================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM 10-K ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2001 --------------------- Commission file number 000-23465 -------------------- CODDLE CREEK FINANCIAL CORP. ---------------------------- (Exact name of registrant as specified in its charter) North Carolina 56-2045998 ------------------------------ ----------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 347 North Main Street Mooresville, North Carolina 28115 --------------------------------------- ---------- (Address of principal executive office) (Zip Code) (704) 664-4888 ---------------------------------------------------- (Registrant's Telephone Number, Including Area Code) Securities Registered Pursuant to Section 12(b) of the Act: None ---- Securities Registered Pursuant to Section 12(g) of the Act: Common Stock, no par value --------------------------------------- (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] State the aggregate market value of the voting stock held by non-affiliates of the registrant (excluding five percent owners as non-affiliates). The aggregate market value shall be computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within 60 days prior to the date of filing. $13,780,596 common stock, no par -------------------------------- value, based on the closing price of such common stock on March 5, 2002 equal to -------------------------------------------------------------------------------- $31.10. ------- Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. 699,156 shares of common stock, ------------------------------- no par value, outstanding at March 5, 2002. ------------------------------------------- DOCUMENTS INCORPORATED BY REFERENCE Portions of the Annual Report of Coddle Creek Financial Corp. for the year ended December 31, 2001 (the "2001 Annual Report"), are incorporated by reference into Part I, Part II, Part III and Part IV. Portions of the Proxy Statement for the 2002 Annual Meeting of Shareholders of Coddle Creek Financial Corp. to be held on April 25, 2002, are incorporated by reference into Part III. Portions of the Registration Statement of Coddle Creek Financial Corp. On Form S-1, Registration No. 333-35497, dated September 12, 1997, as amended on November 5 and 10, 1997, are incorporated by reference into Part IV. This Form 10-K contains forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, changes in interest rate environment, management's business strategy, national, regional, and local market conditions and legislative and regulatory conditions. Readers should not place undue reliance on forward-looking statements, which reflect management's view only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances. Readers should also carefully review the risk factors described in other documents the Company files from time to time with the Securities and Exchange Commission. 2 PART I ITEM 1. BUSINESS General Prior to December 30, 1997, Mooresville Savings Bank, Inc., S.S.B. (the "Bank") operated as a mutual North Carolina-chartered savings bank. On December 30, 1997, the Bank converted from a North Carolina-chartered mutual savings bank to a North Carolina-chartered stock savings bank (the "Conversion"). In connection with the Conversion, all of the issued and outstanding capital stock of the Bank was acquired by Coddle Creek Financial Corp., a North Carolina corporation (the "Company"), which was organized to become the holding company of the Bank. At that time, the Company had an initial public offering of its common stock, no par value (the "Common Stock"). The Company is a bank holding company registered with the Board of Governors of the Federal Reserve System (the "Federal Reserve") under the Bank Holding Company Act of 1956, as amended (the "BHCA") and the savings bank holding company laws of North Carolina. The Company's executive office is located at 347 North Main Street, Mooresville, North Carolina. The Company's activities consist of investing capital which originated as the remaining proceeds of its initial public offering retained at the holding company level, holding the indebtedness outstanding from the Mooresville Savings Bank, Inc., SSB Employee Stock Ownership Plan (the "ESOP"), and owning the Bank. Accordingly, the discussion of the business which follows in the Form 10-K primarily concerns the business conducted by the Bank, unless otherwise indicated. The Company's principal sources of income are earnings on its investments and interest payments received from the ESOP with respect to the ESOP loan. In addition, the Company will receive any dividends which are declared and paid by the Bank on its capital stock. Subsequent to the Conversion, the Company has paid two special dividends to its shareholders, a portion or all of which qualified as a return of capital. The amounts of these dividends were $17.18 and $20.00, which were paid on September 8, 1999 and January 24, 2001, respectively. The major expenses of the Company included interest expense related to the Company's short term indebtedness. The proceeds of such indebtedness funded the 2001 return of capital distributions to shareholders, and the balance of such indebtedness was paid in January, 2002. At December 31, 2001, the Company and the Bank had consolidated total assets of $149.9 million, net loans of $119.1 million, deposits of $112.9 million, and stockholders' equity of $21.0 million. The Bank was originally chartered in 1937. It has been a member of the Federal Home Loan Bank ("FHLB") system, and its deposits have been federally insured since 1947. The Bank's deposits are insured by the Savings Association Insurance Fund (the "SAIF") of the Federal Deposit Insurance Corporation (the "FDIC") to the maximum amount permitted by law. The Bank