business customers and individuals. Specifically, the
Company's competitive strategy consists of approving loan requests more quickly
with a local loan committee, operating with more flexible, but equally prudent,
lending policies, personalizing service by establishing a long-term banking
relationship with the customer, and having a higher ratio of employees to
customers to ensure a higher level of service. A key element of the Company's
near term growth strategy is to grow the New Banks and the Clemson Bank, which
achieved profitability in September 1996, into high performing community banking
institutions whose assets and expenses are appropriate for their levels of
capitalization and which will become major contributors to the Company's
earnings. While the Company does not intend actively to search for opportunities
to expand into additional markets, the Company may consider opportunities that
arise from time to time, though most likely through acquisitions of existing
institutions or branches rather than through formation of additional de novo
banks. The Company has no specific acquisition plans at the current time other
than the New Banks and the Carolina First Branches.
Market Areas
The Company currently operates principally in two market areas: (1)
Greenwood County, South Carolina; and (2) Pickens County, South Carolina. The
Company will also operate in the following three primary market areas upon the
acquisition of the New Banks: (1) Anderson County, South Carolina; (2) Barnwell
County, South Carolina; and (3) Newberry County, South Carolina. Upon the
acquisition of the Carolina First Branches, the Barnwell Bank will also have an
office in each of Aiken and Orangeburg Counties, South Carolina.
Anderson County. The Company intends to serve the Anderson County, South
Carolina area through the Belton Bank. The city of Belton is located in Anderson
County and has a population of approximately 4,646. The city of Belton is
located 11 miles from the city of Anderson, the county seat of Anderson County.
As of December 1995, Anderson County had a population of approximately 152,600.
In 1990, Anderson County had a per capita income of approximately $12,027, as
compared to $11,897 for the State of South Carolina as a whole, and $14,420 for
the United States as a whole. As of October 1996, the unemployment rate for the
county was 5.0%. The economic base for Anderson County relies heavily upon
manufacturing, as well as retail and wholesale trade.
Barnwell County. The Company intends to serve the Barnwell County, South
Carolina area through the Barnwell Bank. The city of Barnwell, located 60 miles
from Columbia, South Carolina, is the county seat of Barnwell County and has a
population of approximately 6,000. As of December 1995, Barnwell County had a
population of approximately 21,000. In 1990, Barnwell County had a per capita
income of approximately $10,611. As of October 1996, the unemployment rate for
the county was 11.1%. The economic base for Barnwell County relies heavily upon
manufacturing.
Greenwood County. The Company serves the Greenwood County, South Carolina
area through the Greenwood Bank. The city of Greenwood, located 43 miles from
Greenville, South Carolina, is the county seat of Greenwood County and has a
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population of approximately 21,000. As of December 1995, Greenwood County had a
population of approximately 61,500. In 1990, Greenwood County had a per capita
income of approximately $11,429. As of October 1996, the unemployment rate for
the county was 7.0%. The economic base for Greenwood County relies heavily upon
manufacturing.
Newberry County. The Company intends to serve the Newberry County, South
Carolina area through the Newberry Bank. The city of Newberry, located 35 miles
from Columbia, South Carolina, is the county seat of Newberry County and has a
population of approximately 10,850. As of December 1995, Newberry County had a
population of approximately 34,100. In 1990, Newberry County had a per capita
income of $10,487. As of October 1996, the unemployment rate for the county was
5.7%. The economic base for Newberry County relies heavily upon manufacturing.
Pickens County. The Company serves the Pickens County, South Carolina area
through the Clemson Bank. The city of Clemson, located 30 miles from Greenville,
South Carolina, is the home of Clemson University and has a permanent population
of approximately 11,000. As of December 1995, Pickens County had a population of
approximately 102,000. In 1990, Pickens County had a per capita income of
approximately $11,427. As of October 1996, the unemployment rate for the county
was 4.1%. The economic base for Pickens County relies heavily upon Clemson
University and manufacturing.
The Existing Banks
The Greenwood Bank, a state chartered Federal Reserve member bank, has
three banking locations, two of which are located in Greenwood, South Carolina,
and the other located in Ninety Six, South Carolina. The Clemson Bank, a state
chartered nonmember bank, has one banking location located in Clemson, South
Carolina.
The following table sets forth certain information concerning the Greenwood
Bank and the Clemson Bank at December 31, 1996:
<TABLE>
<CAPTION>
Number of Total Total Total
Bank Locations Assets Loans Deposits
<S> <C> <C> <C> <C>
(Dollars in thousands)
Greenwood Bank................................................................... 3 $96,729 $69,347 $ 76,960
Clemson Bank..................................................................... 1 17,597 12,066 13,429
</TABLE>

Each Existing Bank offers a full range of commercial banking services,
including checking and savings accounts, NOW accounts, IRA accounts, and other
savings and time deposits of various types ranging from money markets to
long-term certificates of deposit. The Existing Banks also offer a full range of
consumer credit and short-term and intermediate-term commercial and personal
loans. Each Existing Bank conducts residential mortgage loan origination
activities pursuant to which mortgage loans are sold to investors in the
secondary markets. Servicing of such loans is not retained by the Existing
Banks.
The Greenwood Bank also offers trust and related fiduciary services.
Discount securities brokerage services are available through a third-party
brokerage service which has contracted with Community Financial Services, Inc.,
a wholly-owned subsidiary of the Greenwood Bank.
The Company performs data processing functions for the Existing Banks upon
terms that the managements of both Existing Banks believe is competitive with
those offered by unaffiliated third-party service bureaus. The Company also
administers certain operating functions for the Existing Banks where cost
savings can be achieved. Included in such operations are regulatory compliance,
personnel, and internal audit functions. The Company's costs associated with the
performance of such services are allocated between the Existing Banks based on
each Bank's total assets.
The New Banks
The Company intends to open the Belton Bank and the Newberry Bank in
traditional de novo fashion, capitalizing the banks with $3.5 million and $3.3
million, respectively, and seeking local deposits to fund loan growth. The
Company, however, intends to capitalize the Barnwell Bank with $7.0 million and
for the Barnwell Bank to acquire the five Carolina First Branches. As of
December 31, 1996, the Carolina First Branches had approximately $53.7 million
in deposits and $15.2 million in loans. The Company anticipates that this
acquisition will be consummated by the end of the first quarter of 1997. See
"Risk Factors -- General Risks of the Acquisition of the Carolina First
Branches" and " -- No Assurance of Obtaining Regulatory Approvals for the New
Banks."
The New Banks will engage in the commercial banking business in their
respective communities. The Company believes that there is a need for, and that
the Barnwell, Belton, and Newberry communities will support, new locally
operated community banks. Although the Company could obtain a banking presence
in the Barnwell, Belton, or Newberry markets by
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<PAGE>
opening a branch office of one of the Existing Banks there, management of the
Company believes that separate banks with their own local boards of directors
and their own policies, tailored to the local market, is a preferable approach.
Each New Bank will provide personalized banking services, with emphasis on the
financial needs and objectives of individuals and small to medium-sized
businesses. Additionally, substantially all credit and related decisions will be
made by the Bank's local management and board of directors, thereby facilitating
prompt response. Each New Bank will emphasize a commitment to the industrial and
business growth of its primary market area.
The principal business of each New Bank will be to accept deposits from the
public and to make loans and other investments. Each New Bank intends to offer
the same full range of deposit and other services that are currently offered by
the Existing Banks. See "The Existing Banks." The principal sources of funds for
each New Bank's loans and investments are expected to be demand, time, savings
and other deposits, repayment of loans, and borrowings. In addition, a portion
of the net proceeds of this Offering, once contributed to the capital of each
New Bank, will be used by each New Bank to fund loans. The principal source of
income for each New Bank is expected to be interest collected on loans and other
investments. The principal expenses of each New Bank are expected to be interest
paid on savings and other deposits, employee compensation, office expenses, and
other overhead expenses. Initially, the New Banks will not offer trust or
fiduciary services.
Each New Bank will use facilities of the Company for data processing which
should result in a significant monetary savings for each New Bank. The Company
owns its computer and item-sorting equipment. The capacity of such equipment
considerably exceeds the initial needs of the Existing Banks, and, therefore,
the Company will be able to provide data processing services to the New Banks.
Presently, financial institutions in South Carolina that elect not to install
on-premises data processing capability purchase data processing services from
service bureaus. The Company will be able to offer such services to the New
Banks upon terms that management believes would be competitive with those
offered by such service bureaus. It is likely that the Banks will also elect to
jointly administer certain operating functions between themselves where cost
savings can be achieved. Included in possible shared operations are regulatory
compliance, accounts payable, personnel, and internal audit functions.
Lending Activities
General. Through the Banks, the Company offers a range of lending services,
including real estate, consumer, and commercial loans, to individuals and small
business and other organizations that are located in or conduct a substantial
portion of their business in the Banks' market areas. The Company's total loans
at December 31, 1996, were $80.5 million, or 77.1% of total earning assets. The
interest rates charged on loans vary with the degree of risk, maturity, and
amount of the loan, and are further subject to competitive pressures, money
market rates, availability of funds, and government regulations. The Company has
no foreign loans or loans for highly leveraged transactions.
The Company's primary focus has been on commercial and installment lending
to individuals and small to medium-sized businesses in its market areas, as well
as residential mortgage loans. These loans totaled approximately $70.4 million,
and constituted approximately 87.4% of the Company's loan portfolio, at December
31, 1996.
The following table sets forth the composition of the Company's loan
portfolio for each of the five years in the period ended December 31, 1996.
Loan Composition
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C>
Commercial, financial and agricultural................................. 25.90% 23.94% 24.19% 21.12% 19.05%
Real estate:
Construction......................................................... 6.48 25.89 11.68 13.42 12.37
Mortgage:
Residential....................................................... 32.32 25.22 29.62 35.62 39.13
Commercial(1)..................................................... 27.79 16.81 26.57 22.45 21.87
Consumer and other..................................................... 7.51 8.14 7.94 7.39 7.58
Total loans..................................................... 100.00% 100.00% 100.00% 100.00% 100.00%
Total loans (dollars)........................................... $34,493 $44,634 $50,565 $63,204 $80,546
</TABLE>

