<PAGE>


                              UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                         Washington, D. C. 20549

                                FORM 10-K

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

For the fiscal year ended
   December 31, 1997.                         Commission File No. 0-10852

                    SOUTHERN BANCSHARES (N.C.), INC.
          (Exact name of registrant as specified in its charter)

           DELAWARE                                         56-1538087
(State or other jurisdiction of                          (I.R.S. Employer
    incorporation or organization)                     Identification Number)

121 East Main Street                                           28365
Mount Olive, North Carolina                                 (Zip Code)
(Address of Principal Executive offices)

Registrant's Telephone Number,
 including Area Code:                                      (919)  658-7000

Securities registered pursuant to Section 12(b) of the Act:     None

Securities registered pursuant to Section 12(g) of the Act:

           Series B non-cumulative preferred stock, no par value

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 pursuant 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.

                                   [ X ]

The  aggregate  market  value  of the voting stock held by nonaffiliates of the
Registrant  as of March 20, 1998:  The Registrant's voting stock has no readily
ascertainable  market  value  as  of  any  date  within  the last sixty days or
otherwise  for  the  reason  that such stock is not regularly traded and has no
quoted  prices.  Therefore, the aggregate market value of the voting stock held
by non-affiliates is not determinable.

The number of shares outstanding of the Registrant's common stock as of March
20, 1998:  Common Stock, $5.00 par value - 119,918 shares

Documents Incorporated by Reference

1. Part II    Registrant's Annual Report to Shareholders

<PAGE>

PART I

ITEM 1 - BUSINESS:

General

     Southern  BancShares  (N.C.),  Inc.,  a Delaware corporation (hereinafter,
with  all of its subsidiaries, referred to as the "Registrant" or BancShares"),
is  a  bank  holding  company  pursuant  to  the provisions of the Bank Holding
Company  Act  of  1956, as  amended.  BancShares  is  the successor to Southern
BancShares  (N.C.), Inc., a North Carolina corporation ("SBS") which was formed
in  1982  to  become  the  parent  company  of  Southern Bank and Trust Company
("Southern"),  its  principal  operating  subsidiary, which it acquired in late
1982.  BancShares  was formed in 1986 in order to affect the reincorporation in
Delaware  of  the  holding  company  of Southern Bank by the merger of SBS into
BancShares,  which   was  effective  on  December  28,  1986.  All  significant
activities of the Registrant and its subsidiary are banking related so that the
Registrant  operates  within  one industry segment.  Neither BancShares nor its
subsidiary has any foreign operations.

     The  operating subsidiary of BancShares is Southern Bank and Trust Company
("Southern"), which is engaged in commercial banking primarily in eastern North
Carolina.  Southern's  predecessor  bank  was organized on January 29, 1901, as
the  Bank  of  Mount  Olive.  In  1913, it  became  the First National Bank and
remained  so  until  1936  when  it rechartered as the Bank of Mount Olive.  In
1967, Southern  acquired  its  present name.  Over the years, Southern's growth
has been generated principally through branching and by merging with four other
banks: Roanoke  Chowan  Bank, Roxobel, North  Carolina  in 1969, Merchants' and
Farmers' Bank, Macclesfield, North Carolina in 1973, Tarheel Bank & Trust  Co.,
Gatesville, North  Carolina  in  1986  and  Citizens Savings Bank, Rocky Mount,
North  Carolina  in  1993.  Also  in  1993, Southern  acquired deposits in four
branches   of  two  savings  institutions  and  an  office  of  NationsBank  in
Pollocksville, North  Carolina.  In 1994 Southern acquired deposits in branches
in Scotland Neck, North Carolina and Turkey, North Carolina from First Citizens
Bank.  In  1995  Southern  acquired  deposits  in  branches in Farmville, North
Carolina;  Garland,  North  Carolina; Kill  Devil  Hills,  North  Carolina  and
Salemburg, North  Carolina  from  First  Union National Bank.  In 1995 Southern
also  acquired  the  deposits  of a branch in Kill Devil Hills,  North Carolina
from  First  Citizens  Bank.  In 1996 Southern acquired deposits in a branch in
Windsor, North Carolina from First Citizens Bank, acquired deposits in a branch
in  Edenton, North  Carolina from United Carolina Bank and sold the deposits of
its  branch in Scotland Neck, North Carolina to Triangle Bank. In 1997 Southern
acquired  deposits  in  branches  in  Aulander,  North  Carolina, Aurora, North
Carolina  and  Hamilton, North  Carolina  from Wachovia Bank of North Carolina,
N.A.  Refer  to  "Related  Parties"  in  Note  15 on page 37 of the 1997 Annual
Report  of Southern BancShares (N.C.), Inc. in Exhibit number 13 for additional
information  regarding  First  Citizens  Bank.  In  terms  of  total assets, at
December  31, 1997, Southern was the eleventh largest bank in North Carolina.

<PAGE>

Business

     Southern conducts a general banking business designed to meet the needs of
the people of its market area.  These services, all of which are offered at its
42  offices, include, among  other  items:  taking deposits; cashing checks and
providing  for  individual  and  commercial  cash needs; and providing numerous
checking  and  savings  plans, including  automatic  transfer  services, direct
deposit, and banking by mail.

     Southern also makes commercial, consumer and mortgage loans at its 32 full
service  offices  and  provides  individual  retirement  account  service, safe
deposit  box  rental, travelers' check service, and Master Card and Visa credit
card programs.

     The Bank has twenty automatic teller machines; one each in Ahoskie, Ayden,
Belhaven,  Bethel,  Edenton,  Farmville,  LaGrange, Mount  Olive, Murfreesboro,
Nashville,  Plymouth,  Roanoke  Rapids,  Warsaw,  Whitakers  and Windsor, North
Carolina  and two in Kill Devil Hills and Rocky Mount North Carolina.  Southern
has  one  satellite  automatic  teller  machine  at  Duplin General Hospital in
Kenansville, North Carolina.

     Southern does not operate in the international financing market.

     Southern  has a wholly-owned subsidiary: Goshen, Inc., which acts as agent
for  credit life and credit accident and health insurance written in connection
with loans made by Southern.

Statistical Information

     Certain  statistical  information  with respect to BancShares' business is
included in the information incorporated herein under "Item 7" below.

Supervision and Regulation

     The  business  and  operations  of  BancShares and Southern are subject to
extensive federal and state governmental regulation and supervision.

     BancShares  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  is  subject to
supervision  and  examination by and the regulations and reporting requirements
of  the  Federal  Reserve.  Under  the  BHCA, the  activities of BancShares are
limited  to  banking, managing  or controlling banks, furnishing services to or
performing  services  for  its  subsidiaries  or engaging in any other activity
which  the  Federal  Reserve  determines to be so closely related to banking or
managing or controlling banks as to be a proper incident thereto.