conducts business through three (3) full service offices in Mooresville, Cornelius and Huntersville, North Carolina. The Bank is engaged primarily in the business of attracting retail deposits from the general public and using such deposits to make mortgage loans secured by real estate. The Bank primarily makes one-to-four family residential real estate loans. It also makes loans secured by multi-family residential and commercial property, construction loans and equity line of credit loans. The Bank also makes loans which are not secured by real property, such as loans secured by pledged deposit accounts and various types of secured and unsecured consumer loans. The Bank's primary source of revenue is interest income from its lending activities. The Bank's other major sources of revenue are interest and dividend income from investments, interest income from its interest-earning deposit balances in other depository institutions, and transactions and fee income from its lending and deposit activities. The major expenses of the Bank are interest on deposits and general and administrative expenses such as employee compensation and benefits, federal deposit insurance premiums, data processing expenses and office occupancy expenses. 3 The operations of the Bank and depository institutions in general are significantly influenced by general economic conditions and by related monetary and fiscal policies of depository institution regulatory agencies, including the Federal Reserve, the FDIC and the North Carolina Administrator, Savings Institutions Division, North Carolina Department of Commerce (the "Administrator"). Currently, the North Carolina Commissioner of Banks is acting as the Administrator. Deposit flows and cost of funds are influenced by interest rates on competing investments and general market rates of interest. Lending activities are affected by the demand for financing of real estate and other types of loans, which in turn are affected by the interest rates at which such financing may be offered and other factors affecting local demand and availability of funds. At December 31, 2001, the Company and the Bank had a total of 29 full-time employees and 3 part-time employees. Subsidiaries The Company has no subsidiaries other than the Bank. The Bank has no subsidiaries. Market Area The Bank's primary market area consists of the communities in an approximately fifteen (15) mile radius around its headquarters office in Mooresville, North Carolina. This area includes portions of Iredell, Mecklenburg, Lincoln, Catawba, Rowan and Cabarrus counties in North Carolina. Mooresville is located only thirty (30) miles north of Charlotte, North Carolina and the Bank's primary market area is and will continue to be significantly affected by its close proximity to this major metropolitan area. Employment in the Bank's primary market area is diversified among manufacturing, agricultural, retail and wholesale trade, government, services and utilities. Major employers include Lake Norman Regional Medical Center, Walmart, and Mooresville Graded Schools. Competition The Bank has operated in the Mooresville community for more than 60 years and is the only financial institution headquartered in Mooresville. However, the Bank faces strong competition both in attracting deposits and making real estate and other loans. Its most direct competition for deposits has historically come from other savings institutions, credit unions, brokerage firms and commercial banks located in its primary market area, including large financial institutions which have greater financial and marketing resources available to them. Bank of America and Wachovia (which recently merged with First Union), two national money center commercial banks, are currently headquartered in Charlotte, North Carolina, which is only 30 miles from the Bank's primary market area. As of December 31, 2001, there were 10, 11, and 9 depository institutions with a total of 16, 13, and 11 offices in Mooresville, Cornelius and Huntersville, North Carolina, respectively. Based upon June 30, 2001 comparative data, the Bank had 19.1% and 6.7% of the deposits in Mooresville and Iredell County, respectively. As a result of this intense competition, the Bank's branch offices, excluding the Mooresville office, have lower levels of deposits than the industry average. The Bank has also faced additional significant competition for investors' funds from short-term money market securities and other corporate and government securities. While the Bank's market share of deposits has decreased in recent years, its deposit base has grown principally due to economic growth in the Bank's market area. The ability of the Bank to attract and retain savings deposits depends on its ability to generally provide a rate of return, liquidity and risk comparable to that offered by competing investment opportunities. The Bank also experiences strong competition for real estate loans from other savings institutions, commercial banks, and mortgage banking companies. The Bank competes for loans primarily through the interest rates and loan fees it charges, the efficiency and quality of services it provides borrowers, and its more flexible underwriting standards. Competition may increase as a result of the continuing reduction of restrictions on the interstate operations of financial institutions. 