(1) The majority of these loans are made to operating businesses where real
property has been taken as additional collateral.
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Loan Approval. Certain credit risks are inherent in making loan. These
include prepayment risks, risks resulting from uncertainties in the future value
of collateral, risks resulting from changes in economic and industry conditions,
and risks inherent in dealing with individual borrowers. In particular, longer
maturities increase the risk that economic conditions will change and adversely
affect collectibility. The Company attempts to minimize loan losses through
various means and uses standardized underwriting criteria. These means include
the use of policies and procedures including officer and customer lending
limits, and loans in excess of certain limits must be approved by the Board of
Directors of the relevant Banks.
Loan Review. The company has a continuous loan review process designed to
promote early identification of credit quality problems. All loan officers are
charged with the responsibility of reviewing all past due loans in their
respective portfolios. Each of the Banks establishes watch lists of potential
problem loans.
Deposits
The principal sources of funds for the Banks are core deposits, consisting
of demand deposits, interest-bearing transaction accounts, money market
accounts, saving deposits, and certificates of deposit. Transaction accounts
include checking and negotiable order of withdrawal (NOW) accounts which
customers use for cash management and which provide the Banks with a source of
fee income and cross-marketing opportunities, as well as a low-cost source of
funds. Time and savings accounts also provide a relatively stable source of
funding. The largest source of funds for the Banks is certificates of deposit.
Certificates of deposit in excess of $100,000 are held primarily by customers in
the Banks' market areas. Deposit rates are set weekly by senior management of
each of the Banks, subject to approval by management of the Company. Management
believes that the rates the Banks offer are competitive with other institutions
in the Banks' market areas.
Competition
Banks generally compete with other financial institutions through the
selection of banking products and services offered, the pricing of services, the
level of service provided, the convenience and availability of services, and the
degree of expertise and the personal manner in which services are offered. South
Carolina law permits statewide branching by banks and savings institutions, and
many financial institutions in the state have branch networks. Consequently,
commercial banking in South Carolina is highly competitive. South Carolina law
also permits regional interstate banking whereby bank holding companies in
certain southeastern states are allowed to acquire depository institutions
within South Carolina. Many large banking organizations currently operate in the
respective market areas of the Banks, several of which are controlled by
out-of-state ownership. In addition, competition between commercial banks and
thrift institutions (savings institutions 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. 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 a thrift institution. Consequently,
competition among financial institutions of all types is largely unlimited with
respect to legal ability and authority to provide most financial services.
Furthermore, as a consequence of legislation recently enacted by the United
States Congress, out-of-state banks not previously allowed to operate in South
Carolina will be allowed to commence operations and compete in the Banks'
primary service areas if the South Carolina legislature does not elect to limit
the reach of such federal legislation within South Carolina. See "Government
Supervision and Regulation -- Interstate Banking."
Each of the Banks faces increased competition from both federally-chartered
and state-chartered financial and thrift institutions, as well as credit unions,
consumer finance companies, insurance companies and other institutions in the
Banks' respective market areas. Some of these competitors are not subject to the
same degree of regulation and restriction imposed upon the Banks. Many of these
competitors also have broader geographic markets and substantially greater
resources and lending limits than the Banks and offer certain services such as
trust banking that the Banks, other than the Greenwood Bank, do not currently
provide. In addition, many of these competitors have numerous branch offices
located throughout the extended market areas of the Banks that the Company
believes may provide these competitors with an advantage in geographic
convenience that the Banks do not have at present. Such competitors may also be
in a position to make more effective use of media advertising, support services,
and electronic technology than can the Banks.
Currently there are five other commercial banks, two savings institutions,
and seven credit unions operating in the Greenwood Bank's primary service area,
and six other commercial banks, no savings institutions, and one credit union
operating in the Clemson Bank's primary service area. Currently there are two
other commercial banks, two savings institutions, and one credit union operating
in the Belton Bank's primary service area; four other commercial banks, one
savings
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<PAGE>
institution, and one credit union operating in the Newberry Bank's primary
service area; and two other commercial banks, one savings institution, and one
credit union operating in the Barnwell Bank's primary service area.
Legal Proceedings
In the ordinary course of operations, the Company and the Banks are parties
to various legal proceedings. Management does not believe that there is any
pending or threatened proceeding against the Company or any of the Banks which,
if determined adversely, would have a material effect on the business, results
of operations, or financial position of the Company or any of the Banks.
GOVERNMENT SUPERVISION AND REGULATION
General
On September 4, 1996, the organizers of the Belton Bank received
conditional approval from the State Board for a state bank charter for the
Belton Bank. On November 26, 1996, the organizers of the Barnwell Bank amended
their application to the State Board for approval of a state bank charter for
the Barnwell Bank. The Company anticipates that the State Board review and
approval process will be completed for the Belton Bank and the Barnwell Bank
during the first quarter of 1997. The Company is in the process of applying to
the State Board and the Federal Reserve Board to acquire the New Banks as well
as applying for deposit insurance. The Company anticipates that the organizers
of the Newberry Bank will apply to the State Board for approval of a state bank
charter for the Newberry Bank prior to the end of the first quarter of 1997.
The Company and the Banks are subject to an extensive collection of state
and federal banking laws and regulations which impose specific requirements and
restrictions on, and provide for general regulatory oversight with respect to,
virtually all aspects of the Company's and the Banks' operations. The Company
and the Banks are also affected by government monetary policy and by regulatory
measures affecting the banking industry in general. The actions of the Federal
Reserve System affect the money supply and, in general, the Banks' lending
abilities in increasing or decreasing the cost and availability of funds to the
Banks. Additionally, the Federal Reserve System regulates the availability of
bank credit in order to combat recession and curb inflationary pressures in the
economy by open market operations in United States government securities,
changes in the discount rate on member bank borrowings, changes in the reserve
requirements against bank deposits and limitations on interest rates which banks
may pay on time and savings deposits.
During 1989 and 1991, the United States Congress enacted two major pieces
of banking legislation: The Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA") and the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA"). FIRREA and FDICIA have significantly changed
the commercial banking industry through, among other things, revising and
limiting the types and amounts of investment authority, significantly increasing
minimum regulatory capital requirements, and broadening the scope and power of
federal bank and thrift regulators over financial institutions and affiliated
persons in order to protect the deposit insurance funds and depositors. These
laws, and the resulting implementing regulations, have subjected the Banks and
the Company to extensive regulation, supervision and examination by the FDIC.
This change has resulted in increased administrative, professional and
compensation expenses in complying with a substantially increased number of new
regulations and policies. The regulatory structure created by these laws gives
the regulatory authorities extensive authority in connection with their
supervisory and enforcement activities and examination policies.
The following is a brief summary of certain statutes, rules and regulations
affecting the Company and the Banks. This summary is qualified in its entirety
by reference to the particular statutory and regulatory provisions referred to
below and is not intended to be an exhaustive description of the statutes or
regulations applicable to the business of the Company and the Banks. Any change
in applicable laws or regulations may have a material adverse effect on the
business and prospects of the Company and the Banks.
The Company
The Company is a bank holding company within the meaning of the Federal
Bank Holding Company Act of 1956, as amended (the "BHCA"), and the South
Carolina Banking and Branching Efficiency Act of 1996, as amended (the "South
Carolina Act"). The Company is registered with both the Federal Reserve System
and the State Board. The Company is required to file with both of these agencies
annual reports and other information regarding its business operations and those
of its subsidiaries. It is also subject to the supervision of, and to regular
examinations by, these agencies.
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The BHCA requires every bank holding company to obtain the prior approval
of the Federal Reserve Board before (i) it or any of its subsidiaries (other
than a bank) acquires substantially all of the assets of any bank, (ii) it
acquires ownership or control of any voting shares of any bank if after such
acquisition it would own or control, directly or indirectly, more than 5% of the
voting shares of such bank, or (iii) it merges or consolidates with any other
bank holding company. Under the South Carolina Act, it is unlawful without the
prior approval of the South Carolina Board for any South Carolina bank holding
company (i) to acquire direct or indirect ownership or control of more than 5%
of the voting shares of any bank or any other bank holding company, (ii) to
acquire all or substantially all of the assets of a bank or any other bank
holding company, or (iii) to merge or consolidate with any other bank holding
company.
The BHCA and the Federal Change in Bank Control Act, together with
regulations promulgated by the Federal Reserve Board, require that, depending on
the particular circumstances, either the Federal Reserve Board's approval must
be obtained or notice must be furnished to the Federal Reserve Board and not
disapproved prior to any person or company acquiring control of a bank holding
company, such as the Company, subject to certain exemptions for certain
transactions.
Under the BHCA, a bank holding company is generally prohibited from
engaging in, or acquiring direct or indirect control of more than 5% of the
voting shares of any company engaged in, nonbanking activities, unless the
Federal Reserve Board, by order or regulation, has found those activities to be
so closely related to banking or managing or controlling banks as to be a proper
incident thereto. Some of the activities that the Federal Reserve Board has
determined by regulation to be proper incidents to the business of a bank
holding company include making or servicing loans and certain types of leases,
engaging in certain insurance and discount brokerage activities, performing
certain data processing services, acting in certain circumstances as a fiduciary
or investment or financial adviser, owning savings associations and making
investments in certain corporations or projects designed primarily to promote
community welfare. The Company is also restricted in its activities by the
provisions of the Glass-Steagall Act of 1933, which prohibits the Company from
owning subsidiaries that are engaged principally in the issue, flotation,
underwriting, public sale or distribution of securities. The regulatory
requirements to which the Company is subject also set forth various conditions
regarding the eligibility and qualifications of its directors and officers.
The Banks
The operations of the Greenwood Bank are, and the New Banks will be,
subject to various statutory requirements and rules and regulations promulgated
and enforced primarily by the State Board, the Federal Reserve System, and the
FDIC. As a South Carolina-chartered banking corporation with FDIC deposit
insurance, the Clemson Bank is also subject to various statutory requirements
and rules and regulations promulgated and enforced primarily by the State Board
and the FDIC. The State Board and the FDIC regulate or monitor all areas of the
Existing Banks', and will regulate and monitor the areas of the New Banks',
respective operations, including security devices and procedures, adequacy of
capitalization and loss reserves, loans, investments, borrowings, deposits,
mergers, issuances of securities, payment of dividends, interest rates payable
on deposits, interest rates or fees chargeable on loans, establishment of
branches, corporate reorganizations, maintenance of books and records, and
adequacy of staff training to carry on safe lending and deposit gathering
practices.
The Federal Reserve and FDIC also require the Banks to maintain certain
capital ratios (see "Federal Capital Regulations"), and the provisions of the
Federal Reserve Act require the Greenwood Bank and the New Banks to observe
certain restrictions on any extensions of credit to the Company, or with certain
exceptions, other affiliates, on investments in the stock or other securities of
other banks, and on the taking of such stock or securities as collateral on
loans to any borrower. In addition, the Banks are prohibited from engaging in
certain tie-in arrangements in connection with any extension of credit, or the
providing of any property or service. The regulatory requirements to which the
Banks are subject also set forth various conditions regarding the eligibility
and qualification of its of directors and officers.
Dividends
Although the Company is not presently subject to any direct legal or
regulatory restrictions on dividends (other than the South Carolina state
business corporation law requirements that dividends may be paid only if such
payment would not render the Company insolvent or unable to meet its obligations
as they come due), the Company's ability to pay cash dividends will depend
entirely upon the amount of dividends paid by each of the Banks and any other
subsequently acquired entities. The Banks are subject to regulatory restrictions
on the payment of dividends, including the prohibition of payment of dividends
from each Bank's capital. All dividends of the Banks must be paid out of the
respective undivided profits then on hand, after deducting expenses, including
losses and bad debts. In addition, as a member of the Federal Reserve System,
the Greenwood Bank is prohibited from declaring a dividend on its shares of
common stock until its surplus equals its stated
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<PAGE>
capital, unless there has been transferred to surplus no less than one-tenth of
such bank's net profits of the preceding two consecutive half-year periods (in
the case of an annual dividend) and the approval of the Federal Reserve Board is
required if the total of all dividends declared by the Greenwood Bank in any
calendar year exceeds the total of its net profits for that year combined with
the Greenwood Bank's retained net profits for the preceding two years, less any
required transfers to surplus. The Banks are subject to various other federal
and state regulatory restrictions on the payment of dividends, including receipt
of the approval of the South Carolina Commissioner of Banking prior to paying
dividends to the Company.
FIRREA
FIRREA was enacted on August 9, 1989, and has had a significant impact on
the operations of all financial institutions, including the Banks. FIRREA, among
other things, abolished the Federal Savings and Loan Insurance Corporation and
established two new insurance funds under the jurisdiction of the FDIC: the
Savings Association Fund and the Bank Insurance Fund (see "FDIC Regulations").
FIRREA also imposed, with certain exceptions, a "cross guaranty" on the part of
commonly controlled depository institutions such as the Banks. Under this
provision, if one depository institution subsidiary of a multi-bank holding
company fails or requires FDIC assistance, the FDIC may assess a commonly
controlled depository institution for the estimated losses suffered by the FDIC.
Consequently, each of the Banks is subject to assessment by the FDIC related to
any loss suffered by the FDIC arising out of the operations of the other Bank.
The FDIC's claim is junior to the claims of nonaffiliated depositors, holders of
secured liabilities, general creditors and subordinated creditors but is
superior to the claims of shareholders.
FDIC Regulations
The FDIC establishes rates for the payment of premiums by federally insured
banks and thrifts for deposit insurance. Deposits in the Banks are insured by
the FDIC up to a maximum amount (generally $100,000 per depositor, subject to
aggregation rules), and the FDIC maintains an insurance fund for commercial
banks with insurance premiums from the industry used to offset losses from
insurance payouts when banks fail. The Existing Banks pay, and the New Banks
will pay, premiums to the FDIC on their deposits. In 1993, the FDIC adopted a
rule which establishes a risk-based deposit insurance premium system for all
insured depository institutions, including the Banks. Under the 1993 rule, a
depository institution pays to the FDIC a premium of from $0.00 to $0.31 per
$100 of insured deposits depending on its capital levels and risk profile, as
determined by its primary federal regulator on a semi-annual basis. During 1996,
each Existing Bank's assessment rate was $500 per quarter for insured deposits.
Federal Capital Regulations

In an effort to achieve a measure of capital adequacy that is more
sensitive to the individual risk profiles of financial institutions, pursuant to
the provisions of the FDICIA, the Federal Reserve Board, the FDIC, and other
federal banking agencies have adopted risk-based capital adequacy guidelines for
banking organizations insured by the FDIC, including each of the Banks. These
guidelines redefine traditional capital ratios to take into account assessments
of risks related to each balance sheet category, as well as off-balance sheet
financing activities. The guidelines define a two-tier capital framework. Tier 1
capital consists of common and qualifying preferred shareholders' equity, less
goodwill and other adjustments. Tier 2 capital consists of mandatory
convertible, subordinated and other qualifying term debt, preferred stock not
qualifying for Tier 1, and the allowance for credit losses up to 1.25% or
risk-weighted assets. Under the guidelines, institutions must maintain a
specified minimum ratio of "qualifying" capital to risk-weighted assets. At
least 50% of an institution's qualifying capital must be "core" or "Tier 1"
capital, and the balance may be "supplementary" or "Tier 2" capital. The
guidelines imposed on the Company and the Banks include a minimum leverage ratio
standard of capital adequacy. The leverage standard requires top-rated
institutions to maintain a minimum Tier 1 capital to assets ratio of 3%, with
institutions receiving less than the highest rating required to maintain a
minimum ratio of 4% or greater, based upon their particular circumstances and
risk profiles. As of December 31, 1995, the guidelines require achievement of a
minimum ratio of total capital to risk-weighted assets of 8% and a minimum ratio
of Tier 1 capital to risk-weighted assets of 4%.

Each of the Company's and Existing Bank's leverage and risk-based capital
ratios at December 31, 1996, exceeded their respective fully phased-in minimum
requirements.
Other Regulations
Interest and certain other charges collected or contracted for by the Banks
are subject to state usury laws and certain federal laws concerning interest
rates. The Banks' loan operations are also subject to certain federal laws
applicable to credit transactions, such as the federal Truth-In-Lending Act
governing disclosures of credit terms to consumer borrowers, the
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Community Reinvestment Act of 1977 requiring financial institutions to meet
their obligations to provide for the total credit needs of the communities they
serve, including investing their assets in loans to low- and moderate-income
borrowers, the Home Mortgage Disclosure Act of 1975 requiring financial
institutions to provide information to enable public officials to determine
whether a financial institution is fulfilling its obligations to help meet the
housing needs of the community it serves, the Equal Credit Opportunity Act
prohibiting discrimination on the basis of race, creed or other prohibited
factors in extending credit, the Fair Credit Reporting Act governing the manner
in which consumer debts may be collected by collection agencies, and the rules
and regulations of the various federal agencies charged with the responsibility
of implementing such federal laws. The deposit operations of the Banks also are
subject to the Right to Financial Privacy Act, which imposes a duty to maintain
confidentiality of consumer financial records and prescribes procedures for
complying with administrative subpoenas of financial records, and the Electronic
Funds Transfer Act and Regulation E issued by the Federal Reserve Board to
implement that Act, which govern automatic deposits to and withdrawals from
deposit accounts and customers' rights and liabilities arising from the use of
automated teller machines and other electronic banking services.
Interstate Banking
On September 29, 1994, the federal government enacted the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (the "1994 Act"). The
provisions of the 1994 Act became effective on September 29, 1995, at which time
eligible bank holding companies in any state were permitted, with Federal
Reserve Board approval, to acquire banking organizations in any other state. As
such, all existing regional compacts and substantially all existing regional
limitations on interstate acquisitions of banking organizations have been
eliminated.
The 1994 Act also removed substantially all of the existing prohibitions on
interstate branching by banks. On and after June 1, 1997, a bank operating in
any state may establish one or more branches within any other state without, as
currently required, the establishment of a separate banking structure within the
other state. Interstate branching is allowed earlier than the automatic phase-in
date of June 1, 1997, as long as the legislatures of both states involved have
adopted statutes expressly permitting such branching to take place at an earlier
date.
On May 7, 1996, South Carolina adopted the South Carolina Act which became
effective on July 1, 1996. The South Carolina Act permits the acquisition of
South Carolina banks and bank holding companies by, and mergers with,
out-of-state banks and bank holding companies with the prior approval of the
State Board. The South Carolina Act also permits South Carolina state banks,
with prior approval of the State Board, to operate branches outside the State of
South Carolina. Although the 1994 Act has the potential to increase the number
of competitors in the marketplace of each of the Banks, the Company cannot
predict the actual impact of such legislation on the competitive position of the
Banks.
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<PAGE>
MANAGEMENT
Currently, the Company's Board of Directors includes fifteen directors. The
Company's practice is for the Chairman of the Board and President of each Bank
to be elected or appointed to the Company's Board of Directors, and William G.
Stevens, the President of the Company, to serve on each Bank's Board of
Directors.
Executive Officers and Directors of the Company
The following sets forth certain information regarding the Company's
executive officers and directors as of the date of this Prospectus. The
Company's Articles of Incorporation provide for a classified Board of Directors,
so that, as nearly as possible, one-third of the directors are elected each year
to serve three-year terms. Executive officers of the Company serve at the
discretion of the Company's Board of Directors.
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
William G. Stevens............................... 51 President, Chief Executive Officer and Director
James H. Stark................................... 61 Chief Financial Officer and Secretary
Patricia C. Edmonds.............................. 42 Assistant Secretary and Director
Charles J. Rogers................................ 64 Chairman of the Board
David P. Allred.................................. 58 Director
Robert C. Coleman................................ 51 Director
John W. Drummond................................. 77 Director
Wayne Q. Justesen, Jr............................ 50 Director
Thomas C. Lynch, Jr.............................. 61 Director
H. Edward Munnerlyn.............................. 53 Director
George B. Park................................... 46 Director
Joseph H. Patrick, Jr............................ 53 Director
Donna W. Robinson................................ 49 Director
George D. Rodgers................................ 52 Director
Thomas E. Skelton................................ 66 Director
Lex D. Walters................................... 58 Director
</TABLE>

William G. Stevens has served as President and Chief Executive Officer of
the Company since April 1988 and of the Greenwood Bank since January 1989. He
was employed by NCNB National Bank of South Carolina (formerly Bankers Trust)
for eighteen years prior to 1987.
James H. Stark has served as Chief Financial Officer of the Company since
September 1988 and as Senior Vice President, Cashier, and Secretary of the
Greenwood Bank since January 1989.
Patricia C. Edmonds has served as Executive Director of the Upper Savannah
Council of Governments since March 1990 and served as its Assistant Director
from 1984 to March 1989.
Charles J. Rogers has served as Chairman of the Board of Directors of the
Company since January 1989. He has served as President of The Organizational
Paths Company, a consulting firm for organizational strategies, since July 1993.
Mr. Rogers served as team leader of the Greenwood Plant of the Monsanto Chemical
Company from 1982 until June 1993.
David P. Allred is a medical doctor who has been in private practice in
Saluda, North Carolina since April 1994 and was in private practice in Beaufort,
South Carolina from July 1990 to December 1993. From September 1988 to July
1990, he was employed by the Medical University of South Carolina. From 1971
through August 1988, he was in private medical practice in Greenwood, South
Carolina.
Robert C. Coleman has owned and has served as President of Coleman Realty
Company since 1976.
John S. Drummond has owned and operated Drummond Oil Company since 1960 and
has served as a member of the South Carolina Senate since 1964.
Wayne Q. Justesen, Jr. has been employed by Greenwood Mills, Inc. ("GMI"),
a textile manufacturer, since 1978 and has served as Secretary and General
Counsel of GMI since 1983.
Thomas C. Lynch, Jr. served as a pharmacist and as President of Lynch Drug
Company, a retail pharmacy in Clemson, South Carolina, from 1963 until its sale
to Eckerd Drug, Inc. in January 1997.
41