<PAGE>
     The BHCA prohibits BancShares from acquiring direct or indirect control of
more than 5 percent of the outstanding voting stock or substantially all of the
assets  of  any financial institution, or merging or consolidating with another
bank holding company or savings bank holding company, without prior approval of
the Federal Reserve.  Additionally, the BHCA prohibits BancShares from engaging
in, or acquiring ownership or control of more than 5 percent of the outstanding
voting  stock  of  any  company  engaged  in, a nonbanking activity unless such
activity  is  determined  by  the  Federal  Reserve to be so closely related to
banking  as  to  be  properly incident thereto.  In approving an application by
BancShares  to  engage  in  a  non-banking  activity,  the Federal Reserve must
consider  whether  that activity can reasonably be expected to produce benefits
to  the  public, such as greater convenience, increased competition or gains in
efficiency, that outweigh possible adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of interest or unsound
banking practices.

     There  are  a  number  of obligations and restrictions imposed by law on a
bank  holding  company and its insured depository institution subsidiaries that
are  designed  to  minimize potential loss to depositors and the FDIC insurance
funds.  For example, if a bank holding company's insured depository institution
subsidiary becomes "undercapitalized," the  bank holding company is required to
guarantee  (subject  to  certain  limits)  the subsidiary's compliance with the
terms  of  any  capital  restoration  plan  filed  with its appropriate federal
banking  agency.  Also, a bank holding company is required to serve as a source
of  financial strength to its depository institution subsidiaries and to commit
resources  to  support such institutions in circumstances where it might not do
so, absent  such policy.  Under the BHCA, the Federal Reserve has the authority
to  require  a  bank holding company to terminate any activity or to relinquish
control  of  a nonbank subsidiary upon the Federal Reserve's determination that
such  activity or control constitutes a serious risk to the financial soundness
and  stability  of  a  depository  institution  subsidiary  of the bank holding
company.

<PAGE>

     As  a  result  of  its  ownership of a North Carolina-chartered commercial
bank, BancShares  also  is  registered  with  and  subject  to  examination and
regulation  by  the North Carolina Commissioner of Banks under the state's bank
holding company laws.

     Southern  is a North Carolina commercial bank and its deposits are insured
by  the  FDIC.  It  is  subject  to  supervision  and  examination  by  and the
regulations  and  reporting  requirements of the North Carolina Commissioner of
Banks (the "Commissioner") and the FDIC.

     Southern is subject to legal limitations on the amounts of dividends it is
permitted  to pay.  Prior approval of the Commissioner is required if the total
of  all  dividends  declared  by  Southern in any calendar year exceeds its net
profits  (as  defined by statute)  for that year combined with its retained net
profits (as  defined by statute) for the preceding two calendar years, less any
required  transfers to surplus.  As an insured depository institution, Southern
also  is prohibited from making capital distributions, including the payment of
dividends,    if,    after    making   such   distribution, it   would   become
"undercapitalized"  (as  such  term is defined in the Federal Deposit Insurance
Act).

     Under  current  federal  law,  certain  transactions  between a depository
institution  and  its  affiliates  are  governed  by Section 23A and 23B of the
Federal  Reserve  Act.  An affiliate of a depository institution is any company
or  entity  that controls, is controlled by or is under common control with the
institution, and, in a holding company context, the parent holding company of a
depository  institution  and  any companies which are controlled by such parent
holding  company  are  affiliates  of  the  depository institution.  Generally,
Sections  23A and 23B (i) limit the extent to which a depository institution or
its subsidiaries may engage in covered transactions with any one affiliate, and
(ii)  require  that  such  transactions  be  on  terms  and under circumstances
substantially  the  same, or  at  least as favorable, to the institution or the
subsidiary as those provided to a nonaffiliate.

     Southern   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.  As  an insured institution, Southern 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 institution is, and continues
to   be,  in   compliance   with  all  applicable  capital  standards.  Insured
institutions  also  are  prohibited  from  directly  acquiring or retaining any
equity investment of a type or in an amount not permitted for national banks.

     The  Federal  Reserve, the FDIC and the Commissioner all have broad powers
to  enforce  laws  and regulations applicable to BancShares and Southern and to
require  corrective  action of conditions affecting the safety and soundness of
Southern.  Among  others, these  powers  include  cease  and desist orders, the
imposition of civil penalties and the removal of officers and directors.

<PAGE>

Capital Requirements

     Bank  holding  companies are required to comply with the Federal Reserve's
risk-based capital guidelines which require a minimum ratio of total capital to
risk-weighted  assets  of  8  percent.  At  least  half of the total capital is
required  to  be  Tier  I  capital.  In  addition  to  the  risk-based  capital
guidelines, the  Federal  Reserve  has adopted a minimum leverage capital ratio
under  which  a bank holding company must maintain a level of Tier I capital to
average  total  consolidated assets of at least 3 percent in the case of a bank
holding  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  leverage  capital ratio of a least 1
percent to 2 percent above the stated minimum.

     Southern  is  also  subject  to  capital requirements imposed by the FDIC.
Under  the  FDIC's  regulations, insured  institutions that receive the highest
rating  during the examination process and are not anticipating or experiencing
any  significant  growth are required to maintain a minimum leverage ratio of 3
percent  of  Tier  I  capital  to average total consolidated assets.  All other
insured institutions are required to maintain a minimum ratio of 1 percent or 2
percent  above  the  stated  minimum, with a minimum leverage ratio of not less
than  4  percent.  The  FDIC  also  requires  Southern to have a ratio of total
capital to risk-weighted assets of at least 8 percent.

Insurance Assessments

     Southern  is  subject  to  insurance  assessments  imposed  by  the  FDIC.
During  1995 the FDIC reduced the Bank Insurance  Fund ("BIF") assessment rates
for  the highest rated banks to .04 percent, but left unchanged the .31 percent
rate  for  the  weakest  banks;  and, effective January 1, 1996, the FDIC again
reduced  BIF  assessments to a range of 0 percent to .27 percent.  These recent
premium  reductions  do  not  affect  the  deposit  premiums  paid  on  Savings
Association Insurance Fund ("SAIF") insured deposits.  The actual assessment to
be  paid  by  each insured institution is based on the institution's assessment
risk  classification, which  is  determined based on whether the institution is
considered "well capitalized", "adequately capitalized" or "under capitalized",
as  such terms have been defined in applicable federal regulations, and whether
the institution is considered by its supervisory agency to be financially sound
or  to have supervisory concerns.  The FDIC also is authorized to impose one or
more  special assessments in any amount deemed necessary to enable repayment of
amounts borrowed by the FDIC from the United States Treasury Department.