4 Supervision and Regulation Bank holding companies and state savings banks are extensively regulated under both federal and state law. The following is a brief summary of certain statutes and rules and regulations that affect or will affect the Company, the Bank and any subsidiaries. This summary is qualified in its entirety by reference to the particular statute 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 Bank. Supervision, regulation and examination of the Company and the Bank by the regulatory agencies are intended primarily for the protection of depositors rather than shareholders of the Company. Statutes and regulations which contain wide-ranging proposals for altering the structures, regulations and competitive relationship of financial institutions are introduced regularly. The Company cannot predict whether or in what form any proposed statute or regulation will be adopted or the extent to which the business of the Company and the Bank may be affected by such statute or regulation. General. There are a number of obligations and restrictions imposed on bank holding companies and their depository institution subsidiaries by law and regulatory policy that are designed to minimize potential loss to the depositors of such depository institutions and the FDIC insurance funds in the event the depository institution becomes in danger of default or in default. For example, to avoid receivership of an insured depository institution subsidiary, a bank holding company is required to guarantee the compliance of any insured depository institution subsidiary that may become "undercapitalized" with the terms of any capital restoration plan filed by such subsidiary with its appropriate federal banking agency up to the lesser of (i) an amount equal to 5% of the bank's total assets at the time the bank became undercapitalized or (ii) the amount which is necessary (or would have been necessary) to bring the bank into compliance with all acceptable capital standards as of the time the bank fails to comply with such capital restoration plan. Under a policy of the Federal Reserve with respect to bank holding company operations, a bank holding company is required to serve as a source of financial strength to its subsidiary depository institutions and to commit resources to support such institutions in circumstances where it might not do so absent such policy. The Federal Reserve under the BHCA also has the authority to require a bank holding company to terminate any activity or to relinquish control of a nonbank subsidiary (other than a nonbank subsidiary of a bank) upon the Federal Reserve's determination that such activity or control constitutes a serious risk to the financial soundness and stability of any bank subsidiary of the bank holding company. In addition, insured depository institutions under common control are required to reimburse the FDIC for any loss suffered by either the SAIF or the Bank Insurance Fund ("BIF") as a result of the default of a commonly controlled insured depository institution or for any assistance provided by the FDIC to a commonly controlled insured depository institution in danger of default. The FDIC may decline to enforce the cross-guarantee provisions if it determines that a waiver is in the best interest of the SAIF or the BIF or both. The FDIC's claim for damages is superior to claims of stockholders of the insured depository institution or its holding company but is subordinate to claims of depositors, secured creditors and holders of subordinated debt (other than affiliates) of the commonly controlled insured depository institutions. As a result of the Company's ownership of the Bank, the Company is registered under the savings bank holding company laws of North Carolina. Accordingly, the Company is also subject to regulation and supervision by the Administrator. Capital Adequacy Guidelines for Holding Companies. The Federal Reserve has adopted capital adequacy guidelines for bank holding companies and banks that are members of the Federal Reserve system and have consolidated assets of $150 million or more. Bank holding companies subject to the Federal Reserve's capital adequacy guidelines are required to comply with the Federal Reserve's risk-based capital guidelines. Under these regulations, the minimum ratio of total capital to risk-weighted assets is 8%. At least half of the total capital is required to be "Tier I capital," principally consisting of common stockholders' equity, noncumulative perpetual preferred stock, and a limited amount of cumulative perpetual preferred stock, less certain goodwill items. The remainder ("Tier II capital") may consist of a limited amount of subordinated debt, certain hybrid capital instruments and other debt securities, perpetual preferred stock, and a limited amount of the general loan loss allowance. In addition to the risk-based capital guidelines, the Federal Reserve has adopted a minimum Tier I capital (leverage) ratio, under which a bank holding company must maintain a minimum level of Tier I capital to average total consolidated assets of at least 3% in the case of a bank holding 5 company which has the highest regulatory examination rating and is not contemplating significant growth or expansion. All other bank holding companies are expected to maintain a Tier I capital (leverage) ratio of at least 1% to 2% above the stated minimum. Dividend and Repurchase Limitations. The Company must obtain Federal Reserve approval prior to repurchasing Common Stock for in excess of 10% of its net worth during any twelve-month period unless the Company (i) both before and after the redemption satisfies capital requirements for "well capitalized" state member banks; (ii) received a one or two rating in its last examination; and (iii) is not the subject of any unresolved supervisory issues. Although the payment of dividends and repurchase of stock by the Company are subject to certain requirements and limitations of North Carolina corporate law, except as set forth in this paragraph, neither the Administrator nor the FDIC have promulgated any regulations specifically limiting the right of the Company to pay dividends and repurchase shares. However, the ability of the Company to