<PAGE>
H. Edward Munnerlyn has served as President and owner of Munnerlyn Company,
a corporate apparel and uniforms company, since January 1989. Prior to 1989 he
was employed by GMI for twenty years and was Executive Vice President when he
left GMI in 1988.
George B. Park has served as President and Chief Executive Officer of Otis
S. Twilley Seed Company, Inc., a mail order seed company, since August 1993, and
as President and owner of Hopewood, Inc., a seed distribution company, since
April 1993. Mr. Park has also served as Managing Director of K. Sahin Zaden,
B.V., a flower seed breeding and production company. Prior to 1989, he was
co-owner, Vice President and Corporate Secretary of George W. Park Seed Company.
Joseph H. Patrick, Jr. has served as President and co-owner of Southern
Brick Company from 1984 to January 1996 and as President of Southern Resource,
Inc. since January 1996.
Donna W. Robinson has been employed as President and Chief Executive
Officer of the Clemson Bank since June 1995. Between September 1994 and June
1995, she was employed by the Company primarily to assist in matters relating to
the organization of the Clemson Bank. Prior to September 1994, she served as a
Vice President of Wachovia Bank of South Carolina and had been employed by such
bank or its predecessor banks since 1973.
George D. Rodgers has served as the President and owner of Palmetto
Insurance Agency, Inc. in Clemson, South Carolina since 1985.
Thomas E. Skelton has served as a professor at Clemson University since
1969, and since 1992 has served as head of the Clemson University Entomology
Department.
Lex D. Walters has served as President of Piedmont Technical College since
1968.
Directors of the Greenwood Bank
The following sets forth certain information regarding the Greenwood Bank's
directors as of the date of this Prospectus. Directors of the Greenwood Bank
serve until the next annual meeting of shareholders and until their successors
are duly elected and shall have qualified. Executive officers of the Greenwood
Bank serve at the discretion of the Greenwood Bank's Board of Directors.
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
William G. Stevens...................................... 51 President, Chief Executive Officer and Director
Charles J. Rogers....................................... 64 Chairman of the Board
David P. Allred......................................... 58 Director
Robert C. Coleman....................................... 51 Director
John W. Drummond........................................ 77 Director
Patricia C. Edmonds..................................... 42 Director
Wayne Q. Justesen, Jr................................... 50 Director
H. Edward Munnerlyn..................................... 53 Director
George B. Park.......................................... 46 Director
Joseph H. Patrick, Jr................................... 53 Director
Lex D. Walters.......................................... 58 Director
</TABLE>

<PAGE>
Directors of the Clemson Bank
The following sets forth certain information regarding the Clemson Bank's
directors as of the date of this Prospectus. Directors of the Clemson Bank serve
until the next annual meeting of shareholders and until their successors are
duly elected and shall have qualified. Executive officers of the Clemson Bank
serve at the discretion of the Clemson Bank's Board of Directors.
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Donna W. Robinson....................................... 49 President, Chief Executive Officer and Director
Thomas C. Lynch, Jr..................................... 61 Chairman of the Board
Benson L. Bagwell....................................... 53 Director
Donald S. Chamberlain................................... 61 Director
William E. Dukes........................................ 67 Director
Jan S. Fredman.......................................... 39 Director
Robert C. Hubbard, III.................................. 50 Director
Suzanne E. Morse........................................ 50 Director
Ethel C. Pettigrew...................................... 43 Director
George D. Rodgers....................................... 52 Director
Thomas E. Skelton....................................... 66 Director
William G. Stevens...................................... 51 Director
Joseph J. Turner, Jr.................................... 47 Director
Monica Zielinski........................................ 62 Director
</TABLE>

Organizers and Proposed Directors of the Barnwell Bank
The following sets forth certain information regarding the organizers and
the proposed directors of the Barnwell Bank as of the date of this Prospectus.
In addition to the following individuals, William G. Stevens, the President of
the Company and of the Greenwood Bank, will serve as a director of the Barnwell
Bank.
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Marshall L. Martin, Jr.................................. 42 President, Chief Executive Officer and Director
Clinton C. Lemon, Jr.................................... 52 Chairman of the Board
Richard E. Boyles....................................... 37 Director
Albert L. Carroll....................................... 66 Director
Peggy C. Collins........................................ 60 Director
Martin O'Neal Laird (1)................................. 52 Director
Miles Loadholt.......................................... 53 Director
Leonard W. Mills (1).................................... 60 Director
Susan P. Moskow......................................... 42 Director
Michael W. Nix (1)...................................... 32 Director
J. Samuel Plexico....................................... 42 Director
Carolyne S. Williams.................................... 49 Director
W. Allen Woods.......................................... 47 Director
</TABLE>

(1) The Company anticipates that such individuals will not serve as directors of
the Barnwell Bank upon the opening of the Barnwell Bank, but will serve in
such capacity in the future upon regulatory approval.
Marshall L. Martin, Jr. has been employed by the Company since October 1996
primarily to assist in matters relating to the organization of the Barnwell Bank
and to serve as President and Chief Executive Officer of the Barnwell Bank.
Prior to that time, he served as Vice President of NationsBank, N.A. and had
been employed by such bank or its predecessor banks since 1977.
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<PAGE>
Organizers and Proposed Directors of the Belton Bank
The following sets forth certain information regarding the organizers and
the proposed directors of the Belton Bank as of the date of this Prospectus. In
addition to the following individuals, William G. Stevens, the President of the
Company and of the Greenwood Bank, will serve as a director of the Belton Bank.
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
James A. Lollis......................................... 52 President, Chief Executive Officer and Director
James M. Horton......................................... 51 Chairman of the Board
Harold Clinkscales, Jr.................................. 44 Director
Patsy T. Daniel......................................... 54 Director
Thomas M. Dixon......................................... 32 Director
D. Michael Greer........................................ 41 Director
Kenneth B. Heller....................................... 45 Director
Dianne G. Henderson..................................... 51 Director
D. Brian Holliday....................................... 36 Director
B. Marshall Keys........................................ 45 Director
Paul R. Marshall........................................ 40 Director
Patrick B. O'Dell....................................... 42 Director
</TABLE>

James A. Lollis has been employed by the Company since May 1996 primarily
to assist in matters relating to the organization of the Belton Bank and to
serve as President and Chief Executive Officer of the Belton Bank. Prior to that
time, he served as Vice President/Data Processing Manager of First United
Bancorporation, Anderson, South Carolina and had been employed by such bank
holding company since May 1990.
Organizers and Proposed Directors of the Newberry Bank
The following sets forth certain information regarding the organizers and
the proposed directors of the Newberry Bank as of the date of this Prospectus.
In addition to the following individuals, William G. Stevens, the President of
the Company and of the Greenwood Bank, will serve as a director of the Newberry
Bank.
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
William F. Steadman..................................... 42 President, Chief Executive Officer and Director
Earl H. Bergen.......................................... 76 Chairman of the Board
W. Edgar Baker.......................................... 54 Director
Betty F. Barber......................................... 65 Director
Warren R. Cousins....................................... 67 Director
Ronnie W. Cromer........................................ 49 Director
Rodney S. Griffin....................................... 48 Director
William P. Kunkle....................................... 64 Director
William W. Riser, Jr.................................... 77 Director
William B. Rush......................................... 43 Director
</TABLE>

William F. Steadman has been employed by the Company since October 1996
primarily to assist in matters relating to the organization of the Newberry Bank
and to serve as President and Chief Executive Officer of the Newberry Bank. He
served as Vice President Commercial Lending of The Bankers Bank of Atlanta,
Georgia from January 1996 to October 1996, and as President of Davidson Savings
Bank, Lexington, North Carolina from 1985 until January 1995.
Ownership of the Common Stock
As of the date of this Prospectus, the executive officers and directors of
the Company and the Existing Banks own in the aggregate 356,084 shares of Common
Stock and in the aggregate own options to purchase an additional 333,891 shares
of Common Stock. These individuals may, but are not obligated to, purchase
additional shares of Common Stock in this Offering. In addition, the organizers
of the New Banks have indicated that they intend, but are not obligated to,
purchase an aggregate of approximately 285,000 shares of Common Stock in the
Offering (representing approximately 19.5% of the shares of Common Stock offered
hereby). After the completion of the Offering, the Company anticipates that no
employee, executive officer, or director of the Company or the Banks will
beneficially own more than 5% of the outstanding Common Stock of the Company.
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<PAGE>
DESCRIPTION OF SECURITIES
The authorized capital stock of the Company is 12,000,000 shares,
consisting of 10,000,000 shares of Common Stock, par value $1.00 per share, and
2,000,000 shares of a special class of stock, par value $1.00 per share, the
rights and preferences of which may be designated as the Board of Directors may
determine (the "Undesignated Stock"). As of the date of this Prospectus,
1,225,784 shares of Common Stock were outstanding and were held of record by
approximately 1,340 shareholders. After the completion of this Offering, there
will be 2,690,784 shares of Common Stock outstanding. No shares of Undesignated
Stock are currently outstanding.
Common Stock
Subject to the rights of the holders of any outstanding shares of
Undesignated Stock and any restrictions that may be imposed by any lender to the
Company, holders of Common Stock are entitled to receive ratably such dividends,
if any, as may be declared by the Board of Directors out of funds legally
available therefor. See "Dividend Policy." In the event of the liquidation,
dissolution or winding up of the Company, holders of Common Stock are entitled
to share ratably, based on the number of shares held, in the assets, if any,
remaining after payment of all of the Company's debts and liabilities and the
liquidation preference of any outstanding series of Undesignated Stock.
Holders of Common Stock are entitled to one vote per share for each share
held of record on any matter submitted to the holders of Common Stock for a
vote. Because holders of Common Stock do not have cumulative voting rights with
respect to the election of directors, the holders of a majority of the shares of
Common Stock represented at a meeting can elect all of the directors. Holders of
Common Stock do not have preemptive or other rights to subscribe for or purchase
any additional shares of capital stock issued by the Company or to convert their
Common Stock into any other securities. There are no redemption or sinking fund
provisions applicable to the Common Stock.
Undesignated Stock
The Company's authorized shares of Undesignated Stock may be issued in one
or more series, and the Board of Directors is authorized, without further action
by the shareholders, to designate the rights, preferences, limitations and
restrictions of and upon shares of each series, including dividend, voting,
redemption and conversion rights. The Board of Directors also may designate par
value, preferences in liquidation, as well as any sinking fund terms and the
number of shares constituting any series or the designation of such series. The
Company believes that the availability of Undesignated Stock issuable in series
will provide increased flexibility for structuring possible future financings
and acquisitions, if any, and in meeting certain other corporate needs. It is
not possible to state the actual effect of the authorization and issuance of any
series of Undesignated Stock upon the rights of holders of Common Stock until
the Board of Directors determines the specific terms, rights and preferences of
a series of Undesignated Stock. However, such effects might include, among other
things, restricting dividends on the Common Stock, diluting the voting power of
the Common Stock, or impairing liquidation rights of such shares without further
action by holders of the Common Stock. In addition, the Board of Directors is
authorized at any time to issue Undesignated Stock with voting, conversion or
other features that may have the effect of impeding or discouraging a merger,
tender offer, proxy contest, the assumption of control by a holder of a large
block of the Company's securities or the removal of incumbent management.
Issuance of Undesignated Stock could also adversely affect the market price of
the Common Stock. The Company has no present plan to issue any shares of
Undesignated Stock.
Director Liability
The Articles provide that every person who was or is a party to, or is
threatened to be made a party to, or is otherwise involved in, any action, suit,
or proceeding, whether civil, criminal, administrative, or investigative, by
reason of the fact that such person or a person of whom such person is the legal
representative is or was a director or officer of the Company or is or was
serving at the request of the Company or for the Company's benefit as a director
or officer of another corporation, or as the Company's representative in a
partnership, joint venture, trust, or other enterprise, shall be indemnified and
held harmless to the fullest extent legally permissible under and pursuant to
the South Carolina Business Corporation Act of 1988, as amended, against all
expenses, liabilities, and losses (including without limitation attorneys' fees,
judgments, fines, and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith. Such right of
indemnification is provided as a contractual right that may be enforced in any
manner desired by such person.
Insofar as indemnification for liabilities under the Securities Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the provisions in the Articles described above, or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as
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<PAGE>
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person in connection with the securities being registered) the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification is against public policy as expressed in
the Securities Act and will be governed by the final adjudication of such issue.
Under the Articles, the Board of Directors is also entitled to cause the
Company to purchase and maintain insurance on behalf of any person who is or was
a director or officer of the Company, or is or was serving at the request of the
Company as a director or officer of another corporation, or as the Company's
representative in a partnership, joint venture, trust, or other enterprise,
against any liability asserted against such person and incurred in any such
capacity or arising out of such status, whether or not the Company would have
the power to indemnify such person.
Change of Control
General. The Articles and Bylaws of the Company and the Code of Laws of
South Carolina of 1976, as amended (the "South Carolina Code"), contain certain
provisions designed to enhance the ability of the Board of Directors to deal
with attempts to acquire control of the Company. These provisions, as well as
the right of the Board of Directors to designate the features of and issue
shares of Undesignated Stock without a shareholder vote, may be deemed to have
an anti-takeover effect and may discourage takeover attempts which have not been
approved by the Board of Directors (including takeovers that certain
shareholders may deem to be in their best interest) and may adversely affect the
price that a potential purchaser will be willing to pay for the Company's stock.
To the extent that such takeover attempts are discouraged, temporary
fluctuations in the market price of the Common Stock resulting from actual or
rumored takeover attempts may be inhibited. These provisions also could
discourage or make more difficult a merger, tender offer or proxy contest, even
though such a transaction may be favorable to the interests of shareholders.
These provisions could also potentially adversely affect the market price of the
Common Stock.
The following briefly summarizes protective provisions contained in the
Articles and the South Carolina Code and is not intended to be a complete
description of all the features and consequences of these provisions. The
following is qualified in its entirety by reference to the Articles and the
provisions of the South Carolina Code.
Supermajority Voting Provisions. The Articles provide that without the
affirmative vote of the holders of not less than 80% of the shares outstanding
and entitled to vote thereon, the Company cannot effect (a) the merger,
consolidation or exchange of the Company's shares with any other corporation,
partnership, trust, estate or association, (b) the sale or exchange of all or
substantially all of the Company's assets, (c) the issuance or delivery by the
Company of any securities of the Company in exchange or payment for properties
or assets of another entity or securities issued by such entity, or (d) the
nonjudicial dissolution of the Company (individually, a "Subject Transaction")
unless one of the following two additional requirements is met: (i) the Subject
Transaction is approved by the affirmative vote of not less than 80% of the
Company's Board of Directors, or (ii) the Subject Transaction is solely between
the Company and another entity, 50% or more of whose voting stock or voting
equity interests are held by the Company. These approval requirements
substantially increase the overall vote required to approve the Subject
Transaction. As a result, the Board of Directors is able to veto any proposed
takeover by refusing to approve the proposed Subject Transaction.
Other Constituencies. The Articles expressly permit the Board of Directors,
when evaluating any proposed tender or exchange offer, any merger, consolidation
or sale of substantially all of the assets of the Company, or any similar
extraordinary transaction, to consider (i) all relevant factors, including
without limitation the social, legal, and economic effects on the employees,
customers, suppliers and other constituencies of the Company and its
subsidiaries, on the communities and geographical areas in which the Company and
its subsidiaries operate or are located and on any of the business and
properties of the Company or any of its subsidiaries, and (ii) the consideration
being offered, not only in relation to the then current market price for the
Company's outstanding shares of capital stock, but also in relation to the then
current value of the Company in a freely negotiated transaction and in relation
to the Board of Directors' estimate of the future value of the Company
(including the unrealized value of its properties and assets) as an independent
going concern. The Board of Directors believes that these provisions are in the
long-term best interests of the Company and its shareholders.
The standard provisions of the South Carolina Code that would apply to a
Subject Transaction in the absence of the provisions in the Articles noted above
provide that, unless a corporation's articles of incorporation provide for a
higher or lower vote, certain significant corporate actions, such as a merger,
share exchange or sale of all or substantially all of the corporation's assets,
must be approved by the holders of two-thirds of the shares entitled to vote on
the matter. In a merger, the South Carolina Code does not require approval by
the shareholders of the surviving corporation if (a) the articles of
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<PAGE>
incorporation of the surviving corporation will not differ from its articles
before the merger, (b) each shareholder of the surviving corporation whose
shares are outstanding immediately before the effective date of the merger will
hold the same number of shares, with identical designations, preferences,
limitations and relative rights, immediately after the merger, (c) the number of
voting shares outstanding immediately after the merger, plus the number of
voting shares issuable as a result of the merger, will not exceed by more than
20% the total number of voting shares of the surviving corporation outstanding
immediately before the merger, and (d) the number of participating shares
outstanding immediately after the merger, plus the number of participating
shares issuable as a result of the merger, will not exceed by more than 20% the
total number of participating shares outstanding immediately before the merger.
In a share exchange, the South Carolina Code does not require approval of the
shareholders of the acquiring corporation. The effect of the supermajority
voting provisions of the Articles is to establish a requirement for a
shareholder vote in certain mergers in which the Company is the surviving
corporation that would not otherwise have been required, and increase from
66 2/3% to 80% the percentage of shares required to approve a merger in which
such approval is required.
Control Share Acquisitions. The Company is currently subject to the South
Carolina control share acquisitions statute (the "Control Share Statute") which
is designed to afford shareholders of certain corporations (generally,
corporations which have shares registered under Section 12 of the Securities
Exchange Act of 1934 (the "Exchange Act"), have their principal place of
business or substantial assets within South Carolina and meet certain share
ownership requirements) (a "Public Corporation") protection against certain
types of acquisitions in which a person, entity or group (an "Acquiring Person")
seeks to gain voting control of such Public Corporation. With certain enumerated
exceptions, the statute applies to acquisitions of shares of a Public
Corporation which would result in an Acquiring Person's ownership of the
corporation's shares entitled to vote in the election of directors falling
within any one of the following ranges: one-fifth or more but less than one-
third of all voting power; one-third or more but less than a majority of all
voting power; or a majority or more of all voting power (a "Control Share
Acquisition"). Shares that are the subject of a Control Share Acquisition
("Control Shares") will not have voting rights unless the holders of a majority
of "disinterested shares" vote at an annual or special meeting of shareholders
of the corporation to accord the Control Shares voting rights. "Disinterested
shares" are shares other than those owned by the Acquiring Person or a member of
a group with respect to a Control Share Acquisition, any officer of the
corporation or any employee of the corporation who is also a director. Under
certain circumstances, the statute permits an Acquiring Person to call a special
shareholders meeting for the purpose of considering the grant of voting rights
to the holder of the Control Shares. Unless otherwise provided in a
corporation's articles of incorporation or bylaws before a Control Share
Acquisition has occurred, in the event Control Shares acquired in a Control
Share Acquisition are accorded full voting rights and the Acquiring Person has
acquired Control Shares with a majority or more of all voting power, all
shareholders of the Public Corporation have dissenter's rights to receive fair
value for their shares. There is currently no provision in the Articles or the
Bylaws limiting or eliminating such rights. The Control Share Statute also
enables a corporation to provide the redemption under certain circumstances of
Control Shares with no voting rights. A corporation may opt-out of the Control
Share Statute, which the Company has not done, by so providing in its articles
of incorporation. Among the acquisitions specifically excluded from the Control
Share Statute are acquisitions consummated pursuant to a merger or plan of share
exchange in compliance with law if the Public Corporation is a party to the
agreement of merger or plan of share exchange.
Business Combinations with Interested Shareholders. The Company is also
currently subject to the South Carolina business combination statute (the
"Business Combination Statute") which, with certain enumerated exceptions,
places certain restrictions on mergers, consolidations, sales of assets,
liquidations, reclassifications or other similar kinds of transactions
("Business Combinations") with or between a resident domestic corporation with
shares registered under Section 12 of the Exchange Act (a "Resident Domestic
Corporation") and any person who owns beneficially 10% or more of the voting
power of the outstanding voting shares of the Resident Domestic Corporation (an
"Interested Shareholder"). The Business Combination Statute provides that a
Resident Domestic Corporation may not engage in any Business Combination with
any Interested Shareholder of the Resident Domestic Corporation for a period of
two years following the date the person became an Interested Shareholder (the
"Share Acquisition Date") unless the Business Combination or the purchase of
shares made by the Interested Shareholder on the Share Acquisition Date is
approved by a majority of the "disinterested" members of the board of directors
of the Resident Domestic Corporation before the Interested Shareholder's Share
Acquisition Date. A member of the board is "disinterested" if the director is
not a present or former officer or employee of the Resident Domestic Corporation
or a related corporation. The Business Combination Statute further provides
that, subject to certain exceptions, a Resident Domestic Corporation may not
engage at any time in a Business Combination with an Interested Shareholder
unless the Business Combination complies with all of the requirements of the
Resident Domestic Corporation's articles of incorporation and either (a) the
Business Combination is approved by the board of directors of the Resident
Domestic Corporation before the Share Acquisition Date, or the purchase of
shares made by the Interested Shareholder on the Share Acquisition Date has been
approved by the board of directors of the Resident Domestic Corporation before
the Share Acquisition Date, (b) the
47