<PAGE>

     The  Deposit  Insurance  Funds Act of 1996 ("DIFA96") required the FDIC to
impose  a  one-time  special  assessment on SAIF-assessable deposits, including
those  held  by  BIF-member  OAKAR  ("OAKAR")  institutions such as Southern to
capitalize  the  SAIF  to  its  target  Designated Reserve Ratio.  Southern was
accordingly assessed $569 thousand in September 1996.

     The  DIFA96  also  required that, beginning January 1, 1997, BIF banks and
OAKAR  institutions  would  begin  to  be charged a separate assessment for the
Financing Corporation ("FICO") funding requirements.  The FICO rate is not tied
to  the  FDIC  risk  classification and is subject to change by the FDIC within
certain limitations.

     The  FICO  rate  for the first quarter of 1998 is set at an annual rate of
6.28  basis  points of OAKAR adjusted deposits as defined by the FDIC and 1.256
basis  points  of  BIF  adjusted  deposits.  At  September  30, 1997  the  FICO
assessable  OAKAR deposit base for Southern was $99 million and the BIF deposit
base was $398 million.  If Southern's deposits remained at these levels and the
FDIC  maintained  the  same  rates, the  expense  for  the  FICO obligation for
Southern would be approximately $112 thousand for 1998.

Change in Control

     State  and  federal  law  restricts  the  amount of voting stock of a bank
holding  company, or  a  bank, that  a  person  may  acquire  without the prior
approval of banking regulators.

     Pursuant  to  North  Carolina  law, no person may, directly or indirectly,
purchase  or  acquire  voting  stock  of any bank holding company or bank which
would  result  in  the change of control of that entity unless the Commissioner
first  shall  have approved that proposed transaction.  A person will be deemed
to  have  acquired  "control" of a bank holding company or bank if that person,
directly  or indirectly, (i) owns, controls or has the power to vote 10 percent
or  more  of  the  voting  stock  of  the bank holding company or bank, or (ii)
possesses  the  power  to  direct  or cause the direction of its management and
policy.  Federal  law  imposes additional restrictions on acquisitions of stock
in  bank holding companies and insured banks.  Under the federal Change in Bank
Control  Act  and  regulations  thereunder, a person or group acting in concert
must  give advance notice to the Federal Reserve or the FDIC before directly or
indirectly  acquiring  the power to direct the management or policies of, or to
vote  25 percent or more of any class of voting securities of, any bank holding
company  or  insured  bank.  Upon receipt of such notice, the federal regulator
either may approve or disapprove the acquisition.

     Under  the  Act, a  change in control is presumed to occur if, among other
things, a  person or group acquires more than 10 percent of any class of voting
stock  of  a  holding  company or insured bank and, after such acquisition, the
acquirer will be the largest shareholder.

<PAGE>

Interstate Banking and Branching

     Federal  law  permits  adequately  capitalized  and  managed  bank holding
companies  to  acquire  control  of  the  assets  of  banks  in  any state (the
"Interstate   Banking   Law").  Acquisitions  will  be  subject  to  anti-trust
provisions  that cap at 10 percent the portion of the total deposits of insured
depository institutions in the United States that a single bank holding company
may  control, and generally cap at 30 percent the portion of the total deposits
of  insured  depository  institutions  in  a  state  that a single bank holding
company  may  control.  Under  certain circumstances, states have the authority
to  increase  or  decrease  the  30 percent cap, and states may set minimum age
requirements of up to five years on target banks within their borders.

     Beginning  June 1, 1997, and subject to certain conditions, the Interstate
Banking  Law  permited  interstate branching by allowing a bank to merge with a
bank  located  in  a  different state.  The Interstate Banking Law also permits
banks  to  establish  branches  in  other  states,  by  opening new branches or
acquiring  existing  branches of other banks, if the laws of those other states
specifically  permit  that  form  of  interstate branching.  North Carolina has
adopted  statutes  which, subject to conditions contained therein, specifically
authorize  out-of-state  bank  holding  companies and banks to acquire or merge
with  North  Carolina  banks  and  to  establish  or  acquire branches in North
Carolina.

Economic Considerations

     As  a  bank  holding company whose primary asset is the capital stock of a
commercial  bank,  BancShares  is  directly  affected  by  regulatory  measures
affecting  the  banking  industry  in  general. Additionally, since BancShares'
banking  business  is  centered in eastern North Carolina, the general state of
the  economy of eastern North Carolina, especially the agricultural sector, has
a direct effect on its business and profitability.

     Among governmental regulators of primary importance is the Federal Reserve
which  acts  as  the nation's central bank and can directly affect money supply
and  thereby  affect Southern's lending ability by increasing or decreasing its
interest costs and availability of funds.  An important function of the Federal
Reserve  is  to  regulate the national supply of bank credit in order to combat
recession  and  curb inflationary pressures.  Among the instruments of monetary
policy  used  by  the  Federal  Reserve  to implement these objectives are open
market  operations in U. S. Government securities, changes in the discount rate
and  surcharge, if  any, on  member  bank  borrowings, and  changes  in reserve
requirements   against   bank   deposits.  These  means  are  used  in  varying
combinations  to  influence  overall  growth  of  bank  loans, investments  and
deposits  and  may  also  affect  interest  rates  charged on loans or paid for
deposits.

     Southern  is not a member of the Federal Reserve System, but is subject to
reserve  requirements  imposed on non-member banks by the Federal Reserve.  The
monetary  policies  of the Federal Reserve have had a significant effect on the
operating  results of commercial banks in the past and are expected to continue
to do so in the future.

<PAGE>

Competition

     The  banking  laws of North Carolina allow statewide branching; therefore,
commercial  banking  in  the  state  is  highly competitive.  Southern competes
directly  in  many  of  its  markets  with  one  or more of the largest banking
organizations  in  North Carolina.  Such competitors range in size to over $200
billion  in  consolidated resources (including resources represented by banking
organizations  in  other  states  owned  by  or  which  control certain of such
competitors), have  broader  geographic  markets  and higher lending limits and
offer  more services than Southern, and can, therefore, make more effective use
of  media  advertising, support  services  and  electronic  technology than can
BancShares or Southern.

Year 2000

     In  1997  BancShares  developed a plan to deal with the "Year 2000 issue".
Refer  to  "Accounting  and  Other  Matters" on pages 14 through 15 of the 1997
Annual  Report  of  Southern  BancShares  (N.C.), Inc. in Exhibit number 13 for
additional information regarding the Year 2000 issue.

Employees

     At  December 31, 1997, Southern  employed  295  full-time employees and 14
part-time employees.  It is not a party to any collective bargaining agreements
and  considers  relations with its employees to be good.  BancShares and Goshen
do not have any separate employees.