pay dividends or repurchase shares may be dependent upon the Company's receipt of dividends from the Bank. A North Carolina-chartered stock savings bank may not declare or pay a cash dividend on, or repurchase any of, its capital stock if the effect of such transaction would be to reduce the net worth of the institution to an amount which is less than the minimum amount required by applicable federal and state regulations. In addition, a North Carolina-chartered stock savings bank, for a period of five years after its conversion from mutual to stock form, must obtain the written approval from the Administrator before declaring or paying a cash dividend on its capital stock in an amount in excess of one-half of the greater of (i) the institution's net income for the most recent fiscal year end, or (ii) the average of the institution's net income after dividends for the most recent fiscal year end and not more than two of the immediately preceding fiscal year ends, if applicable. Under FDIC regulations, stock repurchases may be made by the savings bank only upon receipt of FDIC approval. Also, without the prior written approval of the Administrator, a North Carolina-chartered stock savings bank, for a period of five years after its conversion from mutual to stock form, may not repurchase any of its capital stock. The Administrator will give approval to repurchase only upon a showing that the proposed repurchase will not adversely affect the safety and soundness of the institution. In addition, the Bank is not permitted to declare or pay a cash dividend on or repurchase any of its capital stock if the effect thereof would be to cause its net worth to be reduced below the amount required for the liquidation account established in connection with the Bank's conversion from mutual to stock ownership. The Company paid regular cash dividends totaling $0.41 per share and a return of capital dividend equal to $20.00 per share during the year ended December 31, 2001. Deposit Insurance Assessments. The Bank is subject to insurance assessments imposed by the FDIC. Under current law, the insurance assessment to be paid by the SAIF members such as the Bank shall be as specified in a schedule required to be issued by the FDIC. All FDIC deposits for deposit insurance have an effective rate ranging from 0 to 31 basis points per $100 of insured deposits, depending on the institution's capital position and other supervisory factors. Based on the current financial condition and capital levels of the Bank, the Bank does not expect that the FDIC insurance assessments will have a material impact on the Bank's future earnings. Federal Home Loan Bank System. The FHLB system provides a central credit facility for member institutions. As a member of the FHLB of Atlanta, the Bank is required to own capital stock in the FHLB of Atlanta in an amount at least equal to the greater of 1% of the aggregate principal amount of its unpaid residential mortgage loans, home purchase contracts and similar obligations at the end of each calendar year, or 5% of its outstanding advances (borrowings) from the FHLB of Atlanta. On December 31, 2001, the Bank was in compliance with this requirement. Community Reinvestment. Under the Community Reinvestment Act ("CRA") as implemented by regulations of the FDIC, an insured institution has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low and moderate income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions, nor does it limit an 6 institution's discretion to develop, consistent with the CRA, the types of products and services that it believes are best suited to its particular community. The CRA requires the federal banking regulators, in connection with their examinations of insured institutions, to assess the institutions' records of meeting the credit needs of their communities, using the ratings of "outstanding," "satisfactory," "needs to improve," or "substantial noncompliance," and to take that record into account in its evaluation of certain applications by those institutions. All institutions are required to make public disclosure of their CRA performance ratings. The Bank received a "satisfactory" rating in its last CRA examination which was conducted during December, 2001. Prompt Corrective Action. The FDIC has broad powers to take corrective action to resolve the problems of insured depository institutions. The extent of these powers will depend upon whether the institutions in question are "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized," or "critically undercapitalized." Under the regulations, an institution is considered "well capitalized" if it has (i) a total risk-based capital ratio of 10% or greater, (ii) a Tier I risk-based capital ratio of 6% or greater, (iii) a leverage ratio of 5% or greater and (iv) is not subject to any order or written directive to meet and maintain a specific capital level for any capital measure. An "adequately capitalized" institution is defined as one that has (i) a total risk-based capital ratio of 8% or greater, (ii) a Tier I risk-based capital ratio of 4% or greater and (iii) a leverage ratio of 4% or greater (or 3% or greater in the case of an institution with the highest examination rating). An institution is considered (A) "undercapitalized" if it has (i) a total risk-based capital ratio of less than 8%, (ii) a Tier I risk-based capital ratio of less than 4% or (iii) a leverage ratio of less than 4% (or 3% in the case of an institution with the highest examination rating); (B) "significantly undercapitalized" if the institution has (i) a total risk-based capital ratio of less than 6%, or (ii) a Tier I risk-based capital ratio of less than 3% or (iii) a leverage ratio of less than 3% and (C) "critically undercapitalized" if the institution has a ratio