<PAGE>
Business Combination is approved by the affirmative vote of the holders of a
majority of the outstanding voting shares not beneficially owned by the
Interested Shareholder proposing the Business Combination at a meeting called
for that purpose no earlier than two years after the Share Acquisition Date, or
(c) the Business Combination meets certain specified fair price and form of
consideration requirements. A company may opt-out of the Business Combination
Statute, which the Company has not done, by so providing in its articles of
incorporation.
The Control Share Statute, the Business Combination Statute and the
Company's supermajority voting provisions may tend to discourage attempts by
third parties to acquire the Company in a hostile takeover effort and may
adversely affect the price that such a potential purchaser would be willing to
pay for the stock of the Company. The provisions may also make the removal of
incumbent management more difficult and may permit a minority of the directors
and the holders of a minority of the Company's outstanding stock to prevent a
Business Combination or related transaction, and may discourage certain
speculations in the Company's stock and reduce the chances of temporary
increases in the market price of the Company's stock that could be beneficial to
shareholders desiring to sell in the market at that time.
Classification of Directors. The Company's Board of Directors is classified
so that, as nearly as possible, one-third of the Board of Directors is elected
each year to serve a three-year term. This classification would delay an attempt
by dissatisfied shareholders or anyone who obtains a controlling interest in the
Company to elect a new Board of Directors, because, absent the removal,
resignation or death of the members of the Board, it would take three annual
meetings of shareholders to change fully the composition of the Board.
Removal of Directors. The Articles provide that a director of the Company
may be removed without cause only after a vote of the holders of 80% of the
outstanding Common Stock.
Transfer Agent and Registrar
The transfer agent and registrar for the Common Stock is Registrar and
Transfer Company, Cranford, New Jersey.
Shares Eligible for Future Sale
Upon consummation of the Offering, the Company will have 2,690,784 shares
of Common Stock outstanding, and all of these shares (plus any shares issued
upon the exercise of the Underwriters' over-allotment option) will be freely
tradeable without restriction or registration under the Securities Act, unless
owned by an affiliate of the Company, subject to the lock-up agreements
described below, or acquired pursuant to the exercise of certain stock options.
Shares held by "affiliates" of the Company are subject to resale restrictions
under the Securities Act. An affiliate of an issuer is defined in Rule 144 under
the Securities Act as a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with the
issuer. Rule 405 under the Securities Act defines the term "control" to mean the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of the person whether through the ownership of
voting securities, by contract, or otherwise. All directors and executive
officers of the Company will likely be deemed to be affiliates. See
"Management -- Ownership of the Common Stock." Shares held by affiliates may be
eligible for sale in the open market without registration in accordance with the
provisions of Rule 144. Upon consummation of the Offering, the only outstanding
shares of Common Stock which will be "restricted securities," within the meaning
of Rule 144, will be those shares which have been issued upon exercise of
certain stock options, as all other shares of Common Stock will have been issued
pursuant to offerings registered under the Securities Act.
In general, under Rule 144 any person (or persons whose shares are
aggregated) who has beneficially owned restricted securities for at least two
years, including affiliates, and any affiliate who holds shares sold in a public
offering, may sell, within any three-month period, a number of such shares that
does not exceed the greater of (i) 1% of the then outstanding shares of the
Company's Common Stock or (ii) the average weekly trading volume of the Common
Stock during the four calendar weeks preceding the sale. Rule 144 also requires
that the securities must be sold in "brokers' transactions," as defined in the
Securities Act, and the person selling the securities may not solicit orders or
make any payment in connection with the offer or sale of securities to any
person other than the broker who executes the order to sell the securities.
After restricted securities are held for three years, a person who is not deemed
an affiliate of the Company is entitled to sell such shares under Rule 144
without regard to the volume and manner of sale limitations described above.
Sales of shares by affiliates will continue to be subject to the volume and
manner of sale limitations.
In addition, there are outstanding stock options that the Company has
granted to certain directors, officers, and employees of the Company and the
Banks for the purchase of an aggregate of 447,851 shares of Common Stock, of
which options for 310,801 shares are currently exercisable. Shares issuable upon
exercise of such options will be freely tradeable without
48

<PAGE>
restriction or registration under the Securities Act, unless owned by an
affiliate of the Company or subject to the lock-up agreement described below.
The Company's and each Bank's directors, executive officers, and organizers have
agreed with the Underwriters not to sell any Common Stock, which includes
356,084 currently outstanding shares and 378,891 shares issuable upon exercise
of options, for 180 days from the date of this Prospectus without the prior
written consent of the Representatives.
No prediction can be made of the effect, if any, that future sales of
shares of Common Stock, or the availability of shares for future sales, will
have on the market price prevailing from time to time. Sales of substantial
amounts of shares of Common Stock, or the perception that such sales could
occur, could adversely affect the prevailing market price of the shares.
49

<PAGE>
UNDERWRITING
Pursuant to the Underwriting Agreement and subject to the terms and
conditions thereof, the Underwriters named below have agreed to purchase from
the Company the respective number of shares of Common Stock set forth below.

<TABLE>
<CAPTION>
Name of Underwriter Number of Shares
<S> <C>
J.C. Bradford & Co.................................................................. 1,025,500
Edgar M. Norris & Co., Inc.......................................................... 439,500
Total............................................................................... 1,465,000
</TABLE>

The underwriting discount has been calculated on the basis of a commission
rate of 7.0% with respect to an aggregate of 1,093,662 shares of Common Stock to
be sold by the Company to the public, and no underwriting discount or commission
with respect to an aggregate of 371,338 shares of Common Stock to be sold to
certain purchasers disclosed to the Underwriters. Also, in consideration of
certain financial consulting services provided to the Company, the Company shall
pay to the Underwriters a financial advisory fee of $112,000.

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all of the shares of Common Stock
offered hereby (other than those shares covered by the over-allotment option
described below) if any are purchased. The Underwriting Agreement provides that,
in the event of a default by an Underwriter, in certain circumstances the
purchase commitments of the non-defaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.
The Company has granted to the Underwriters an option, expiring on the
close of business on the 30th day after the date of this Prospectus, to purchase
up to 219,750 additional shares at the initial public offering price less the
underwriting discounts and commissions, all as set forth on the cover page of
this Prospectus. Such option may be exercised only to cover over-allotments in
the sale of the shares of Common Stock. To the extent such option is exercised,
each Underwriter will become obligated, subject to certain conditions, to
purchase approximately the same percentage of such additional shares of Common
Stock as it was obligated to purchase pursuant to the Underwriting Agreement.

The Representatives have advised the Company that the Underwriters propose
initially to offer the shares of Common Stock to the public at the public
offering price set forth on the cover page of this Prospectus and to certain
dealers at such price less a concession not in excess of $0.45 per share. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of $0.10 per share to certain other dealers. After the Offering, the public
offering price and such concessions may be changed. The Representatives have
informed the Company that the Underwriters do not intend to confirm sales to
accounts over which they exercise discretionary authority.

The Offering of the Common Stock is made for delivery when, as, and if
accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation, or modification of the offer without notice. The Underwriters
reserve the right to reject any offer for the purchase of shares.

The Common Stock has been approved for listing on the American Stock
Exchange under the symbol "CYL," subject to official notice of issuance.
Although the Common Stock has been quoted on the OTC Bulletin Board, trading and
quotations of the Common Stock have been limited and sporadic. The public
offering price has been determined by negotiation among the Company and the
Representatives. In determining such price, consideration was given to, among
other things, the financial and operating history and trends of the Company, the
experience of its management, the position of the Company in its industry, the
Company's prospects, and the Company's financial results. In addition,
consideration was given to the status of the securities markets, market
conditions for new offerings of securities, and the prices of similar securities
of comparable companies.

The Underwriting Agreement provides that the Company will indemnify the
Underwriters and controlling persons, if any, against certain civil liabilities,
including liabilities under the Securities Act, or will contribute to payments
the Underwriters or any such controlling persons may be required to make in
respect thereof.
The Company and the Company's and each Bank's directors, executive
officers, and organizers have each agreed with the Underwriters that they will
not, for a period of 180 days from the date of this Prospectus, without the
prior written consent of J.C. Bradford & Co., offer, pledge, sell, contract to
sell, grant any option for the sale of, or otherwise dispose of, directly or
indirectly, any shares of Common Stock or any security or other instrument which
by its terms is convertible into, exercisable for, or exchangeable for shares of
such Common Stock, other than through bona fide gifts to persons who agree in
writing to be bound by this agreement if such writing is delivered to J.C.
Bradford & Co. within five days after such gift or pledge, and, in the case of
the Company, Common Stock issued pursuant to the exercise of outstanding
options.
50

<PAGE>
LEGAL MATTERS
Certain legal matters in connection with the Common Stock offered hereby
are being passed upon for the Company by Nexsen Pruet Jacobs & Pollard, LLP,
Columbia, South Carolina. Certain legal matters in connection with the Offering
are being passed upon for the Underwriters by Nelson Mullins Riley &
Scarborough, L.L.P., Atlanta, Georgia.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1995 and
1996 and the consolidated statements of the operations, shareholders' equity,
and cash flows of the Company for each of the three years in the period ended
December 31, 1996, have been included in this Prospectus in reliance on the
report of Tourville, Simpson & Henderson, independent accountants, given on the
authority of that firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission a
Registration Statement on Form S-2 under the Securities Act, with respect to the
shares of Common Stock offered hereby. This Prospectus omits certain information
contained in the Registration Statement, and reference is hereby made to the
Registration Statement and the exhibits thereto for further information about
the Company and the securities offered hereby. Statements contained herein
regarding the provisions of documents filed as exhibits to the Registration
Statement are not necessarily complete, and each such statement is qualified in
its entirety by reference to the copy of the applicable document filed with the
Securities and Exchange Commission. The Registration Statement, and the exhibits
thereto, may be obtained from the Public Reference Section of the Securities and
Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission. Such reports, proxy
statements and other information can be inspected and copied at prescribed rates
at the public reference facilities maintained by the Securities and Exchange
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Securities and Exchange Commission's regional offices at Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and at 7
World Trade Center, New York, New York 10048. Copies of such material can be
obtained by mail from the Public Reference Section of the Securities and
Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Securities and Exchange Commission maintains a web site
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Securities and Exchange
Commission. The address of such site is http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed with the Commission by the Company under the
Exchange Act, are incorporated by reference into this Prospectus:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, as amended; and
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996 and September 30, 1996.
All other reports and documents filed pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of this Offering shall be deemed to be incorporated by reference in
this Prospectus and shall be deemed a part hereof from the date of filing of
such reports and documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated herein by reference shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any subsequently filed document that also is,
or is deemed to be, incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
Copies of the above documents (other than exhibits to such documents,
unless such exhibits are specifically incorporated by reference into such
documents) are available upon written or oral request, without charge, from the
Company, 109 Montague Street, Greenwood, South Carolina 29646, telephone: (864)
941-8206, Attention: James H. Stark.
51