<PAGE>

Statistical Information

I.  AVERAGE BALANCE SHEET ITEMS AND NET INTEREST DIFFERENTIAL
    AVERAGE BALANCES AND AVERAGE RATES EARNED AND PAID

<TABLE>
<CAPTION>
(Dollars in thousands, taxable-equivalent)



                                             DECEMBER 31, 1997           DECEMBER 31, 1996                DECEMBER 31, 1995
                                          AVERAGE           AVERAGE   AVERAGE           AVERAGE        AVERAGE           AVERAGE
ASSETS                                    BALANCE  INTEREST   RATE    BALANCE  INTEREST   RATE         BALANCE  INTEREST   RATE
<S>                                      <C>       <C>      <C>       <C>       <C>      <C>           <C>       <C>      <C>
Interest earning assets:
  Loans (1) (2)                          $340,195  $29,225   8.59%    $310,389  $26,878   8.66%        $270,563  $24,338   9.00%
  Taxable investment securities           126,829    7,532   5.94%     125,068    7,899   6.32%         107,279    6,292   5.87%
  Nontaxable investment securities (3)     24,581    2,130   8.67%      25,914    2,290   8.84%          23,760    2,202   9.27%
  Federal funds sold                       11,526      623   5.41%       6,895      402   5.83%          14,378      810   5.63%
  Other                                     4,840      269   5.56%       1,526       62   4.06%            -        -        -
                                          _______   ______   ____      _______  _______   ____          _______   ______   _____
     Total interest earning assets        507,971   39,779   7.83%     469,792   37,531   7.99%         415,980   33,642   8.01%
                                                    ______                       ______                           ______

Non-interest earning assets:
  Cash and due from banks                  17,730                       15,726                           15,381
  Premises and equipment, net              17,457                       13,498                           10,974
  Other                                    24,078                       20,525                           14,164
                                           ______                       ______                            _____
    Total assets                         $567,236                     $519,541                         $456,499
                                          =======                      =======                          =======


LIABILITIES & EQUITY
Interest bearing liabilities:
  Demand deposits                         $76,080    1,234   1.62%     $70,443    1,227   1.74%         $59,926    1,262   2.11%
  Savings deposits                         87,577    2,259   2.58%      83,761    2,202   2.63%          79,486    2,238   2.82%
  Time deposits                           270,863   14,736   5.44%     247,575   13,504   5.45%         217,752   11,910   5.47%
  Short-term borrowings                     6,295      303   4.81%       8,160      400   4.90%           6,280      336   5.35%
  Long-term obligations                     4,539      295   6.50%       2,021      117   5.79%           3,153      309   9.80%
                                          _______   ______   ____      _______   ______   ____          _______    _____   ____
    Total interest bearing liabilities    445,354   18,827   4.23%     411,960   17,450   4.24%         366,597   16,055   4.38%
                                                    ______                       ______                           ______


Non-interest bearing liabilities:
  Demand deposits                          63,783                       57,773                           50,088
  Other                                    12,396                        9,574                            5,157
Shareholders' equity                       45,703                       40,234                           34,657
                                          _______                      _______                          _______

    Total liabilities and equity         $567,236                     $519,541                         $456,499
                                          =======                      =======                          =======


Interest rate spread (4)                                     3.60%                        3.75%                            3.63%
Net interest income and
 Net interest margin (5)                           $20,952   4.12%              $20,081   4.28%                  $17,587   3.85%

</TABLE>


(1) Includes non-accrual loans
(2) Interest income includes related loan fee amounts which were immaterial.
(3) The average rate on nontaxable investment securities has been adjusted to a
    tax equivalent yield using a 34% tax rate.
(4) Interest  rate  spread  is  the  difference between earning asset yield and
    interest bearing liability rate.
(5) Net  interest  margin  is  net  interest  income divided by average earning
    assets.


II.  AVERAGE BALANCE SHEET ITEMS AND NET INTEREST DIFFERENTIAL
     ANALYSIS OF CHANGES IN INTEREST DIFFERENTIAL

<TABLE>
<CAPTION>

(Dollars in thousands)                                          December 31,1997 Increase(Decrease)

                                                                     AMOUNT              AMOUNT              AMOUNT
                                                   TOTAL          ATTRIBUTABLE        ATTRIBUTABLE        ATTRIBUTABLE
                                                   CHANGE           TO CHANGE           TO CHANGE           TO CHANGE
                                                  1996-1997         IN VOLUME            IN RATE           RATE/VOLUME
<S>                                               <C>                 <C>                 <C>                   <C>
ASSETS
Interest earning assets:
  Loans, net                                      $2,347              $2,581             ($217)                ($17)
  Taxable investment securities                     (183)                339              (506)                 (16)
  Non-taxable investment securities                 (161)               (144)              (18)                   1
  Federal funds sold                                 221                 270               (29)                 (20)
                                                   _____                _____             _____                ____
    Total interest income                          2,224                3,046             (770)                 (52)

LIABILITIES & EQUITY
Interest bearing liabilities:
  Demand deposits                                   (479)                  98             (535)                 (42)
  Savings deposits                                    57                  100              (42)                  (1)
  Time deposits                                    1,718                1,269              421                   28
  Short-term borrowings                              (97)                 (91)              (7)                   1
  Long-term obligations                              178                  146               14                   18
                                                   _____                _____             ____                  ___
    Total interest expense                         1,377                1,522             (149)                   4

Net interest income                                 $847               $1,524            ($621)                ($56)




                                                                 December 31, 1996 Increase(Decrease)

                                                                      AMOUNT              AMOUNT              AMOUNT
                                                 TOTAL             ATTRIBUTABLE        ATTRIBUTABLE        ATTRIBUTABLE
                                                CHANGE               TO CHANGE           TO CHANGE           TO CHANGE
                                              1995-1996              IN VOLUME            IN RATE           RATE/VOLUME
ASSETS
Interest earning assets:
  Loans, net                                      $2,540               $3,584           $(920)                $(124)
  Taxable investment securities                    2,602                1,075            1,277                  250
  Non-taxable investment securities               (1,291)                  56           (1,327)                 (20)
  Federal funds sold                                (408)                (421)              29                  (16)
                                                   _____                _____            _____                 ____
      Total interest income                        3,443                4,294             (941)                  90

LIABILITIES & EQUITY
Interest bearing liabilities:
  Demand deposits                                    (35)                 222             (222)                 (35)
  Savings deposits                                   (36)                 121             (151)                  (6)
  Time deposits                                    1,594                1,631              (44)                   7
  Short-term borrowed funds                           64                  101              (28)                  (9)
  Long-term obligations                             (192)                (111)            (126)                  45
                                                   _____                _____            _____                 ____
    Total interest expense                         1,395                1,964             (571)                   2

Net interest income                               $2,048               $2,330            ($370)                 $88
                                                    ====                =====            =====                 ====

     Average   loan   balances   include  nonaccrual  loans.  BancShares  earns
tax-exempt  interest  on  certain  loans  and  investment securities due to the
borrower  or  issuer being either a governmental agency or a quasi-governmental
agency.  Yields  related  to  loans and securities exempt from both federal and
state  income taxes, federal income taxes only, or state income taxes only, are
stated  on  a  taxable-equivalent basis assuming a statutory federal income tax
rate  of  34  percent  for  all periods.  The taxable equivalent adjustment was
$2,024, $740 and $477 for the years 1997, 1996 and 1995, respectively.