of tangible equity to total assets equal to or less than 2%. Other. Additional regulations require annual examinations of all insured depository institutions by the appropriate federal banking agency, with some exceptions for small, well-capitalized institutions and state chartered institutions examined by state regulators, and establish operational and managerial, asset quality, earnings and stock valuation standards for insured depository institutions, as well as compensation standards where such compensation would endanger the insured depository institution or would constitute an unsafe practice. The Bank is subject to examination by the FDIC and the Administrator. In addition, the Bank is subject to various other state and federal laws and regulations, including state usury laws, laws relating to fiduciaries, consumer credit and equal credit, fair credit reporting laws and laws relating to branch banking. The Bank, as an insured North Carolina chartered stock savings bank, is prohibited from engaging as a principal in activities that are not permitted for national banks, unless (i) the FDIC determines that the activity would pose no significant risk to the appropriate deposit insurance fund and (ii) the Bank is, and continues to be, in compliance with all applicable capital standards. The Bank is subject to the liquidity requirements established by the Administrator. North Carolina law requires savings banks to maintain cash and readily marketable investments of not less that 10% of the savings bank's total assets. In addition, the Bank is required to maintain a net worth of 5% or more of its total assets. Statutes and regulations which contain wide-ranging proposals for altering the structures, regulations and competitive relationships of financial institutions are introduced regularly. Neither the Company nor the Bank can predict whether or in what form any proposed statute or regulation will be adopted or the extent to which the business of the Company and the Bank may be affected by such statute or regulation. In short, the FDIC and the Administrator have broad powers to enforce laws and regulations applicable to the Company and the Bank. These powers include the ability to assess civil money penalties, to issue cease and desist or removal orders and to initiate injunctive actions. In general, these enforcement actions may be initiated in response to violation of laws and regulations and the conduct of unsafe and unsound practices. 7 ITEM 2. DESCRIPTION OF PROPERTIES The following table sets forth the location of the Bank's principal office in Mooresville, North Carolina and its full service branch office in Cornelius and Huntersville, North Carolina, as well as the amount of deposits at each location as of December 31, 2001. All of the properties listed are owned. Deposits Address (In Thousands) ------- As of 12/31/01 -------------- Mooresville: $ 94,879 347 North Main Street Mooresville, North Carolina 28115 (Corporate office) Cornelius: $ 9,693 20209 Highway 73 West Cornelius, North Carolina 28031 Huntersville: $ 9,208 -------- 401 Gilead Road Huntersville, North Carolina 28078 $113,780 ======== In addition, the Bank owns a 1.24 acre lot located at Highway 150 West, 239 West Plaza Drive, Mooresville, North Carolina, purchased in 1988 for future expansion purposes. See also Note 4 to the "Notes To Consolidated Financial Statements" to the 2001 Annual Report. ITEM 3. LEGAL PROCEEDINGS In the opinion of management, neither the Company nor the Bank is involved in any pending legal proceedings other than routine, non-material proceedings occurring in the ordinary course of business. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted to a vote of the Company's stockholders during the quarter ended December 31, 2001. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS See the information under the section captioned "Common Stock Information" on page 58 in the Company's 2001 Annual Report, which section is incorporated herein by reference. See "Item 1. BUSINESS- Supervision and Regulation -- Dividend and Repurchase Limitations" above and Note 8 to the Notes to financial statements as the Company's 2001 Annual Report which is incorporated herein by reference for regulatory restrictions which limit the ability of the Company to pay dividends to its shareholders and the Bank to pay dividends to the Company. 8 ITEM 6. SELECTED FINANCIAL DATA The information required by this Item is set forth in the table captioned "Selected Consolidated Financial Data" on pages 2 and 3 of the Company's 2001 Annual Report which is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION See the information set forth under Item 1 above and the information set forth under the section captioned "Management's Discussion and Analysis of Financial Condition and Operating Results" on pages 4 through 17 in the Company's 2001 Annual Report, which section is incorporated herein by reference. ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Pages 6 through 8 and 13 through 16 of the Company's 2001 Annual Report are herein incorporated by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements of the Company and supplementary data set forth on pages 20 through 56 of the Company's 2001 Annual Report are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE N/A. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this Item regarding directors and executive officers of the Company is set forth under the sections captioned "Proposal 1 - Election of Directors - Nominees" on pages 6 and 7 of the Proxy Statement of the 2002 Annual Meeting of Stockholders (the "Proxy Statement") and "Proposal 1 - Election of Directors - Executive Officers" on page 10 of the Proxy Statement, which sections are incorporated herein by reference. The information required by this Item regarding compliance with Section 16(a) of the Securities Exchange Act of 1934 is set forth under the section captioned "Section 16(a) Beneficial Ownership Reporting Compliance" set forth on page 6 of the Proxy Statement, which is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information required by this Item is set forth under the sections captioned "Proposal 1 - Election of Directors - Directors' Compensation" on pages 9 and 10 and " - Executive Compensation" on pages 11 through 19 of the Proxy Statement, which sections are incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this Item is incorporated by reference from the section captioned "Security Ownership of Certain Beneficial Owners" on pages 3 through 6 of the Proxy Statement. 9 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS See the section captioned "Proposal 1 - Election of Directors - Certain Indebtedness and Transactions of Management" on page 21 of the Proxy Statement, which section is incorporated herein by reference. Also, see Note 13 to the "Notes of Consolidated Financial Statements" of the 2001 Annual Report. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K 14(a)1. Consolidated Financial Statements (contained in the Company's 2001 Annual Report which is attached hereto as Exhibit (13) and incorporated herein by reference) including the following: (a) Independent Auditors' Report; (b) Consolidated Statements of Financial Condition as of December 31, 2001 and 2000; (c) Consolidated Statements of Operations for the Years Ended December 31, 2001, 2000 and 1999; (d) Consolidated Statements of Stockholder's Equity for the Years Ended December 31, 2001, 2000 and 1999; (e) Consolidated Statements of Cash Flows for the Years Ended December 31, 2001, 2000 and 1999; (f) Notes to Consolidated Financial Statements. 14(a)2. Consolidated Financial Statement Schedules All schedules have been omitted as the required information is either inapplicable or included in the Notes to Consolidated Financial Statements. 14(a)3. Exhibits Exhibit(3)(i) Certificate of Incorporation, incorporated herein by reference to Exhibit (3)(i) to the Registration Statement on Form S-1, Registration No. 333-35497, dated September 12, 1997, and amended on November 5 and 10, 1997. Exhibit (3)(ii) Bylaws, incorporated herein by reference to Exhibit (3)(ii) to the Registration Statement on Form S-1, Registration No. 333-35497, dated September 12, 1997, and amended on November 5 and 10, 1997. Exhibit (4) Specimen Stock Certificate, incorporated herein by reference to Exhibit (4) to the Registration Statement on Form S-1, Registration No. 333-35497, dated September 12, 1997, and amended on November 5 and 10, 1997. Exhibit (10)(a) Employment Agreement between Mooresville Savings Bank, Inc., S.S.B. and George W. Brawley, Jr. dated December 30, 1997, as amended on December 15, 1998, incorporated herein by reference to Exhibit 10 (a) to the Company's Form 10-K for the year ended December 31, 1998.

10 Exhibit (10)(b) Employment Agreement between Mooresville Savings Bank, Inc., S.S.B. and Dale W. Brawley dated December 30, 1997, as amended on December 15, 1998, incorporated herein by reference to Exhibit 10 (b) to the Company's Form 10-K for the year ended December 31, 1998. Exhibit (10)(c) Employment Agreement between Mooresville Savings Bank, Inc., S.S.B. and Billy R. Williams dated December 30, 1997, as amended on December 15, 1998, incorporated herein by reference to Exhibit 10 (c) to the Company's Form 10-K for the year ended December 31, 1998. Exhibit (10)(d) Employee Stock Ownership Plan and Trust of Mooresville Savings Bank, Inc., S.S.B., incorporated by reference to Exhibit 10(d) to the Company's Form 10-K for the year ended December 31, 1997. Exhibit (10)(e) Mooresville Savings Bank, Inc., S.S.B. Severance Plan, incorporated herein by reference to Exhibit 10(f) to the Registration Statement on Form S-1, Registration No. 333-35497, dated September 12, 1997, and as amended on November 5 and 10, 1997. Exhibit (10)(f) Capital Maintenance Agreement between Coddle Creek Financial Corp. and Mooresville Savings Bank, Inc., S.S.B., incorporated by reference to Exhibit 10(f) to the Company's Form 10-K for the year ended December 31, 1997. Exhibit (10)(g) Management Recognition Plan of Mooresville Savings Bank, Inc., S.S.B., incorporated herein by reference to Exhibit 10(g) to the Company's Form 10-K for the year ended December 31, 1998. Exhibit (10)(h) Stock Option Plan of Coddle Creek Financial Corp., incorporated herein by reference to Exhibit 10(h) to the Company's Form 10-K for the year ended December 31, 1998. Exhibit (10)(i) (i) Amended and Restated Retirement Payment Agreements between Mooresville Savings Bank, Inc., S.S.B. and each of Donald R. Belk, George W. Brawley and Claude U. Voils, Jr. dated September 3, 1979, as amended and restated September 8, 1997 and as amended on December 16, 1998, incorporated herein by reference to Exhibit 10(i)(i) to the Company's Form 10-K for the year ended December 31, 1998. (ii) Retirement Payment Agreement between Mooresville Savings Bank, Inc., S.S.B. and Calvin E. Tyner dated September 3, 1979, as amended on September 8, 1997, incorporated herein by reference to Exhibit 10(i)(ii) to the Company's Form 10-K for the year ended December 31, 1998. (iii) Amended and Restated Director's Deferred Compensation Agreements between Mooresville Savings Bank, Inc., S.S.B. and each of Donald R. Belk, George W. Brawley, Jr., and Claude U. Voils, Jr. dated January 1, 1985, as amended and restated on March 31, 1988 and September 8, 1997 and as amended for Messrs. Belk, Brawley, and Voils on December 16, 1998, incorporated herein by reference to Exhibit 10(i)(iii) to the Company's Form 10-K for the year ended December 31, 1998.