<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
COMMUNITY CAPITAL CORPORATION
<TABLE>
<CAPTION>
Report of Independent Accountants...................................................................................... F-2
<S> <C>
Consolidated Balance Sheets at December 31, 1995 and 1996.............................................................. F-3
Consolidated Statements of Operations for the Years Ended December 31, 1994, 1995 and 1996............................. F-4
Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1994, 1995 and 1996................... F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 1994, 1995 and 1996............................. F-6
Notes to Consolidated Financial Statements............................................................................. F-7
</TABLE>

F-1

<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
THE BOARD OF DIRECTORS
COMMUNITY CAPITAL CORPORATION
GREENWOOD, SOUTH CAROLINA
We have audited the accompanying consolidated balance sheets of Community
Capital Corporation and Subsidiaries as of December 31, 1995 and 1996, and the
related consolidated statements of operations, shareholders' equity and cash
flows for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Community
Capital Corporation and Subsidiaries as of December 31, 1995 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
TOURVILLE, SIMPSON & HENDERSON
January 10, 1997
(except for Note 12, as to which
the date is January 23, 1997)
Columbia, South Carolina
F-2

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
1995 1996
<S> <C> <C>
ASSETS
Cash and cash equivalents:
Cash and due from banks........................................................................... $ 2,949 $ 3,927
Federal funds sold................................................................................ 2,330 700
Total cash and cash equivalents................................................................. 5,279 4,627
Securities available for sale.......................................................................... 22,446 23,280
Loans receivable....................................................................................... 63,204 80,546
Less allowance for loan losses....................................................................... (671) (837)
Loans, net........................................................................................ 62,533 79,709
Premises and equipment, net............................................................................ 2,531 3,523
Accrued interest receivable............................................................................ 942 1,114
Other assets........................................................................................... 2,369 3,706
Total assets.................................................................................... $96,100 $115,959
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing................................................................................. $ 9,447 $ 12,226
Interest bearing..................................................................................... 63,691 77,636
Total deposits.................................................................................. 73,138 89,862
Federal funds purchased................................................................................ 2,034 783
Securities sold under agreements to repurchase......................................................... 1,000 6,000
Advances from the Federal Home Loan Bank............................................................... 6,244 4,889
Accrued interest payable............................................................................... 453 462
Other liabilities...................................................................................... 299 407
Total liabilities............................................................................... 83,168 102,403
Shareholders' Equity:
Common stock, $1 par value; 10,000,000 shares authorized; 1,153,060 and 1,219,109 shares issued and
outstanding at December 31, 1995 and 1996, respectively.............................................. 1,153 1,219
Capital surplus........................................................................................ 11,254 12,004
Unrealized gain on securities available for sale, net.................................................. 178 35
Retained earnings...................................................................................... 347 298
Total shareholders' equity...................................................................... 12,932 13,556
Total liabilities and shareholders' equity...................................................... $96,100 $115,959
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.
F-3

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except for per share data)
<TABLE>
<CAPTION>
Year ended December 31,
1994 1995 1996
<S> <C> <C> <C>
INTEREST INCOME:
Loans, including fees....................................................................... $3,909 $5,146 $6,622
Securities, taxable......................................................................... 301 723 1,112
Securities, nontaxable...................................................................... 82 171 290
Federal funds sold and other................................................................ 48 107 90
Total interest income.................................................................. 4,340 6,147 8,114
INTEREST EXPENSE:
Deposits.................................................................................... 1,364 2,422 3,425
Advances from the Federal Home Loan Bank.................................................... 298 381 298
Securities sold under agreements to repurchase.............................................. -- 13 157
Federal funds purchased and other........................................................... 31 132 126
Total interest expense................................................................. 1,693 2,948 4,006
NET INTEREST INCOME........................................................................... 2,647 3,199 4,108
Loan loss provision........................................................................... 14 112 187
NET INTEREST INCOME AFTER LOAN LOSS PROVISION................................................. 2,633 3,087 3,921
OTHER INCOME:
Service charges on deposit accounts......................................................... 306 393 515
Gain (loss) on sales of securities available for sale....................................... (79) (22) 17
Residential mortgage origination fees....................................................... 113 115 207
Commissions from sales of mutual funds...................................................... -- 49 132
Other income................................................................................ 174 242 355
Total other income..................................................................... 514 777 1,226
OTHER EXPENSE:
Salaries and employee benefits.............................................................. 1,108 1,411 1,960
Net occupancy expense....................................................................... 116 182 287
Furniture and equipment expense............................................................. 121 240 305
Other operating expense..................................................................... 916 1,236 1,589
Total other expense.................................................................... 2,261 3,069 4,141
INCOME BEFORE INCOME TAXES.................................................................... 886 795 1,006
Income tax provision.......................................................................... 301 261 300
NET INCOME.................................................................................... $ 585 $ 534 $ 706
PRIMARY AND FULLY DILUTED NET INCOME PER SHARE................................................ $ 0.80 $ 0.55 $ 0.54
AVERAGE COMMON SHARES AND EQUIVALENTS OUTSTANDING............................................. 804,822 1,070,135 1,356,626
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.
F-4

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands)
<TABLE>
<CAPTION>
Unrealized
Gain (Loss) on
Securities
Common Stock Capital Available For Retained
Shares Amount Surplus Sale, Net Earnings Total
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1993........................... 532,109 $ 532 $ 4,725 $ -- $ 162 $ 5,419
Sales of stock to ESOP............................... 14,294 14 140 -- -- 154
Adoption of accounting principle..................... -- -- -- (4) -- (4)
5% stock dividend.................................... 26,599 27 246 -- (275) (2)
Change in fair value for the period.................. -- -- -- (73) -- (73)
Net income........................................... -- -- -- -- 585 585
BALANCE, DECEMBER 31, 1994........................... 573,002 573 5,111 (77) 472 6,079
Net proceeds of stock offering....................... 520,422 520 5,490 -- -- 6,010
Sales of stock to ESOP............................... 4,741 5 51 -- -- 56
Stock options exercised.............................. 300 -- 2 -- -- 2
5% stock dividend.................................... 54,595 55 600 -- (659) (4)
Change in fair value for the period.................. -- -- -- 255 -- 255
Net income........................................... -- -- -- -- 534 534
BALANCE, DECEMBER 31, 1995........................... 1,153,060 1,153 11,254 178 347 12,932
Stock options exercised.............................. 8,558 9 60 -- -- 69
5% stock dividend.................................... 57,491 57 690 -- (755) (8)
Change in fair value for the period.................. -- -- -- (143) -- (143)
Net income........................................... -- -- -- -- 706 706
BALANCE, DECEMBER 31, 1996........................... 1,219,109 $1,219 $12,004 $ 35 $ 298 $13,556
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.
F-5

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Year ended December 31,
1994 1995 1996
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................................................ $ 585 $ 534 $ 706
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization.......................................................... 210 324 460
Provision for loan losses.............................................................. 14 112 187
Deferred income tax benefit............................................................ -- (43) (56)
Amortization less accretion on securities.............................................. 45 46 51
Amortization of deferred loan fees and costs, net...................................... 103 84 134
(Gain) loss on sale of securities available for sale................................... 79 22 (17)
Proceeds from sales of residential mortgages........................................... 5,814 4,651 8,768
Disbursements for residential mortgages held for sale.................................. (5,572) (4,814) (8,684)
Increase in interest receivable........................................................ (119) (426) (172)
Increase in interest payable........................................................... 17 180 9
Loss on disposal of premises and equipment............................................. -- -- 32
Increase in other assets............................................................... (551) (267) (333)
Increase (decrease) in other liabilities............................................... (76) 38 105
Net cash provided by operating activities............................................ 549 441 1,190
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in loans made to customers................................................... (6,295) (12,582) (17,581)
Net decrease in deposits in other banks................................................... 200 -- --
Proceeds from sales of securities available for sale...................................... 4,928 1,975 4,512
Proceeds from maturities of securities available for sale................................. 38 1,527 3,603
Purchases of securities available for sale................................................ (4,484) (15,209) (9,205)
Proceeds from maturities of securities held to maturity................................... 461 100 --
Purchases of securities held to maturity.................................................. (853) (2,891) --
Purchases of non-marketable equity securities............................................. -- (166) (947)
Proceeds from sale of other real estate owned............................................. -- 20 --
Purchases of premises and equipment....................................................... (184) (997) (1,713)
Proceeds from disposals of premises and equipment......................................... -- -- 309
Net cash used by investing activities................................................ (6,189) (28,223) (21,022)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand and savings deposits............................................... 3,696 9,136 8,343
Net increase (decrease) in certificates of deposit........................................ (542) 14,856 8,381
Proceeds of advances from the Federal Home Loan Bank...................................... 117 1,900 700
Repayments of advances from the Federal Home Loan Bank.................................... (948) (1,582) (2,054)
Proceeds from issuance of common stock.................................................... -- 6,010 --
Proceeds from exercise of stock options................................................... -- 2 69
Proceeds from stock sales to employee benefit plan........................................ 154 56 --
Net increase (decrease) in federal funds purchased and securities sold under repurchase
agreements............................................................................. 3,178 (352) 3,749
Cash paid in lieu of fractional shares.................................................... (2) (4) (8)
Net cash provided by financing activities............................................ 5,653 30,022 19,180
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........................................ 13 2,240 (652)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR................................................ 3,026 3,039 5,279
CASH AND CASH EQUIVALENTS, END OF YEAR...................................................... $ 3,039 $ 5,279 $ 4,627
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.
F-6

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation -- The accompanying consolidated financial statements
include the accounts of Community Capital Corporation (the "Company"), and its
wholly-owned subsidiaries, Greenwood Bank & Trust (the "Greenwood Bank") and
Clemson Bank & Trust (the "Clemson Bank" and together with the Greenwood Bank,
the "Banks"). The Clemson Bank began operations on June 22, 1995 (See Note 10).
The principal business activity of the Company and its subsidiaries is to
provide banking services to domestic markets, principally Greenwood County and
Pickens County, South Carolina. The Company provides data processing and other
services to the Banks. In consolidation, fees charged for these services and all
other intercompany items and transactions have been eliminated.
Use of Estimates -- In preparing the financial statements, management is
required to make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the balance sheet date and revenues and expenses
for the period. Actual results could differ significantly from those estimates.
Material estimates that are particularly susceptible to significant change
relate to the determination of the allowance for loan losses, including
valuation allowances for impaired loans, the carrying amount of real estate
acquired in connection with foreclosures or in satisfaction of loans, and the
assumptions used in computing the fair value of stock options granted and the
pro forma disclosures required by Statement of Financial Accounting Standards
No. 123 (See Notes 2 and 13). Management must also make estimates in determining
the estimated useful lives and methods for depreciating premises and equipment.
While management uses available information to recognize losses on loans
and foreclosed real estate, future additions to the allowance may be necessary
based on changes in local economic conditions. In addition, regulatory agencies,
as an integral part of their examination process, periodically review the Banks'
allowances for losses on loans and foreclosed real estate. Such agencies may
require the Banks to recognize additions to the allowances based on their
judgements about information available to them at the time of their examination.
Because of these factors, it is reasonably possible that the allowances for
losses on loans and foreclosed real estate may change materially in the near
term.
Securities Available for Sale -- All debt securities have been designated
available for sale by the Company and are carried at amortized cost and adjusted
to estimated market value by recording the aggregate unrealized gain or loss in
a valuation account. Management does not actively trade securities classified as
available for sale. Reductions in market value considered by management to be
other than temporary are reported as a realized loss and a reduction in the cost
basis in the security. Generally, amortization of premiums and accretion of
discounts are charged or credited to earnings on a straight-line basis over the
life of the securities. The adjusted cost basis of securities available for sale
is determined by specific identification and is used in computing the gain or
loss from a sales transaction.
Loans -- Loans are stated at their unpaid principal balance. Interest
income is computed using the simple interest method and is recorded in the
period earned. When serious doubt exists as to the collectibility of a loan or a
loan is 90 days past due, the accrual of interest income is generally
discontinued unless the estimated net realizable value of the collateral is
sufficient to assure collection of the principal balance and accrued interest.
When interest accruals are discontinued, unpaid accrued interest is reversed and
charged against current year income.
Impairment of a loan is measured based on the present value of expected
future cash flows discounted at the loan's effective interest rate or fair value
of the collateral if the loan is collateral dependent. When management
determines that a loan is impaired, the difference between the Company's
investment in the related loan and the present value of the expected future cash
flows, or the fair value of the collateral, is charged to bad debt expense with
a corresponding entry to a valuation account. The accrual of interest is
discontinued on an impaired loan when management determines that the borrower
may be unable to meet payments as they become due.
Allowance for Loan Losses -- Management provides for losses on loans
through specific and general charges to operations and credits such charges to
the allowance for loan losses. Specific provision for losses is determined for
identified loans based upon estimates of the excess of the loan's carrying value
over the net realizable value of the underlying collateral. General provision
for loan losses is estimated by management based upon factors including industry
loss experience for similar lending categories, actual loss experience,
delinquency trends as well as prevailing and anticipated economic conditions.
While management uses the best information available to make evaluations, future
adjustment to the allowance may be
F-7

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- Continued
necessary if economic conditions differ substantially from the assumptions used
in making the evaluation. Delinquent loans are charged against the allowance at
the time they are determined to be uncollectible. Recoveries are added to the
allowance.
Residential Mortgages Held For Sale -- The Banks' mortgage activities are
comprised of accepting residential mortgage loan applications, qualifying
borrowers to standards established by investors, funding residential mortgages
and selling mortgages to investors under pre-existing commitments. Funded
residential mortgages held temporarily for sale to investors are recorded at
cost which approximates the market value (See Note 5). Application and
origination fees collected by the Banks are recognized as income upon sale to
the investor.
Premises and Equipment -- Premises and equipment are stated at cost, less
accumulated depreciation. Gain or loss on retirement of premises and equipment
is recognized in the statements of operations when incurred. Expenditures for
maintenance and repairs are charged to expense; betterments and improvements are
capitalized. Depreciation charges are computed principally on the straight-line
method over the estimated useful lives as follows:
<TABLE>
<S> <C>
Building and improvements................................................................ 7-40 years
Furniture, fixtures and equipment........................................................ 3-10 years
</TABLE>