</TABLE>

III. INVESTMENT PORTFOLIO


The following table sets forth the carrying amount of investment securities
    (dollars in thousands):

<TABLE>
<CAPTION>

                                                                                           December 31,

                                                                                     1997      1996      1995
<S>                                                                                 <C>      <C>        <C>
          U.S. Treasury and U.S. Government agencies and corporations               $118,589 $108,592   $97,831
          States and political subdivisions                                           31,150   35,086    33,999
          Other                                                                       30,394   25,011    16,976
                                                                                      ______   ______    ______

              Total                                                                 $180,133 $168,689  $148,806
                                                                                     =======  =======   =======

</TABLE>

     The  following table sets forth the maturities of investment securities at
December 31, 1997  (dollars  in  thousands)  and the weighted average yields of
such  securities. (Note  that  nontaxable  investment  securities have not been
adjusted  to a tax equivalent basis and unrealized gain (loss) on available for
sale is not included.)

<TABLE>
<CAPTION>

                                                                              Maturing

                                                                After One But        After Five But
                                          Within One Year     Within Five Years     Within Ten Years      After Ten Years
                                          Amount    Yield     Amount      Yield     Amount     Yield      Amount    Yield
<S>                                       <C>      <C>        <C>         <C>       <C>       <C>         <C>      <C>
U.S. Treasury and other
  U.S. Government agencies (1)           $46,484    5.74%     $69,956      5.90%      -          -        $1,977    6.66%
States and political subdivisions          5,709    6.93%       7,973      6.98%     9,036     6.25%       7,906    5.41%
Other (2)                                  8,119    4.41%        -           -        -          -           100    6.75%
                                          ______    ____       ______      ____     ______     _____       _____    ____
                                         $60,312    5.68%     $77,929      6.01%    $9,036     6.25%      $9,983   5.67%
                                          ======               ======                =====                 ======
</TABLE>

(1) Mortgage-backed   securities  are  included  in  the  obligations  of  U.S.
    Government  agencies  and  spread  within  the  columns  according to their
    anticipated repayment schedules.

(2) The "Within  One  Year" column  of the "Other" category includes marketable
    equity  securities  held  by  BancShares.  Accordingly, the  yield on these
    securities  represents  anticipated  dividend  income  rather than interest
    income.


IV.  LOAN PORTFOLIO

Analysis of loans by type and maturity


     The table below classifies loans by major category (dollars in thousands):

<TABLE>
<CAPTION>                                                                                   December 31,
                                                                         1997       1996       1995        1994       1993
<S>                                                                     <C>        <C>        <C>         <C>        <C>
Commercial, financial, and agricultural                                 $84,281    $70,881    $57,398     $36,343    $23,672
Real Estate:
  Construction                                                            5,209      2,470      1,533       3,221      1,851
    Mortgage:
      One to four family residential                                    106,444    113,915    111,372     108,804    110,258
      Commercial                                                         58,056     52,686     43,580      41,090     45,470
      Equityline                                                         27,759     18,654     13,828      10,858      8,868
      Other                                                              27,868     21,615     20,535      17,261     16,464
Consumer                                                                 35,780     35,512     37,548      33,762     30,149
Lease Financing                                                           5,385      2,370      2,410       1,447       -
                                                                        _______    _______     ______      ______     ______
                                                                        350,782    318,103    288,204     252,786    236,732
Less: unearned income                                                    (1,429)      (348)      (244)       (175)      -
                                                                        _______    _______    _______     _______    _______
                                                                       $349,353   $317,755   $287,960    $252,611   $236,732
                                                                        =======    =======    =======     =======    =======

</TABLE>

The  following  table identifies the maturities of all loans as of December 31,
   1997  and  addresses  the  sensitivity of these loans to changes in interest
   rates.

<TABLE>
<CAPTION>



                                                               Within        After One Year But        After Five        Total
                                                              One Year       Within Five Years           Years

                                                               _________      ________________          _________      _________
<S>                                                             <C>                <C>                   <C>             <C>
Commercial and financial                                      $  28,593         $   43,692              $ 11,996      $   84,281
Real estate:
  Construction                                                    2,228              2,500                   481           5,209
    One to four family residential                               25,547             60,241                20,656         106,444
    Commercial                                                   12,772             32,594                12,690          58,056
    Equityline                                                    1,164              5,751                20,844          27,759
    Other                                                         9,407             14,303                 4,158          27,868
    Consumer                                                     24,091             11,069                   620          35,780
Lease Financing                                                     783              3,280                 1,322           5,385
                                                               _________         _________             _________        _________
        Total                                                  $104,585          $ 173,430              $ 72,767       $ 350,782
                                                               =========         =========             =========        =========
Fixed rate                                                    $  49,436          $ 129,593               $32,216        $211,245
Variable rate                                                    55,149             43,837                40,551         139,537
                                                               _________         _________             _________        _________
       Total                                                   $104,585          $ 173,430              $ 72,767       $ 350,782
                                                               =========         =========             =========        =========
</TABLE>

Non-accrual, past-due, and restructured loans


The  following  analysis identifies other real estate owned and loans that were
either  non-accruing,  past-due   or   restructured.  Loans  are  placed  on  a
non-accrual  basis  when  they  become  90 days past due and the ability of the
borrower to comply with the present terms is doubtful.

<TABLE>
<CAPTION>


                                                          December 31,

                                                       1997           1996           1995           1994           1993
<S>                                                    <C>            <C>            <C>          <C>             <C>
Non-accrual loans                                  $    230       $    147       $     50       $     77        $     44
Restructured loans                                       -               8             -             204             221
Accruing loans past-due 90 days or more                 466            343            508            234             183
                                                       _____         _____          _____          _____           _____
  Total non-performing loans                       $    696       $    498       $    558       $    515        $    448
Other real estate owned                                  48             -              86          1,339           1,020
                                                       _____         _____          _____          _____           _____
  Total non-performing loans and assets            $    744       $    498       $    644       $  1,854        $  1,468
                                                       =====         =====          =====          =====           =====

</TABLE>

     The  amount  of  interest  which  would  have  been  recorded  in  1997 on
non-accrual  loans  had  they  been  in  accordance  with  the  original  terms
throughout the period was immaterial.