11 (iv) Amended and Restated Director's Deferred Compensation Agreements between Mooresville Savings Bank, Inc., S.S.B. and each of Donald R. Belk, George W. Brawley, Jr.., Calvin E. Tyner, and Claude U. Voils, Jr. dated December 1, 1985, as amended and restated on September 8, 1997 and as amended for Messrs. Belk, Brawley and Voils on December 16, 1998, incorporated herein by reference to Exhibit 10(i)(iv) to the Company's Form 10-K for the year ended December 31, 1998. (v) Amended and Restated Retirement Plan Agreements between Mooresville Savings Bank, Inc., S.S.B. and each of George W. Brawley, Jr., Donald R. Belk, Claude U. Voils, Jr. and Calvin E. Tyner dated November 1, 1993, as amended and restated on September 15, 1997, and as amended for Messrs. Brawley, Belk, and Voils on December 16, 1998, incorporated herein by reference to Exhibit 10(i)(v) to the Company's Form 10-K for the year ended December 31, 1998. (vi) Amended and Restated Retirement Payment Agreements between Mooresville Savings Bank, S.S.B. and George W. Brawley, Jr. dated December 1, 1990, as amended and restated on September 8, 1997 and as amended on December 16, 1998, incorporated herein by reference to Exhibit 10(i)(vi) to the Company's Form 10-K for the year ended December 31, 1998. (vii) Amended and Restated Retirement Payment Agreement between Mooresville Savings Bank, S.S.B. and Dale W.Brawley dated November 1, 1990, amended and restated on October 21, 1993, as amended and restated on September 8, 1997, incorporated herein by reference to Exhibit 10(i)(vii) to the Company's Form 10-K for the year ended December 31, 1998. (viii) Amended and Restated Retirement Payment Agreements between (a) Mooresville Savings Bank, Inc., S.S.B. and each of Donald R. Belk, George W. Brawley, Jr., and Claude U. Voils, Jr. dated March 1, 1993, as amended and restated on September 8, 1997 and as amended for each of them on December 16, 1998 and (b) Mooresville Savings Bank, Inc., S.S.B. and Dale W. Brawley dated February 11, 1993, as amended and restated on October 21, 1993 and September 8, 1997, incorporated herein by reference to Exhibit 10(i)(viii) to the Company's Form 10-K for the year ended December 31, 1998. (ix) Amended and Restated Retirement Payment Agreements between Mooresville Savings Bank, Inc., S.S.B. and each of Dale W. Brawley and George W. Brawley, Jr. dated August 1, 1993, amended and restated on October 23, 1993 for Dale W. Brawley, as amended and restated on September 8, 1997, and as amended for George W. Brawley on December 16, 1998, incorporated herein by reference to Exhibit 10(i)(ix) to the Company's Form 10-K for the year ended December 31, 1998. (x) Amended and Restated Retirement Payment Agreement between Mooresville Savings Bank, Inc., S.S.B. and Jack G. Lawler dated June 1, 1994, as amended and restated on September 8, 1997, incorporated herein by reference to Exhibit 10(i)(x) to the Company's Form 10-K for the year ended December 31, 1998.