Other Real Estate Owned -- Other real estate owned includes real estate
acquired through foreclosure and loans accounted for as in-substance
foreclosures. Collateral is considered foreclosed in-substance when the borrower
has little or no equity in the fair value of the collateral, proceeds for
repayment of the debt can be expected to come only from the sale of the
collateral and it is doubtful that the borrower can rebuild equity or otherwise
repay the loan in the foreseeable future. Other real estate owned is carried at
the lower of cost (fair value at the date of foreclosure) or fair value minus
estimated costs to sell. Any write-downs at the date of acquisition are charged
to the allowance for possible loan losses. Expenses to maintain such assets,
subsequent changes in the valuation allowance, and gains and losses on disposal
are included in other expenses.
Investments in Equity Securities -- Other assets include the costs of the
Banks' investments in the stock of the Federal Reserve Bank and the Federal Home
Loan Bank. The stocks have no quoted market value and no ready market exists.
Investment in Federal Reserve Bank stock is required for state-chartered member
banks. Investment in Federal Home Loan Bank stock is a condition of borrowing
from the Federal Home Loan Bank, and the stock is pledged to secure the
borrowings. At December 31, 1995 and 1996, the investment in Federal Reserve
Bank stock was $127,000 and $150,000, respectively. At December 31, 1995 and
1996, the investment in Federal Home Loan Bank stock was $772,000 and $822,000,
respectively. Dividends received on Federal Reserve Bank stock and Federal Home
Loan Bank stock are included in other income.
The Company's investments in the stock of three unrelated financial
institutions are also included in other assets at cost. The Company owns less
than five percent of the outstanding shares of each institution, and the stocks
either have no quoted market value or are not readily marketable. At December
31, 1995 and 1996, the investments in the stock of the unrelated financial
institutions were $353,000 and $1,227,000, respectively. Dividends received are
included in other income.
Loan Fees and Costs -- Loan origination and commitment fees and certain
direct loan origination costs are deferred and are being amortized to income
over the contractual lives of commercial and installment loans, adjusted for
prepayments, using the level yield method. Net deferred fees and costs
associated with the origination of home equity lines of credit are being
amortized to income over the contractual life of the lending agreement using the
straight-line method.
Income taxes -- The income tax provision is the sum of amounts currently
payable to taxing authorities and the net changes in income taxes payable or
refundable in future years. Income taxes deferred to future years are determined
utilizing a liability approach. This method gives consideration to the future
tax consequences associated with differences between the financial accounting
and tax bases of certain assets and liabilities, principally the allowance for
loan losses and depreciable premises and equipment.
Cash Flow Information -- For purposes of reporting cash flows, the Company
considers certain highly liquid debt instruments purchased with a maturity of
three months or less to be cash equivalents. Cash equivalents include amounts
due from depository institutions and federal funds sold. Generally, federal
funds sold are purchased for one-day periods.
F-8

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- Continued
During 1994, 1995 and 1996, the Company paid $1,676,000, $2,768,000 and
$4,007,000, respectively, for interest. In 1994, 1995 and 1996, the Company made
tax payments of $512,000, $331,000 and $290,000, respectively.
Supplemental noncash investing and financing activities are as follows:
In 1994, 1995 and 1996, the Company declared 5% stock dividends and
transferred $273,000, $655,000 and $747,000 from retained earnings (net of cash
paid for fractional shares) to common stock and capital surplus in the amounts
of $27,000, $55,000 and $57,000, respectively, and $246,000, $600,000 and
$690,000, respectively.
Changes in the valuation account of securities available for sale,
including the deferred tax effects, are considered noncash transactions for
purposes of the statement of cash flows and are presented in detail in the notes
to the financial statements.
Off-Balance-Sheet Financial Instruments -- In the ordinary course of
business, the Banks have entered into off-balance-sheet financial instruments
consisting of commitments to extend credit, commitments under credit card
arrangements and letters of credit. These financial instruments are recorded in
the financial statements when they become payable by the customer.
Concentrations of Credit Risk -- Financial instruments which potentially
subject the Company to concentrations of credit risk consist principally of
loans receivable, securities, federal funds sold and amounts due from banks.
Management is not aware of any concentrations of loans to classes of borrowers
or industries that would be similarly affected by economic conditions. Although
the Company's loan portfolio is diversified, a substantial portion of its
borrowers' ability to honor the terms of their loans is dependent on business
and economic conditions in Greenwood and Pickens Counties and surrounding areas.
Management does not believe credit risk is associated with obligations of the
United States, its agencies or its corporations. The Company places its deposits
and correspondent accounts with and sells its federal funds to high credit
quality institutions. By policy, time deposits are limited to amounts insured by
the FDIC. Management believes credit risk associated with correspondent accounts
is not significant.
Per Share Amounts -- Net income per share is computed by dividing net
income by the weighted average number of shares of common stock and common stock
equivalents outstanding during the period using the treasury stock method
modified for the 20% limitation. The weighted average common shares outstanding
were 804,822, 1,070,135, and 1,356,626, during December 31, 1994, 1995 and 1996,
respectively. Retroactive recognition has been given for the effect of all stock
dividends.
Common Stock Owned by the Employee Stock Ownership Plan (ESOP) -- ESOP
purchases and redemptions of the Company's common stock are at estimated fair
value as determined by independent valuations. Dividends on ESOP shares are
charged to retained earnings. All shares held by the ESOP are treated as
outstanding for purposes of computing earnings per share.
Reclassifications -- Furniture and equipment expense, which was included in
net occupancy expense in the 1994 and 1995 financial statements, has been
segregated to conform with the 1996 presentation. Certain other captions and
amounts in the 1994 and 1995 consolidated financial statements were reclassified
to conform with the 1996 presentation.
NOTE 2 -- CHANGE IN ACCOUNTING PRINCIPLE:
In October 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") 123, "Accounting for
Stock-based Compensation," effective for transactions entered into in fiscal
years that begin after December 15, 1995. SFAS 123 recommends that companies
account for stock compensation on a fair value based method which requires
compensation cost to be measured at the grant date based on the value of the
award and to be recognized over the service period. As an alternative, companies
may continue to record compensation cost based on the excess, if any, of the
quoted market price of the stock at the grant date (or other measurement date)
over the amount an employee must pay to acquire the stock (APB Opinion No. 25).
However, if a company elects this method, it must include in the financial
statements certain disclosures which reflect pro forma amounts as if the fair
value method had been used. As permitted by SFAS 123, the Company has elected to
continue its current method of accounting for stock options with pro
F-9

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
NOTE 2 -- CHANGE IN ACCOUNTING PRINCIPLE: -- Continued
forma amounts disclosed in the financial statements. The pro forma disclosures
for the Company include the effects of all awards granted after December 31,
1994 as required by SFAS 123 (See Note 13).
NOTE 3 -- RESTRICTIONS ON CASH AND DUE FROM BANKS:
The Banks are required to maintain average reserve balances computed as a
percentage of deposits. At December 31, 1996, the required cash reserves were
satisfied by vault cash on hand and amounts due from correspondent banks.
NOTE 4 -- INVESTMENT SECURITIES:
Securities available for sale at December 31, 1995 and 1996 consist of the
following:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
(Dollars in thousands)
December 31, 1995:
U.S. Treasury securities...................................................... $ 5,897 $ 55 $ -- $ 5,952
Securities of other U.S. Government agencies and corporations................. 11,435 117 6 11,546
Obligations of states and local government.................................... 4,439 111 -- 4,550
Mortgage-backed securities.................................................... 394 4 -- 398
Total investment securities................................................. $22,165 $ 287 $ 6 $22,446
December 31, 1996:
U.S. Treasury securities...................................................... $ 6,395 $ 25 $ -- $ 6,420
Securities of other U.S. Government agencies and corporations................. 11,170 27 47 11,150
Obligations of states and local govenment..................................... 5,321 73 27 5,367
Mortgage-backed securities.................................................... 337 6 -- 343
Total investment securities................................................. $23,223 $ 131 $ 74 $23,280
</TABLE>

The following table summarizes the maturities of securities available for
sale as of December 31, 1996, based on the contractual maturities. Actual
maturities may differ from the contractual maturities because borrowers may have
the right to call or prepay obligations with or without penalty. There were no
securities designated held to maturity at December 31, 1995 or 1996.
<TABLE>
<CAPTION>
Estimated
Amortized Fair
Cost Value
<S> <C> <C>
(Dollars in thousands)
Due in one year or less........................................................ $ 2,530 $ 2,539
Due after one year but within five years....................................... 10,825 10,844
Due after five years but within ten years...................................... 7,122 7,128
Due after ten years............................................................ 2,409 2,426
Mortgage-backed securities..................................................... 337 343
Total........................................................................ $23,223 $23,280
</TABLE>

Proceeds from sales of securities available for sale during 1994, 1995 and
1996 were $4,928,000, $1,975,000 and $4,512,000, respectively, resulting in
gross realized gains of $0, $0 and $18,000 along with gross realized losses of
$79,000, $22,000 and $1,000, respectively. There were no sales of securities
held to maturity in 1994, 1995 or 1996.
At December 31, 1995 and 1996, securities having an amortized cost of
approximately $13,822,000 and $18,310,000, respectively, and an estimated market
value of $14,018,000 and $18,392,000, respectively, were pledged as collateral
for short-term borrowings and advances from the Federal Home Loan Bank (See Note
9) to secure public and trust deposits, and for other purposes as required and
permitted by law.
F-10

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
NOTE 5 -- LOANS RECEIVABLE:
Loans receivable at December 31, 1995 and 1996, are summarized as follows:
<TABLE>
<CAPTION>
1995 1996
<S> <C> <C>
(Dollars in
thousands)
Commercial and agricultural.................................................. $13,349 $15,348
Real estate.................................................................. 38,296 49,639
Home equity.................................................................. 6,593 9,243
Consumer -- installment...................................................... 3,722 4,592
Consumer -- credit card and checking......................................... 869 1,355
Residential mortgages held for sale and other................................ 375 369
Total loans................................................................ $63,204 $80,546
</TABLE>

At December 31, 1995 and 1996, the Banks had sold participations in loans
aggregating $5,595,000 and $2,879,000, respectively, to other financial
institutions on a nonrecourse basis. Collections on loan participations and
remittances to participating institutions conform to customary banking
practices.
The Banks accept residential mortgage loan applications and fund loans of
qualified borrowers (See Note 1). Funded loans are sold without recourse to
investors at face value under the terms of pre-existing commitments. The Banks
do not sell residential mortgages having market or interest rate risk. The Banks
do not service residential mortgage loans for the benefit of others.
At December 31, 1995 and 1996, the Banks had pledged approximately
$6,864,000 and $6,294,000, respectively, of loans on residential real estate as
collateral for advances from the Federal Home Loan Bank (See Note 9).
The Company adopted SFAS 114, "Accounting by Creditors for the Impairment
of a Loan", and SFAS 118, "Accounting By Creditors for Impairment of a
Loan -- Income Recognition and Disclosures" as of January 1, 1995. These
statements identify how creditors should measure and account for impaired loans.
Under SFAS 114 and 118, impairment of loans should be measured at the present
value of the expected future cash flows discounted at the loan's effective
interest rate or at fair value of the collateral if the loan is collateral
dependent.
Loans are defined as impaired when "based on current information and
events, it is probable that a creditor will be unable to collect all amounts due
according to the contractual terms of the loan agreement." All loans are subject
to this criteria except for: "smaller-balance homogeneous loans that are
collectively evaluated for impairment" and loans "measured at fair value or at
the lower of cost or fair value." The Company considers its consumer installment
portfolio, credit cards and home equity lines as meeting this criteria.
Therefore, the real estate and commercial loan portfolios are primarily affected
by these Statements.
The Company identifies impaired loans through its normal internal loan
review process. Loans on the Company's problem loan watch list are considered
potentially impaired loans. These loans are evaluated in determining whether all
outstanding principal and interest are expected to be collected. Loans are not
considered impaired if a minimal delay occurs and all amounts due including
accrued interest at the contractual interest rate for the period of delay are
expected to be collected. At December 31, 1995 and 1996, management reviewed its
problem loan watch list and determined that no impairment on loans existed that
would have a material effect on the Company's consolidated financial statements.
At December 31, 1995 and 1996, the Company had nonaccrual loans of
approximately $13,000 and $186,000, respectively, for which impairment had not
been recognized. The additional interest income which would have been recognized
into earnings if the Company's nonaccrual loans had been current in accordance
with their original terms is immaterial for all years presented.
F-11

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
NOTE 5 -- LOANS RECEIVABLE: -- Continued
An analysis of the allowance for loan losses for the years ended December
31, 1994, 1995 and 1996, is as follows:
<TABLE>
<CAPTION>
1994 1995 1996
<S> <C> <C> <C>
(Dollars in
thousands)
Balance, beginning of year.................................................... $567 $580 $671
Provision for loan losses..................................................... 14 112 187
Loans charged off, net........................................................ (5) (21) (21)
Recoveries.................................................................... 4 -- --
Balance, end of year.......................................................... $580 $671 $837
</TABLE>

In the normal course of business, the Company is a party to financial
instruments with off-balance-sheet risk. These financial instruments are
commitments to extend credit and letters of credit and have elements of risk in
excess of the amount recognized in the balance sheet. Commitments to extend
credit are agreements to lend to a customer as long as there is no violation of
any condition established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment of a fee.
A commitment involves, to varying degrees, elements of credit and interest rate
risk in excess of the amount recognized in the consolidated balance sheets. The
Company's exposure to credit loss in the event of non-performance by the other
party to the instrument is represented by the contractual notional amount of the
instrument. Since certain commitments are expected to expire without being drawn
upon, the total commitment amounts do not necessarily represent future cash
requirements. Letters of credit are conditional commitments issued to guarantee
a customer's performance to a third party and have essentially the same credit
risk as other lending facilities. The Company uses the same credit policies in
making commitments to extend credit as it does for on-balance-sheet instruments.
At December 31, 1995 and 1996, the Company had unfunded commitments,
including standby letters of credit, of $11,786,000 and $16,334,000, of which
$2,393,000 and $3,692,000, respectively, were unsecured. At December 31, 1996,
the Company was not committed to lend additional funds to borrowers owing
nonaccrual loans.
NOTE 6 -- PREMISES AND EQUIPMENT:
Premises and equipment at December 31, 1995 and 1996, consists of the
following:
<TABLE>
<CAPTION>
1995 1996
<S> <C> <C>
(Dollars in
thousands)
Land............................................................................ $ 465 $ 501
Buildings and lease hold improvements........................................... 1,577 1,963
Furniture and equipment......................................................... 1,600 1,916
Construction in progress........................................................ -- 443
Total......................................................................... 3,642 4,823
Less, accumulated depreciation.................................................. 1,111 1,300
Net premises and equipment.................................................... $2,531 $3,523
</TABLE>

The Clemson Bank has a contract for the construction of its permanent
facility. During 1996, approximately $10,000 of interest was capitalized on the
construction. As of December 31, 1996, management estimates the cost to complete
the building to range from $600,000 to $800,000.
F-12

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
NOTE 7 -- DEPOSITS:
The following is a summary of deposit accounts as of December 31, 1995 and
1996:
<TABLE>
<CAPTION>
1995 1996
<S> <C> <C>
(Dollars in
thousands)
Non-interest bearing demand deposits......................................... $ 9,447 $12,226
Interest-bearing demand deposits............................................. 8,028 8,296
Money market accounts........................................................ 9,498 14,035
Savings accounts............................................................. 7,922 8,681
Certificates of deposit...................................................... 38,243 46,624
Total deposits............................................................. $73,138 $89,862
</TABLE>

At December 31, 1995 and 1996, certificates of deposit of $100,000 or more
totaled approximately $12,082,000 and $11,879,000, respectively. Interest
expense on these deposits was approximately $259,000, $471,000 and $665,000 in
1994, 1995 and 1996, respectively.
As of December 31, 1995 and 1996, brokered deposits totaled approximately
$985,000 and $1,380,000, respectively. Brokered deposits are not expected to be
a long-term source of funds for the Company.
NOTE 8 -- SHORT-TERM BORROWINGS:
Securities sold under agreements to repurchase generally mature within one
to fourteen days from the transaction date. During 1996, the daily average of
securities sold under agreements to repurchase was $2,830,000, and the maximum
amount outstanding at any month end was $7,000,000. The purchaser-seller
provides safekeeping services for the Company and maintains possession of the
securities.
As of December 31, 1996, the amortized cost and market value of the
securities underlying the agreement were $7,406,000 and $7,430,000,
respectively.
NOTE 9 -- ADVANCES FROM THE FEDERAL HOME LOAN BANK:
Advances from the Federal Home Loan Bank consisted of the following at
December 31, 1996:
<TABLE>
<CAPTION>
Interest
Description Rate Balance
<S> <C> <C>
(Dollars in
thousands)
Adjustable rate advances maturing:
January 29, 1997.............................................................. 5.53% $ 700
March 23, 1997................................................................ 5.67 1,100
April 24, 1997................................................................ 5.61 1,500
Fixed rate advances maturing:
January 29, 1997.............................................................. 5.45 400
March 5, 1997................................................................. 5.31 340
May 27, 1997.................................................................. 6.34 7
August 27, 1997............................................................... 4.49 692
March 24, 1998................................................................ 7.37 150
Total...................................................................... $ 4,889
</TABLE>