V.  SUMMARY OF LOAN LOSS EXPERIENCE

Analysis of the allowance for loan losses:

     The  table  presented  below summarizes activity in the allowance for loan
losses for the five years ended (dollars in thousands):

<TABLE>
<CAPTION>

                                                                                           December 31,

                                                                           1997      1996      1995      1994      1993
<S>                                                                       <C>       <C>       <C>       <C>       <C>
Allowance for loan losses - beginning of year                            $ 6,163   $ 6,321   $ 6,653   $ 6,717   $ 3,553

Charge-offs:
  Commercial, financial, and agricultural                                     47         5        -         26        10
  Real estate:
    Construction                                                              -         -         -         -         -
      Mortgage:
        One to four residential                                               86       106        34        89       141
        Commercial                                                            -         -         -         -         -
        Equityline                                                            -         -         -         -         -
        Other                                                                 23        -        209        -        240
  Consumer                                                                   307       428       220       181       358
  Lease Financing                                                             -         -         -         -         -
                                                                            _____    _____     _____     _____     _____
     Total charge-offs                                                       463       539       463       296       749
                                                                            _____    _____     _____     _____     _____
Recoveries:
  Commercial, financial, and agricultural                                     13        -         54        29        74
  Real estate:
    Construction                                                              -         19        -         -         -
      Mortgage:
        One to four residential                                               59       131        19        27        48
        Commercial                                                            -         -         -         -         -
        Equityline                                                            -         -         -         15        -
        Other                                                                 -         -         -         20         8
  Consumer                                                                   139        91        58       141       126
  Lease Financing                                                             -         -         -         -         -
                                                                           _____     _____     _____     _____     _____
     Total recoveries                                                        211       241       131       232       256

Net charge-offs (recoveries)                                                 252       298       332        64       493
Additions charged to operations                                               60       140        -         -        300
Addition from Citizens Savings Bank                                           -         -         -         -      3,357
                                                                           _____     _____     _____     _____     _____
Allowance for loan losses - end of year                                  $ 5,971   $ 6,163   $ 6,321   $ 6,653   $ 6,717


                                                                         =======   =======   =======   =======   =======
Average loans outstanding during the year                               $340,195  $310,389  $270,563  $242,217  $191,360
                                                                         =======   =======   =======   =======   =======
Ratio of net charge-offs (recoveries) to average loans outstanding        0.07%     0.10%     0.12%     0.03%     0.26%

</TABLE>

     The  allowances  for loan  losses is increased by charges to the provision
for loan losses and reduced by loans charged off net of recoveries.  Southern's
provision  is  the  amount  necessary  to  maintain  the  allowance  at a level
considered  adequate  to provide for possible loan losses based on management's
internal   evaluation  of  the  loan  portfolio,  as  well  as  prevailing  and
anticipated economic conditions.


Allocation of the allowance for loan losses:

     The composition of the allowance by loan category shown in the table below
is  based upon management's evaluation of the loan portfolio, past history, and
prevailing economic conditions:

<TABLE>
<CAPTION>

                                                                    December 31,

                                 1997                 1996                 1995                 1994                1993
                                    % of loans           % of loans           % of loans           % of loans          % of loans
                                     in each             in each               in each              in each             in each
                                   category to          category to          category to          category to         category to
                           Amount  total loans  Amount  total loans  Amount  total loans  Amount  total loans  Amount total loans
<S>                        <C>        <C>       <C>        <C>       <C>        <C>        <C>      <C>         <C>      <C>
Commercial, financial
     and agricultural      $2,149      24%      $2,214      22%      $1,264      20%       $774      14%        $672      10%
Real estate:
  Construction                 60       1%          76       1%          63       1%        247       1%          53       1%
    Mortgage:
      1 to 4 residential    1,194      30%       1,245      36%       2,188      39%      2,813      43%       3,134      47%
      Commercial              537      17%         566      17%         853      15%      1,061      16%       1,284      19%
      Equityline              239       8%         204       6%         260       5%        277       4%         257       4%
      Other                   239       8%         248       6%         408       7%        460       8%         462       6%
Consumer                    1,493      10%       1,537      11%       1,222      13%      1,021      13%         855      13%
Lease Financing                60       2%          73       1%          63       -         -         1%          -        -
                            _____     ___        _____     ___        _____     ___       _____      ___       _____     ___
                           $5,971     100%      $6,163     100%      $6,321     100%     $6,653      100%     $6,717     100%
                            =====     ===        =====     ===        =====     ===       =====      ===       =====     ===

</TABLE>


VI.  DEPOSITS


     The average monthly volume of deposits, which is considered representative
of  BancShares'  operations, and  the  average  rates paid on such deposits are
presented below (dollars in thousands):

<TABLE>
<CAPTION>

                                               1997               1996                1995
                                        Average   Average   Average   Average   Average   Average
                                        Balances   Rates    Balances   Rates    Balances   Rates
<S>                                     <C>       <C>      <C>        <C>       <C>       <C>
Non-interest bearing demand             $63,783      -     $57,773       -      $50,088     -
Interest bearing demand                  76,080    0.98%    70,443     1.74%     59,926    2.11%
Savings                                  87,577    2.58%    83,761     2.63%     79,486    2.82%
Time deposits                           270,863    5.62%   247,575     5.45%    217,752    5.47%
                                        _______            _______              ______
   Total deposits                      $498,303           $459,552             $407,252
                                        =======            =======              ======
</TABLE>


     Maturities of $100,000 or more time certificates of deposit at December
31, 1997 are summarized as follows (dollars in thousands):

<TABLE>
<CATEGORY>

Maturity Category
<S>                                              <C>
Three months or less                             $20,339
Over three through six months                     10,430
Over six months through twelve months             14,720
Over one year through five years                   7,269
Over five years                                      246
                                                 _______
                                                 $53,004
                                                 =======

</TABLE>

VII.  RETURN ON EQUITY AND ASSETS

The following table presents certain ratios of the Company:

<TABLE>
<CAPTION>                                                                          December 31,

                                                                           1997       1996       1995
<S>                                                                      <C>        <C>        <C>
Return on assets (net income divided by average total assets)              1.17%      0.84%      0.86%

Return on equity - including Series B and C preferred
  (net income divided by average total equity)                            14.47%     10.85%     11.29%

Dividend payout ratio
   (Dividends paid divided by net income)                                  8.85%     13.45%     13.57%

Equity to assets ratio - including Series B and C preferred
   (Average equity divided by average total assets)                        8.06%      7.74%      7.59%

</TABLE>

VIII.  CAPITAL ADEQUACY

The  following  table  presents certain calculations of BancShares' capital and
related ratios:

<TABLE>
<CAPTION>

                                                     December  31,
(Dollars in thousands)
                                               1997       1996        1995
<S>                                          <C>        <C>         <C>
 Total Shareholders' Equity                  $54,984    $44,778     $37,163
 Leverage Capital                             34,380     27,891      23,369
 Tier I Capital                               34,380     27,891      23,369
 Total Capital                                38,449     31,861      26,831

 Leverage Capital Ratio (1)                    6.07%      5.46%       5.60%
 Tier I Capital Ratio                         11.43%      9.33%       8.87%
 Total Capital Ratio (2)                      12.78%     10.66%      10.19%

 </TABLE>

(1) Bank  holding  companies  operating  at the 3% minimum are expected to have
    well  diversified  risk  profiles, including  no  undue interest rate risk,
    excellent  asset  quality, high liquidity and strong earnings. Bank holding
    companies  not  meeting  these  requirements  are  expected  to  maintain a
    leverage  ratio  somewhat  higher  than  the  3%  minimum applicable to the
    highest rated companies.