12 (xi) Amended and Restated Salary Continuation Agreements between Mooresville Savings Bank, Inc., S.S.B. and each of Dale W. Brawley, George W. Brawley, Jr., Patricia B. Clontz, and Richard E. Woods dated September 1, 1984, as amended and restated on September 17, 1997, and as amended for George W. Brawley on December 16, 1998, incorporated herein by reference to Exhibit 10(i)(x) to the Company's Form 10-K for the year ended December 31, 1998. (xii) Amended and Restated Supplemental Income Agreements between Mooresville Savings Bank, Inc., S.S.B. and each of Dale W. Brawley, George W. Brawley, Jr., Billy R. Williams, Donald G. Jones and Richard E. Woods dated November 1, 1993, as amended and restated on September 17, 1997, and as amended for George W. Brawley on December 16, 1998, incorporated herein by reference to Exhibit 10(i)(xii) to the Company's Form 10-K for the year ended December 31, 1998. (xiii) Amended and Restated Salary Continuation Agreements between Mooresville Savings Bank, S.S.B. and each of Lucille Doster, Marie Hedrick, Carol Huffman, Brenda Johnson, D. Glenn Jones, and Nancy Lee Petrea dated February 1, 1988, as amended and restated on September 17, 1997, incorporated herein by reference to Exhibit 10(i)(xiii) to the Company's Form 10-K for the year ended December 31, 1998. Exhibit (10)(j) Mooresville Savings Bank, Inc., S.S.B. Non-Qualified Excess Savings Plan, incorporated herein by reference to Exhibit 10(i) to the Registration Statement on Form S-1, Registration No. 333-35497, dated September 12, 1997, as amended on November 5 and 10, 1997. Exhibit (11) Statement regarding computation of per share earnings. Exhibit (13) 2001 Annual Report to Security Holders. Exhibit (21) See Item 1. "Business" for discussion of subsidiaries. Exhibit (23) Consent of Independent Certified Public Accountants. 14(b) The Company filed no reports on Form 8-K during the last quarter of the fiscal year ended December 31, 2001.

13 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CODDLE CREEK FINANCIAL CORP. Date: March 19, 2002 By:/s/ George W. Brawley, Jr. -------------------------------------------- George W. Brawley, Jr. President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: Signature Title Date --------- ----- ---- /s/ George W. Brawley, Jr. President, Chief Executive March 19, 2002 ------------------------------- George W. Brawley, Jr. Officer and Director /s/ Dale W. Brawley Executive Vice President, March 19, 2002 ------------------------------- Dale W. Brawley Treasurer and Director /s/ Billy R. Williams Chief Financial Officer, March 19, 2002 ------------------------------- Billy R. Williams Chief Accounting Officer, Controller and Secretary /s/ Donald R. Belk Director March 19, 2002 ------------------------------- Donald R. Belk /s/ Jack G. Lawler Director March 19, 2002 ------------------------------- Jack G. Lawler /s/ Claude U. Voils, Jr. Director March 19, 2002 ------------------------------- Claude U. Voils, Jr. /s/ Don E. Mills, Jr. Director March 19, 2002 ------------------------------- Don E. Mills, Jr. 14 INDEX TO EXHIBITS Exhibit No. Description ----------- ----------- Exhibit (11) Statement regarding computation of per share earnings. Exhibit (13) 2001 Annual Report to Security Holders. Exhibit (23) Consent of Independent Certified Public Accountants. 15

Owned ----- Net Book Value or Deposits -------------- -- --------- Address of Property leased (In Thousands) ------- ----------- ------ ------------- Mooresville: $207,000 Owned $ 89,118 ------------ -------- ----- -------- 347 North Main Street --------------------- Mooresville, North Carolina 28115 --------------------------------- Cornelius: $276,000 Owned $ 8,871 ---------- -------- ----- -------- 20209 Highway 73 West --------------------- Cornelius, North Carolina 28031 ------------------------------- Huntersville: $181,000 Owned $ 6,380 ------------- -------- -------- 401 Gilead Road --------------- Huntersville, North Carolina 28078 ----------------------------------

Signature Title Date --------- ----- ---- /s/ George W. Brawley, Jr. President, Chief Executive March 23, 2001 ------------------------ George W. Brawley, Jr. Officer and Director /s/ Dale W. Brawley Executive Vice President, March 23, 2001 ------------------------ Dale W. Brawley Treasurer and Director /s/ Billy R. Williams Chief Financial Officer, March 23, 2001 ------------------------ Billy R. Williams Chief Accounting Officer, Controller and Secretary /s/ Donald R. Belk Director March 23, 2001 ------------------------ Donald R. Belk /s/ Jack G. Lawler Director March 23, 2001 ------------------------ Jack G. Lawler /s/ Claude U. Voils, Jr. Director March 23, 2001 ------------------------ Claude U. Voils, Jr. /s/ Don E. Mills, Jr. Director March 23, 2001 ------------------------ Don E. Mills, Jr.

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