Scheduled principal reductions of Federal Home Loan Bank advances are as
follows:
<TABLE>
<S> <C> <C>
1997............................................................................ $ 4,739
1998............................................................................ 150
Total...................................................................... $ 4,889
</TABLE>

F-13

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
NOTE 9 -- ADVANCES FROM THE FEDERAL HOME LOAN BANK: -- Continued
As collateral, the Company has pledged first mortgage loans on one to four
family residential loans aggregating $6,294,000 (See Note 5) and debt securities
aggregating $1,755,000 (See Note 4) at December 31, 1996. In addition, the
Company's Federal Home Loan Bank stock, which is included in other assets (See
Note 1), is pledged to secure the borrowings. Certain advances are subject to
prepayment penalties.
NOTE 10 -- SHAREHOLDERS' EQUITY:
On December 20, 1996, the Company filed a registration statement with the
Securities and Exchange Commission for the purpose of registering up to
1,684,750 shares of its common stock to be sold in a public offering. The
offering is expected to be completed during the first quarter of 1997. The
proceeds from the offering will be used to acquire three banks organizing in
Barnwell, Belton, and Newberry (See Note 12).
Pursuant to a prospectus dated February 27, 1995, the Company completed a
public offering of 520,422 shares of its common stock, resulting in net proceeds
(after deducting issuance cost) of $6,010,000. On June 22, 1995, the Company
acquired all of the common stock of the Clemson Bank for $4,500,000. Immediately
upon being chartered as a state bank on June 22, 1995, the Clemson Bank assumed
ownership of its organizational partnership's assets and liabilities.
The Company declared 5% stock dividends for stockholders of record on April
1, 1994, August 1, 1995 and May 1, 1996. Accordingly, amounts equal to the
estimated fair market value of the additional shares issued have been charged to
retained earnings and credited to common stock and capital surplus. Dividends
representing fractional shares were paid in cash.
The Company has authorized 2,000,000 shares of a special class of stock,
par value $1.00 per share, the rights and preferences of which are to be
designated as the Board of Directors may determine. At December 31, 1996, no
shares of the undesignated stock had been issued or were outstanding.
NOTE 11 -- CAPITAL REQUIREMENTS:
The Banks are 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 material
effect on the Company's financial statements. Under capital adequacy guidelines
and the regulatory framework for prompt corrective action, the Banks must meet
specific capital guidelines that involve quantitative measures of the Banks'
assets, liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Banks' 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 Banks to maintain minimum ratios of Tier 1 and total capital as a
percentage of assets and off-balance-sheet exposures, adjusted for risk weights
ranging from 0% to 100%. Tier 1 capital of the Banks consists of common
shareholders' equity, excluding the unrealized gain or loss on securities
available for sale, minus certain intangible assets. The Banks' Tier 2 capital
consists of the allowance for loan losses subject to certain limitations. Total
capital for purposes of computing the capital ratios consists of the sum of Tier
1 and Tier 2 capital. The regulatory minimum requirements are 4% for Tier 1 and
8% for total risk-based capital.
The Banks are also required to maintain capital at a minimum level based on
total assets, which is known as the leverage ratio. Only the strongest banks are
allowed to maintain capital at the minimum requirement of 3%. All others are
subject to maintaining ratios 1% to 2% above the minimum.
As of December 31, 1996, the most recent notifications from each Bank's
primary regulator categorized the Banks as well-capitalized under the regulatory
framework for prompt corrective action. There are no conditions or events that
management believes have changed the Banks' categories.
F-14

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
NOTE 11 -- CAPITAL REQUIREMENTS: -- Continued
The following table summarizes the capital ratios of the Banks and the
regulatory minimum requirements at December 31, 1996.
<TABLE>
<CAPTION>
Tier 1 Total
Risk-Based Risk-Based
<S> <C> <C>
Actual ratio:
Greenwood Bank........................................................................ 9.97% 10.91%
Clemson Bank.......................................................................... 30.76 32.01
Regulatory minimum:
For capital adequacy purposes......................................................... 4.00 8.00
To be well capitalized under prompt corrective action provisions...................... 6.00 10.00
<CAPTION>
Tier 1
Leverage
<S> <C>
Actual ratio:
Greenwood Bank........................................................................ 7.34%
Clemson Bank.......................................................................... 23.60
Regulatory minimum:
For capital adequacy purposes......................................................... 4.00
To be well capitalized under prompt corrective action provisions...................... 5.00
</TABLE>

The Federal Reserve Board has similar requirements for bank holding
companies. The Company is currently not subject to these requirements because
the Federal Reserve guidelines contain an exemption for bank holding companies
with less than $150,000,000 in consolidated assets.
NOTE 12 -- ACQUISITION OF NEW BANKS AND BRANCHES:
The Company is in the process of acquiring three de novo community banks in
Barnwell, Belton, and Newberry (collectively the "New Banks"), which are
non-metropolitan markets in South Carolina. The Company intends to open the
banks in Belton and Newberry in traditional de novo fashion by capitalizing the
banks and seeking local deposits to fund loan growth.
In contrast, the Company intends for the bank in Barnwell (the "Barnwell
Bank"), after opening, to acquire certain deposits and assets associated with
five branches located in Aiken, Barnwell, and Orangeburg Counties, South
Carolina from Carolina First Bank ("Carolina First"). The Company, the Barnwell
Bank, and Carolina First have entered into a Purchase and Assumption Agreement
dated January 21, 1997 (the "Agreement") for the acquisition by the Barnwell
Bank of the branches. The Company anticipates that the acquisition of the
branches will close during the first quarter of 1997. At the closing, and
subject to the terms of the Agreement, the Barnwell Bank will pay Carolina First
a premium of 5.25% on the assumed Carolina First deposits other than
certificates of deposit greater than or equal to $100,000. The acquisition will
be accounted for as a purchase. The assets acquired and the liabilities assumed
will be recorded at Carolina First's respective book values if not materially
different from fair value. The premium will be amortized over a fifteen-year
period on a straight-line basis. The following table presents the book value of
the subject assets and liabilities of the five branches as of December 31, 1995
and 1996 per unaudited information obtained from Carolina First.
<TABLE>
<CAPTION>
December 31,
1995 1996
<S> <C> <C>
(Dollars in
thousands)
Assets:
Loans................................................................................................. $18,583 $15,152
Premises and equipment................................................................................ 1,894 1,892
Accrued interest receivable........................................................................... 301 238
Liabilities:
Deposits:
Noninterest bearing................................................................................ 3,793 4,936
CD's greater than or equal to $100,000............................................................. 6,741 6,255
Other interest bearing deposits.................................................................... 42,188 42,517
Total deposits................................................................................... 52,722 53,708
Accrued interest payable.............................................................................. 524 554
</TABLE>

F-15

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
NOTE 12 -- ACQUISITION OF NEW BANKS AND BRANCHES: -- Continued
To capitalize the New Banks, the Company plans to sell up to 1,684,750
shares of its common stock. Of the expected net proceeds, the Company intends to
use $7,000,000 to capitalize the Barnwell Bank, $3,500,000 to capitalize the
bank in Belton, and $3,300,000 to capitalize the bank in Newberry. In accordance
with the agreements with the organizers of the New Banks and subject to the New
Banks being opened, the Company has agreed to include organizational and
preopening costs in the initial capitalization of the New Banks. The total of
the organizational and preopening costs is expected to range from $600,000 to
$900,000 and will be amortized over a five-year period on a straight-line basis.
The opening of the New Banks and the acquisition of the common stock of the
New Banks by the Company are subject to various regulatory approvals.
NOTE 13 -- STOCK COMPENSATION PLANS:
The Company has two stock option plans, an Employee Incentive Stock Option
Plan (the "1988 Plan") and an Incentive and Nonstatutory Stock Option Plan (the
"Stock Plan"), which are described below. As discussed in Note 2, the Company
will continue to apply APB Opinion 25 and related Interpretations in accounting
for its plans. Accordingly, no compensation cost has been recognized for either
the 1988 Plan or the Stock Plan. Had compensation cost for the Company's stock
option plans been determined based on the fair value at the grant dates for
awards under those plans consistent with the method of FASB Statement 123, the
Company's net income and earnings per share would have been reduced to the pro
forma amounts indicated below:
<TABLE>
<CAPTION>
1995 1996
<S> <C> <C>
(Dollars in
thousands,
except for per
share data)
Net Income:
As reported............................................................................................. $ 534 $ 706
Pro forma............................................................................................... 460 418
Primary and fully diluted earnings per share:
As reported............................................................................................. $0.55 $0.54
Pro forma............................................................................................... 0.43 0.33
</TABLE>

In calculating the pro forma disclosures, the fair value of options granted
is estimated as of the date granted using the Black-Scholes option pricing model
with the following weighted-average assumptions used for grants in 1995 and
1996, respectively (there were no options granted under the 1988 Plan during
1996): dividend yield of 0 percent for all years; expected volatility of 24 and
28 percent; risk-free interest rates of 6.9 percent in 1995 for the 1988 Plan
options and 7.33 and 6.71 percent for the Stock Plan options; and expected lives
of 4 years in 1995 for the 1988 Plan options and 8.5 and 5.6 years for the Stock
Plan options. Pro forma disclosure is not required for 1994. (See Note 2).
Employee Incentive Stock Option Plan -- Adopted in 1988, this plan provides
for the granting of options to purchase up to 47,648 shares, adjusted for stock
dividends of the Company's common stock, to officers and other eligible
employees of the Company and Greenwood Bank & Trust. The per-share exercise
price of the options may not be less than the fair market value of a share of
common stock on the date the option is granted. Options become exercisable one
year after the date of grant and can be exercised within five years from the
date of grant. Any options that expire unexercised or are canceled become
available for issuance.
Incentive and Nonstatutory Stock Option Plan -- During 1993 the Company
approved the terms of the Company's Incentive Stock Option and Nonstatutory
Stock Option Plan which received shareholders approval on May 16, 1994. The
Stock Plan provides for the granting of statutory incentive stock options within
the meaning of Section 422 of the Internal Revenue Code as well as nonstatutory
stock options and stock appreciation rights. Stock options and stock
appreciation rights are issuable only to employees and directors of the Company
and its subsidiaries. The per-share exercise price of incentive stock options
granted under the Stock Plan may not be less than the fair market value of a
share on the date of grant, nor can the exercise date of any option granted be
less than one year from the date of grant. Any options that expire unexercised
or are canceled become available for issuance. Options granted generally become
exercisable after one year and expire five to
F-16

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
NOTE 13 -- STOCK COMPENSATION PLANS: -- Continued
ten years from the date of grant. On May 20, 1996, the shareholders approved an
amendment to the Stock Plan increasing the number of options that may be granted
to 525,000, adjusted for the effects of the stock dividend in 1996.
A summary of the status of the Company's stock option plans as of December
31, 1994, 1995 and 1996 and changes during the years ending on those dates is
presented below (all amounts have been restated to reflect stock dividends paid
in 1994, 1995 and 1996):
<TABLE>
<CAPTION>
1994 1995 1996
Weighted-Average Weighted-Average Exercise
Shares Exercise Price Shares Exercise Price Shares Price
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year............. 36,179 $ 7.96 305,369 $ 8.57 330,681 $ 8.75
Granted...................................... 277,624 8.64 31,698 10.78 139,900 11.94
Exercised.................................... -- -- (315) 8.64 (8,733) 7.89
Canceled..................................... (8,434) 8.38 (6,071) 10.19 (6,100) 10.69
Outstanding at end of year................... 305,369 8.57 330,681 8.75 455,748 9.72
</TABLE>

Options exercisable at December 31, 1994, 1995 and 1996 were 297,674,
300,309 and 318,398, respectively.
The weighted-average fair value of options, calculated using the
Black-Scholes option pricing model, granted during 1995 and 1996 is $4.60 and
$4.66, respectively.
The following table summarizes information about the stock options
outstanding under the Company's two plans at December 31, 1996.
<TABLE>
<CAPTION>
Options Outstanding Options
Weighted-average Exercisable
Range of Number Remaining Contractual Weighted-average Number
Exercise Prices Outstanding Life Exercise Price Exercisable
<S> <C> <C> <C> <C>
$7.10 to $8.64.......................... 290,243 6.5 years $ 8.58 290,243
10.66 to 12.38.......................... 165,505 6.3 11.73 28,155
455,748 6.4 9.72 318,398
<CAPTION>
Range of Weighted-average
Exercise Prices Exercise Price
<S> <C>
$7.10 to $8.64.......................... $ 8.58
10.66 to 12.38.......................... 10.79
8.77
</TABLE>

NOTE 14 -- RELATED PARTY TRANSACTIONS:
Certain parties (primarily directors, executive officers, principal
shareholders and their associates) were loan customers and had other
transactions in the normal course of business with the Company. Related party
loans are made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
unrelated persons and generally do not involve more than normal risk of
collectibility. Total loans and commitments outstanding to related parties at
December 31, 1995 and 1996, were $2,876,000 and $4,012,000, respectively. During
1996, $2,787,000 of new loans were made to related parties and repayments
totaled $1,651,000.
The Company conducts branch banking activities from two locations which are
leased from two directors under long-term leases. Land used as the site for a
branch banking location is leased from a director under a five-year operating
lease ending July 31, 1999. The Company can purchase the land at any time during
the term of the lease for $90,000.
During 1996, the Company began leasing part of a building and land as a
branch banking location from a director. The operating lease has an initial
ten-year term which expires July 31, 2006 and is renewable, at the Company's
option, for four five-year terms at an increased monthly rental. The lease
requires monthly payments of $3,500 with an increase to $3,850 per month during
the last five years of the initial lease term.
F-17

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
NOTE 14 -- RELATED PARTY TRANSACTIONS: -- Continued
Rent expense under these operating lease agreements was $2,000, $5,300, and
$24,000 for the years ended December 31, 1994, 1995, and 1996, respectively.
Future obligations over the primary terms of these long-term leases as of
December 31, 1996 are as follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
<S> <C>
1997............................................................................ $ 50
1998............................................................................ 52
1999............................................................................ 48
2000............................................................................ 42
2001............................................................................ 44
After five years................................................................ 212
Total...................................................................... $448
</TABLE>

There were no unpaid amounts outstanding at December 31, 1996.
NOTE 15 -- COMMITMENTS, CONTINGENCIES AND SUBSEQUENT EVENTS:
In the ordinary course of business, the Company or its subsidiaries may,
from time to time, become a party to legal claims and disputes. At December 31,
1996, management is not aware of any pending or threatened litigation, or
unasserted claims that could result in losses, if any, that would be material to
the consolidated financial statements.
NOTE 16 -- RESTRICTION ON SUBSIDIARY DIVIDENDS:
The ability of the Company to pay cash dividends to shareholders is
dependent upon receiving cash in the form of dividends from its banking
subsidiaries. However, certain restrictions exist regarding the ability of the
subsidiaries to transfer funds in the form of cash dividends, loans or advances
to the Company. The prior approval of the Commissioner of Banking is required
and dividends are payable only from the undivided profits of the banking
subsidiaries. At December 31, 1996, the Greenwood Bank's undivided profits were
$2,099,000, and the deficit balance in the Clemson Bank's undivided profits was
$346,000.
NOTE 17 -- INCOME TAXES:
Income tax expense for the years ended December 31, 1994, 1995 and 1996
consists of the following:
<TABLE>
<CAPTION>
1994 1995 1996
<S> <C> <C> <C>
(Dollars in
thousands)
Currently payable:
Federal............................................................................................. $272 $269 $ 305
State............................................................................................... 29 35 51
301 304 356
Change in deferred income taxes:
Federal............................................................................................. (40) 101 (104)
State............................................................................................... (2) -- (33)
(42) 101 (137)
Income tax expense............................................................................. $259 $405 $ 219
Income tax expense is allocated as follows:
To continuing operations............................................................................ $301 $261 $ 300
To shareholders' equity............................................................................. (42) 144 (81)
$259 $405 $ 219
</TABLE>