(2) The  minimum  ratio  of qualifying total capital to risk weighted assets is
    8%, of  which  4%  must be Tier 1 capital, which is common equity, retained
    earnings, and  a  limited amount of perpetual preferred stock, less certain
    intangibles.


IX.  RATE OF INTERNAL CAPITAL GENERATION

<TABLE>
<CAPTION>

                                                                    December  31,

                                                                   1997      1996       1995
<S>                                                             <C>       <C>        <C>
Return on average assets (based on net income)                    1.17%     0.84%      0.86%

Average equity as a percentage of total average assets            8.06%     7.74%      7.59%

Return on average equity                                         14.47%    10.85%     11.29%

Dividend payout ratio                                             8.85%    13.45%     13.57%
   (Dividends paid divided by net income)

Earnings retention                                               91.15%    86.55%     86.43%
   (Net income less dividends divided by net income)

Rate of internal capital generation                              13.19%     9.39%      9.76%
   (Return on average equity ratio times earnings
    retention ratio)

</TABLE>


X.  INTEREST RATE SENSITIVITY ANALYSIS

<TABLE>
<CAPTION>

(Dollars in Thousands)


                                                                                  December 31, 1997
                                                                                                           Non-Rate
                                                    1-30          31-90         91-180         181-365     Sensitive
                                                    Days           Days          Days            Days       & Over
                                                  Sensitive      Sensitive     Sensitive       Sensitive    1 Year        Total
<S>                                                <C>            <C>            <C>            <C>        <C>           <C>
Earning Assets:
Loans, net of unearned income                      $82,232        $68,584        $16,151        $28,290    $154,096      $349,353
Investment Securities                               38,654         16,178          5,249         26,869      93,183       180,133
Temporary Investments                               10,240           -              -              -           -           10,240
Other                                                 -             5,200           -              -           -            5,200
                                                   _______         ______         ______         ______     _______       _______
Total interest earning assets                     $131,126        $89,962        $21,400        $55,159    $247,279      $544,926
                                                   =======         ======         ======         ======     =======       =======


Interest-Bearing Liabilities:
Savings and core time deposits                    $200,515        $39,330        $50,300        $60,382     $43,232      $393,759
Time deposits of $100,000 and more                   9,579         10,760         10,430         14,720       7,515        53,004
Short-term borrowing                                 6,826            -              -              -           -           6,826
Long-term obligations                                  -            4,750            -              -           -           4,750
                                                   _______         ______         ______         ______     _______       _______
Total interest bearing liabilites                 $216,920        $54,840        $60,730        $75,102     $50,747      $458,339
                                                   =======         ======         ======         ======     =======       =======
Interest sensitive Gap                            $(85,794)       $35,122       $(39,330)      $(19,943)   $196,532      $ 86,587
                                                   =======         ======         ======         ======     =======       =======
</TABLE>

Interest  sensitivity  is  continually  changing.   The  table  above  reflects
Bancshares'  gap  position  at  December  31, 1997  and  does  not  necessarily
represent its position on any other dates.


XI.  SHORT-TERM BORROWINGS

<TABLE>
<CAPTION>

                                                           (Dollars in Thousands)
                                                        1997                    1996
                                                  Amount    Rate           Amount    Rate
<S>                                               <C>      <C>             <C>      <C>
Repurchase Agreements
          At December 31                          $4,761    5.62%          $3,838    6.71%
          Average during year                      4,819    4.18%           2,934    4.04%
          Maximum month-end balance during year    5,929                    4,507

U.S. Treasury tax and loan accounts
          At December 31                          $2,065     5.25%         $1,226    5.15%
          Average during year                        997     5.85%          1,052    5.09%
          Maximum month-end balance during year    2,215                    1,300

</TABLE>

ITEM 2 - PROPERTIES

     BancShares  does not own or  lease  any  real  property.  Except  for four
tracts  of  land  that  are  leased  and  upon  which are constructed leasehold
improvements  for the conduct of its banking business, Southern owns all of the
real property utilized in its operations.

     Southern's  home  office  is located at 121 East Main Street, Mount Olive,
North Carolina.  At  December 31, 1997  there were 42 Southern offices in North
Carolina.  These offices are listed in BancShares' 1997 Annual Report.

ITEM 3 - LEGAL PROCEEDINGS:

     There  are  no  material  legal  proceedings  to  which  BancShares or its
subsidiaries  are  a  party or to which any of their property is subject, other
than  ordinary, routine  litigation  incidental  to  the business of commercial
banking.

ITEM 4 -  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS:

          None.
<PAGE>

PART II

ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
         MATTERS:

         Information  is  included  on  page 15 of the Registrant's 1997 Annual
Report in Exhibit 13 incorporated herein by reference.

ITEM 6 - SELECTED FINANCIAL DATA:

         Information  is  included  in  table  1, Five-Year  Financial Summary,
Selected  Balances  and Ratios, on page 4 of Registrant's 1997 Annual Report in
Exhibit number 13 incorporated herein by reference.

<PAGE>

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS:

         Information  is  included  on pages  4 through 16 of Registrant's 1997
Annual Report in Exhibit number 13 incorporated herein by reference.

Item 7A. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK:

         Information  is  included  under the section "Market Risk" on pages 11
and 12 of the Registrant's 1997 Annual Report in Exhibit number 13 incorporated
herein by reference.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:

         The  following  financial  statements and independent auditors' report
are  incorporated  herein  by  reference, on the page numbers indicated, in the
1997  Annual  Report  of  Southern  BancShares (N.C.), Inc. included in exhibit
number 13 herein.

         Independent Auditors' Report                                      17

         Consolidated Balance Sheets as of December 31, 1997 and 1996      18

         Consolidated Statements of Income for the years ended
         December 31, 1997, 1996 and 1995                                  19

         Consolidated Statements of Cash Flows for the years ended
         December 31, 1997, 1996 and 1995                                  20

         Consolidated Statements of Changes in Shareholders' Equity
         for the years ended December 31, 1997, 1996 and 1995              21

         Notes To Consolidated Financial Statements                     22-38


ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURES:

         None

<PAGE>

PART III

ITEM 10 -  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:

     The  information  under  the  captions "PROPOSAL 1: ELECTION OF DIRECTORS"
and  "Executive  Officers"  on  pages  5  through  7 and page 9 of Registrant's
definitive  Proxy  Statement  dated  March  20, 1998, is incorporated herein by
reference.

ITEM 11 - EXECUTIVE COMPENSATION:

     The   information   under   the   captions  "Compensation  of  Directors",
"Compensation  Committee  Interlocks  and  Insider  Participation",  "Committee
Report  on  Executive Compensation", "Pension Plan", and "Employment Contracts,
Termination  of  Employment  and  Change-in-Control  Arrangements"  on  pages 7
through  9  and  page  11  of the Registrant's definitive Proxy Statement dated
March 20, 1998, is incorporated herein by reference.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:

     The   information   under   the  captions  "PRINCIPAL  HOLDERS  OF  VOTING
SECURITIES"  and  "OWNERSHIP  OF  VOTING  SECURITIES  BY MANAGEMENT" on pages 2
through  5  of  the  Registrant's  definitive  Proxy Statement  dated March 20,
1998, is incorporated herein by reference.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:

     The  information  contained  in "Transactions with Management" on pages 12
through 13 of the Registrant's definitive Proxy Statement dated March 20, 1998,
is incorporated herein by reference.


PART IV

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS  ON FORM 8-K:

     (a) 1. Financial Statements

            The   following   consolidated  financial  statements  of  Southern
            BancShares (N.C.), Inc. and  subsidiary, and  Independent Auditors'
            Report  thereon,   are   incorporated   herein  by  reference  from
            Registrant's 1997 Annual Report to Shareholders.

            .  Independent Auditors' Report

            .  Consolidated Balance Sheets at December 31, 1997 and 1996

            .  Consolidated  Statements  of Income for the years ended December
               31, 1997, 1996 and 1995

            .  Consolidated  Statements  of  Cash  Flows  for  the  years ended
               December 31, 1997, 1996 and 1995

            .  Consolidated  Statements  of Changes in Shareholders' equity for
               the years ended December 31, 1997, 1996 and 1995

            .  Notes to Consolidated Financial Statements

         2.  Financial  statement  schedules are omitted because of the absence
             of  conditions  under  which  they  are  required  or  because the
             required  information  is  contained in the consolidated financial
             statements  or related notes thereto which are incorporated herein
             by reference from Registrant's 1997 Annual Report to Shareholders.

         3.  Exhibits

             The  following exhibits are filed or incorporated herewith as part
             of this report on Form 10-K:


            Exhibit                        Description of Exhibits
            Number

            3.1        Certificate   of   Incorporation   and   Certificate  of
                       Amendment  to  the  Certificate of  Incorporation of the
                       Registrant (filed as exhibits 3.1, and 3.2 respectively,
                       to  Amendment  No. 1  to  the  Registrant's Registration
                       Statement  on  Form S-4  (No. 33-8581) filed October 20,
                       1986 and incorporated  herein  by reference)

            3.2        Registrant's  Bylaws  (filed  as   Exhibit   3.  to  the
                       Registrant's   1992  Annual  Report  on  Form  10-K  and
                       incorporated herein by reference)

            4          Southern Bank and Trust Company Indenture dated February
                       27, 1971   (filed  as  exhibit  4  to  the  Registrant's
                       Registration  Statement on Form S-14 (No. 2-78327) filed
                       July 7, 1982 and incorporated herein by reference)

            10.1*      Non-Competition  and  Consulting Agreement between R. S.
                       Williams  and  Southern Bank and Trust Company (filed as
                       exhibit  10.1  to the Registrant's 1989 Annual Report on
                       Form 10-K and incorporated herein by reference)

            10.2*      Eighth   Amendment   to  Noncompetition  and  Consulting
                       Agreement  between  R. S. Williams and Southern Bank and
                       Trust Company (filed herewith)

            10.3*      Assignment  and Assumption Agreement and First Amendment
                       of  Noncompetition  and  Consultation  Agreement between
                       First-Citizens  Bank  & Trust Company, Southern Bank and
                       Trust  Company and M. J. McSorley (filed as exhibit 10.3
                       to  the Registrant's 1989 Annual Report on Form 10-K and
                       incorporated herein by reference)

            13         Registrant's  1997  Annual Report to Shareholders (filed
                       herewith)

            22         Subsidiaries of the Registrant (filed herewith)

            99.1**     Registrant's  definitive Proxy Statement dated March 20,
                       1998 for the 1998 Annual Shareholders' Meeting





     (b)    Reports on Form 8-K


            No  reports  on  Form  8-K were filed for the fourth quarter of the
            year ended December 31, 1997.

 *     Denotes  a  Management  Contract  or compensatory plan or arrangement in
       which an executive officer or director of the Company participates

 **    Not being refiled



     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.


DATED:  MARCH 19, 1998 SOUTHERN  BANCSHARES  (N.C.),  INC.
                         /s/ R. S. Williams
                    By:  ____________________________________________________
                         R. S. Williams, Chairman of  the Board


     Pursuant  to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.



Signature                   Title                 Date


/s/R. S. Williams      Chairman of the Board of    March 20, 1998
R. S. Williams         Directors

/s/David A. Bean      Treasurer (principal         March 19, 1998
David A. Bean         financial and accounting
                      officer)

/s/Bynum R. Brown           Director               March 23, 1998
Bynum R. Brown

/s/William H. Bryan         Director               March 25, 1998
William H. Bryan

/s/D. Hugh Carlton          Director               March 23, 1998
D. Hugh Carlton

/s/Robert J. Carroll        Director               March 20, 1998
Robert J. Carroll

/s/Hope H. Connell          Director               March 20, 1998
Hope H. Connell

/s/J. Edwin Drew            Director               March 23, 1998
J. Edwin Drew

/s/Moses B. Gillam, Jr      Director               March 26, 1998
Moses B. Gillam, Jr.

/s/Leroy C. Hand, Jr.       Director               March 23, 1998
LeRoy C. Hand, Jr.

/s/Frank B. Holding         Director               March 19, 1998
Frank B. Holding

/s/M. J. McSorley           Director               March 23, 1998
M. J. McSorley

/s/W. B. Midyette, Jr.      Director               March 23, 1998
W. B. Midyette, Jr.

/s/W. Hunter Morgan         Director               March 23, 1998
W. Hunter Morgan

/s/Charles I. Pierce        Director               March 26, 1998
Charles I. Pierce, Sr.

/s/W. A. Potts              Director               March 24, 1998
W. A. Potts

/s/Charles L. Revelle, Jr.  Director               March 23, 1998
Charles L. Revelle, Jr.

/s/ Charles O. Sykes        Director               March 25, 1998
Charles O. Sykes

/s/John N. Walker           Director               March 23, 1998
John N. Walker