F-18

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
NOTE 17 -- INCOME TAXES: -- Continued
The Company's deferred tax accounts as of December 31, 1995 and 1996 are as
follows:
<TABLE>
<CAPTION>
1995 1996
<S> <C> <C>
(Dollars in
thousands)
Deferred tax assets.......................................................... $298 $348
Deferred tax liabilities..................................................... 190 103
Valuation allowance.......................................................... 0 0
</TABLE>

The principal sources of temporary differences in 1994, 1995 and 1996, and
the related deferred tax effects are as follows:
<TABLE>
<CAPTION>
1994 1995 1996
<S> <C> <C> <C>
(Dollars in thousands)
Provision for bad debts.............................................................................. $ (5) $ (39) $ (45)
Tax depreciation in excess of book depreciation...................................................... 3 8 6
Net operating losses................................................................................. -- (9) (21)
Other, net........................................................................................... 2 (3) 4
Temporary differences attributable to continuing operations........................................ -- (43) (56)
Change in valuation allowance........................................................................ -- -- --
Deferred tax expense attributable to continuing operations........................................... -- (43) (56)
Deferred tax expense (benefit) attributable to shareholders' equity.................................. (42) 144 (81)
Change in deferred income taxes.................................................................... $(42) $ 101 $(137)
</TABLE>

A reconciliation of the income tax provision and the amount computed by
applying the Federal statutory rate of 34% to income before income taxes
follows:
<TABLE>
<CAPTION>
1994 1995 1996
<S> <C> <C> <C>
(Dollars in
thousands)
Income tax at the statutory rate...................................................................... $301 $270 $342
State income tax, net of federal benefit.............................................................. 16 10 10
Tax exempt interest income............................................................................ (19) (46) (84)
Disallowed interest expense........................................................................... 4 6 17
Officers' life insurance.............................................................................. 6 (1) 12
Other, net............................................................................................ (7) 22 3
Income tax provision........................................................................... $301 $261 $300
</TABLE>

F-19

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
NOTE 18 -- OTHER OPERATING EXPENSES:
Other operating expenses for the years ended December 31, 1994, 1995 and
1996 are summarized below:
<TABLE>
<CAPTION>
1994 1995 1996
<S> <C> <C> <C>
(Dollars in thousands)
Federal deposit insurance assessment............................................................... $109 $ 59 $ 3
Banking and ATM supplies........................................................................... 96 186 228
Directors' fees.................................................................................... 90 72 114
Mortgage loan department expenses.................................................................. 40 44 80
Amortization of organizational costs and other assets.............................................. 31 33 14
Data processing and supplies....................................................................... 37 110 176
Postage and freight................................................................................ 51 90 117
Professional fees.................................................................................. 92 116 132
Credit card expenses............................................................................... 44 65 94
Other.............................................................................................. 326 461 631
Total $916 $1,236 $1,589
</TABLE>

NOTE 19 -- RETIREMENT AND BENEFIT PLANS:
The Company sponsors a voluntary nonleveraged employee stock ownership plan
(ESOP) as part of a 401(K) savings plan covering substantially all full-time
employees. The Company matches 50 cents per dollar, up to a maximum of 3% of
employee compensation. Company contributions to the savings plan were $19,000,
$23,000 and $33,000 in 1994, 1995 and 1996, respectively. The Company's policy
is to fund amounts accrued. At December 31, 1996, the savings plan owned 21,118
shares of the Company's common stock purchased at an average cost of $9.92 per
share adjusted for the effects of stock dividends. The estimated value of shares
held at December 31, 1996 was $211,000.
The Company has a Directors' Incentive Compensation Plan and an Officers'
Incentive Compensation Plan which provide that portions of directors' fees and
certain officers' cash awards, respectively, will be determined based upon
various performance measures of the Greenwood Bank. For the years ended December
31, 1994, 1995 and 1996, awards under the directors' plan were $42,000, $27,000
and $56,000, respectively, and awards under the officers' plan were $84,000,
$58,000 and $123,000, respectively.

The Company has an Executive Supplemental Compensation Plan which provides
certain officers with salary continuation benefits upon retirement. The plan
also provides for benefits in the event of early retirement, death or
substantial change of control of the Company. For the years ended December 31,
1994, 1995 and 1996, salary continuation expense included in salaries and
employee benefits was $12,000, $20,000 and $24,000, respectively. In connection
with the Executive Supplemental Compensation Plan, life insurance contracts were
purchased on the officers. Insurance premiums of $192,000 were paid in each of
the three years ended December 31, 1996, of which $168,000, $181,000 and
$187,000 were capitalized in 1994, 1995, and 1996, respectively, to reflect the
increase in the cash surrender value of the insurance contracts.

NOTE 20 -- UNUSED LINES OF CREDIT:
As of December 31, 1996, the Banks had unused lines of credit to purchase
federal funds from unrelated banks totaling $9,250,000. These lines of credit
are available on a one to fourteen day basis for general corporate purposes. The
lenders have reserved the right not to renew their respective lines.
The Company has a $5,000,000 line of credit with The Bankers Bank for
general operating purposes. This line is collateralized by the Company's
investments in the Greenwood Bank and the Clemson Bank. As of December 31, 1996,
there were no amounts payable on this line.
F-20

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
NOTE 21 -- FAIR VALUE OF FINANCIAL INSTRUMENTS:
In December 1991, the FASB issued SFAS No. 107, "Disclosures About Fair
Value of Financial Instruments." SFAS 107 extends the existing fair value
disclosure practices for some instruments by requiring all entities to disclose
the fair value of financial instruments, both assets and liabilities recognized
and not recognized in the balance sheet, for which it is practicable to estimate
fair value.
The fair value of a financial instrument is the amount at which the asset
or obligation could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale. Fair value estimates are
made at a specific point in time based on relevant market information and
information about the financial statements. Because no market value exists for a
significant portion of the financial instruments, fair value estimates are based
on judgments regarding future expected loss experience, current economic
conditions, risk characteristics of various financial instruments, and other
factors.
The following methods and assumptions were used to estimate the fair value
of significant financial instruments:
Cash and Due from Banks -- The carrying amount is a reasonable estimate of
fair value.
Federal Funds Sold -- Federal funds sold are for a term of one day and the
carrying amount approximates the fair value.
Investment Securities -- The fair values of marketable securities
held-to-maturity are based on quoted market prices or dealer quotes. For
securities available-for-sale, fair value equals the carrying amount which is
the quoted market price. If quoted market prices are not available, fair values
are based on quoted market prices of comparable securities.
Loans -- For certain categories of loans, such as variable rate loans which
are repriced frequently and have no significant change in credit risk and credit
card receivables, fair values are based on the carrying amounts. The fair value
of other types of loans is estimated by discounting the future cash flows using
the current rates at which similar loans would be made to the borrowers with
similar credit ratings and for the same remaining maturities.
Deposits -- The fair value of demand deposits, savings, and money market
accounts is the amount payable on demand at the reporting date. The fair values
of certificates of deposit are estimated using a discounted cash flow
calculation that applies current interest rates to a schedule of aggregated
expected maturities.
Federal Funds Purchased and Securities Sold Under Agreements to
Repurchase -- The carrying amount is a reasonable estimate of fair value because
these instruments typically have terms of one day.
Advances from the Federal Home Loan Bank -- The carrying amounts of
variable rate borrowings are reasonable estimates of fair value because they can
be repriced frequently. The fair values of fixed rate borrowings are estimated
using a discounted cash flow calculation that applies the Company's current
borrowing rate from the FHLB.
Off-Balance Sheet Financial Instruments -- The fair value of commitments to
extend credit and standby letters of credit is estimated using the fees
currently charged to enter into similar agreements taking into account the
remaining terms of the agreements and the present creditworthiness of the
counterparties. The contractual amount is a reasonable estimate of fair value
for the instruments because commitments to extend credit and standby letters of
credit are issued on a short-term or floating rate basis.
F-21

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
NOTE 21 -- FAIR VALUE OF FINANCIAL INSTRUMENTS: -- Continued
The carrying values and estimated fair values of the Company's financial
instruments as of December 31, 1995 and 1996 are as follows:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1996
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
<S> <C> <C> <C> <C>
(Dollars in thousands)
Financial Assets:
Cash and due from banks....................................................... $ 2,949 $ 2,949 $ 3,927 $ 3,927
Federal funds sold............................................................ 2,330 2,330 700 700
Securities available for sale................................................. 22,446 22,446 23,280 23,280
Loans......................................................................... 63,204 63,017 80,546 80,478
Allowance for loan losses..................................................... (671) (671) (837) (837)
Financial Liabilities:
Demand deposit, interest-bearing transaction, and savings accounts............ $ 34,894 $ 34,894 $ 43,238 $ 43,238
Certificates of deposit....................................................... 38,243 38,371 46,624 46,729
Federal funds purchased and securities sold under agreements to repurchase.... 3,034 3,034 6,783 6,783
Advances from Federal Home Loan Bank.......................................... 6,244 6,227 4,889 4,880
</TABLE>

<TABLE>
<CAPTION>
Notional Estimated Notional Estimated
Amount Fair Value Amount Fair Value
<S> <C> <C> <C> <C>
(Dollars in thousands)
Off-Balance Sheet Financial Instruments:
Commitments to extend credit.................................................. $ 11,649 $ 11,649 $ 15,658 $ 15,658
Standby letters of credit..................................................... 137 137 676 676
</TABLE>

F-22

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
NOTE 22 -- COMMUNITY CAPITAL CORPORATION (PARENT COMPANY ONLY):
Condensed financial statements for Community Capital Corporation (Parent
Company Only) for the years ended December 31, 1995 and 1996 follow:
BALANCE SHEETS
<TABLE>
<CAPTION>
1995 1996
<S> <C> <C>
(Dollars in
thousands)
Assets
Cash and cash equivalents.......................................................................... $ 200 $ 104
Investment in subsidiaries......................................................................... 10,467 11,288
Securities available for sale...................................................................... 1,002 --
Premises and equipment, net........................................................................ 897 1,300
Other assets....................................................................................... 366 1,779
Total assets.................................................................................. $12,932 $14,471
Liabilities and Shareholders' Equity
Notes payable to subsidiaries...................................................................... $ -- $ 867
Other liabilities.................................................................................. -- 48
Total liabilities............................................................................. -- 915
Common stock....................................................................................... 1,153 1,219
Capital surplus.................................................................................... 11,254 12,004
Unrealized gain on securities available for sale, net.............................................. 178 35
Retained earnings.................................................................................. 347 298
Total shareholders' equity.................................................................... 12,932 13,556
Total liabilities and shareholders' equity.................................................... $12,932 $14,471
</TABLE>

STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended December
31,
1994 1995 1996
<S> <C> <C> <C>
(Dollars in thousands)
Income:
Interest income on securities available for sale................................................... $ -- $ 27 $ 5
Data processing and other fees from subsidiaries................................................... -- -- 953
Other income....................................................................................... 19 93 162
Total income.................................................................................... 19 120 1,120
Expenses:
Salaries........................................................................................... 12 20 668
Net occupancy expense.............................................................................. -- 67 117
Furniture and equipment expense.................................................................... -- -- 196
Interest expense................................................................................... -- 8 47
Other operating expenses........................................................................... 90 89 473
Total expenses................................................................................ 102 184 1,501
Loss before income taxes, and equity in undistributed earnings of subsidiaries....................... (83) (64) (381)
Income tax benefit................................................................................... 35 26 125
Loss before equity in undistributed earnings of subsidiaries......................................... (48) (38) (256)
Equity in undistributed earnings of subsidiaries..................................................... 633 572 962
Net income........................................................................................... $585 $534 $ 706
</TABLE>

F-23

<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
NOTE 22 -- COMMUNITY CAPITAL CORPORATION (PARENT COMPANY ONLY): -- Continued
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
1994 1995 1996
<S> <C> <C> <C>
(Dollars in thousands)
Operating activities:
Net income...................................................................................... $ 585 $ 534 $ 706
Adjustments to reconcile net income to net cash used by operating activities:
Equity in undistributed earnings of subsidiaries............................................. (633) (572) (962)
Depreciation and amortization................................................................ 27 52 256
Deferred tax benefit......................................................................... (35) (10) 31
Increase (decrease) in other liabilities..................................................... (3) -- 48
Increase in other assets..................................................................... (58) (58) (676)
Net cash used by operating activities...................................................... (117) (54) (597)
Investing activities:
Purchases of premises and equipment, net........................................................ (78) (437) (603)
Purchases of securities available for sale...................................................... -- (1,000) --
Proceeds from sales of securities available for sale............................................ -- -- 1,000
Net investment in Clemson Bank.................................................................. -- (4,385) --
Purchase of equity securities................................................................... -- -- (824)
Net cash used by investing activities...................................................... (78) (5,822) (427)
Financing activities:
Proceeds from the exercise of stock options..................................................... -- 2 69
Proceeds from sales of stock to retirement plan................................................. 154 56 --
Cash paid in lieu of fractional shares.......................................................... (2) (4) (8)
Proceeds from issuance of common stock.......................................................... -- 6,010 --
Proceeds of borrowings from subsidiaries........................................................ -- -- 870
Repayments on borrowings from subsidiaries...................................................... -- -- (3)
Net cash provided by financing activities.................................................. 152 6,064 928
Net increase (decrease) in cash and cash equivalents............................................ (43) 188 (96)
Cash and cash equivalents, beginning of year.................................................... 55 12 200
Cash and cash equivalents, end of year.......................................................... $ 12 $ 200 $ 104
</TABLE>

Supplemental schedule of non-cash investing and financing activities:
In 1994, 1995 and 1996, the Company declared 5% stock dividends and
transferred $273,000, $655,000 and $747,000, respectively, from retained
earnings to common stock and capital surplus in the amounts of $27,000, $55,000
and $57,000, respectively, and $246,000, $600,000 and $690,000, respectively.
F-24

<PAGE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this Prospectus and,
if given or made, such information or representation must not be relied upon as
having been authorized by the Company or any Underwriter. This Prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction to any person whom it is unlawful
to make such offer in such jurisdiction. Neither the delivery of this Prospectus
nor any sale made hereunder shall, under any circumstances, create any
implication that the information herein is correct as of any time subsequent to
the date hereof or that there has been no change in the affairs of the Company
since such date.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Prospectus Summary................................... 3
Risk Factors......................................... 6
The Company.......................................... 10
Acquisition of the Carolina First Branches........... 10
Use of Proceeds...................................... 13
Market for Common Stock.............................. 13
Dividend Policy...................................... 13
Dilution............................................. 14
Capitalization....................................... 15
Selected Consolidated Financial Data................. 16
Management's Discussion and Analysis of Financial
Condition and Results of Operations................ 17
Business............................................. 32
Government Supervision and Regulation................ 37
Management........................................... 41
Description of Securities............................ 45
Underwriting......................................... 50
Legal Matters........................................ 51
Experts.............................................. 51
Available Information................................ 51
Incorporation of Certain Documents by
Reference.......................................... 51
Index to Consolidated Financial Statements........... F-1
</TABLE>

1,465,000 Shares

(Logo appears here)

Common Stock
PROSPECTUS
J.C. Bradford &Co.
Edgar M. Norris & Co., Inc.

February 11, 1997