SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                    FORM 10-Q

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

For the quarter ended March 31, 2000                 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  Mount Olive, North Carolina               28365
( Address of Principal Executive offices)                     (Zip Code)

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


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 the number of shares outstanding of the Registrant's common stock as of
the close of the period covered by this report.    118,526 shares

<PAGE>
<TABLE>
<CAPTION>
                                                                             (Unaudited)
SOUTHERN BANCSHARES (N.C.), INC. AND SUBSIDIARIES                              March 31,    December 31,
CONSOLIDATED BALANCE SHEETS                                                      2000           1999
                                                                               ---------     ---------
(Dollars in thousands except per share data)

<S>                                                                            <C>           <C>
ASSETS

Cash and due from banks ...................................................    $  26,918     $  28,524
Federal funds sold ........................................................       13,375        20,370
Investment securities:
     Available-for-sale, at fair value (amortized cost
     $82,941 and $83,095, respectively) ...................................       91,970        94,084
     Held-to-maturity,  at amortized cost (fair value
     $115,923 and $99,979, respectively) ..................................      116,356       100,129
Loans .....................................................................      405,680       398,060
     Less allowance for loan losses .......................................       (6,184)       (6,188)
                                                                               ---------     ---------
Net loans .................................................................      399,496       391,872
Premises and equipment ....................................................       21,479        21,257
Intangible assets .........................................................        6,441         6,411
Accrued interest receivable ...............................................        5,215         4,730
Other assets ..............................................................        1,792         1,855
                                                                               ---------     ---------
              Total assets ................................................    $ 683,042     $ 669,232
                                                                               =========     =========

LIABILITIES
Deposits:

     Noninterest-bearing ..................................................    $  94,306     $  89,181
     Interest-bearing .....................................................      498,930       489,069
                                                                               ---------     ---------
Total deposits ............................................................      593,236       578,250
Short-term borrowings .....................................................        6,667         6,658
Long-term obligations .....................................................       23,000        23,000
Accrued interest payable ..................................................        4,430         4,471
Other liabilities .........................................................        1,799         1,909
                                                                               ---------     ---------
          Total liabilities ...............................................      629,132       614,288
                                                                               ---------     ---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                            <C>           <C>
SHAREHOLDERS' EQUITY

SeriesB   non-cumulative   preferred   stock,  no  par  value;
      408,728  shares authorized; 397,170 and 397,370 shares issued
      and outstanding at March 31, 2000 and December 31, 1999, respectively        1,934         1,936
Series  C  non-cumulative preferred stock, no par value; 43,631 shares
      authorized;  39,825 shares issued and outstanding at March 31, 2000
      and December 31, 1999, respectively .................................          555           555
Common  stock,  $5  par  value;  158,485  shares authorized; 118,526 and
      118,912 shares issued and outstanding at March 31, 2000 and December
      31, 1999, respectively ..............................................          593           595
Surplus ...................................................................       10,000        10,000
Retained earnings .........................................................       34,900        34,606
Accumulated other comprehensive income ....................................        5,928         7,252
                                                                               ---------     ---------
        Total shareholders' equity ........................................       53,910        54,944
                                                                               ---------     ---------

              Total liabilities and shareholders' equity ..................    $ 683,042      $ 669,232
                                                                               =========      =========
</TABLE>
The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

<PAGE>
<TABLE>
<CAPTION>
SOUTHERN BANCSHARES (N.C.), INC. AND SUBSIDIARIES                                   (Unaudited)
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME                 Three Months Ended March 31,
                                                                                2000          1999
                                                                             ---------      ---------
(Dollars in thousands except share and per share data)
<S>                                                                          <C>            <C>
Interest income:
      Loans ............................................................     $   8,434      $   7,439
      Investment securities:
          U. S. Government .............................................         1,958          1,891
          State, county and municipal ..................................           478            434
          Other ........................................................           156            186
                                                                             ---------      ---------
               Total investment securities interest income .............         2,592          2,511
      Federal funds sold ...............................................           310            277
                                                                             ---------      ---------
                       Total interest income ...........................        11,336         10,227

Interest expense:
       Deposits ........................................................         4,738          4,378
       Short-term borrowings ...........................................            63             48
       Long-term obligations ...........................................           517            517
                                                                             ---------      ---------
                 Total interest expense ................................         5,318          4,943
                                                                             ---------      ---------
                     Net interest income ...............................         6,018          5,284
      Provision for loan losses ........................................            75             60
                                                                             ---------      ---------
                     Net interest income after provision for loan losses         5,943          5,224

Noninterest income:
     Service charges on deposit accounts ...............................           862            807
     Investment securities (losses) gains, net .........................          (843)             1
     Other service charges and fees ....................................           285            247
     Gain on sale of other real estate .................................            82           --
     Credit card merchant discount .....................................            72             28
     Gain (loss) on sale of loans ......................................            (2)           (40)
     Other .............................................................            28             66
                                                                             ---------      ---------
           Total noninterest income ....................................           484          1,109

Noninterest expense:
      Personnel ........................................................         2,823          2,733
      Data processing ..................................................           479            492
      Intangibles amortization .........................................           457            610
      Occupancy ........................................................           495            382
      Furniture and equipment ..........................................           382            358
      Professional fees ................................................           229            164
      Other ............................................................           927            662
                                                                             ---------      ---------
             Total noninterest expense .................................         5,792          5,401
                                                                             ---------      ---------
Income before income taxes .............................................           635            932
Income taxes ...........................................................           130            240
                                                                             ---------      ---------
                       Net income ......................................           505            692
                                                                             ---------      ---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                          <C>            <C>
Other comprehensive income (loss) net of tax:
   Unrealized (losses) gains arising during period .....................        (1,880)        (2,069)
      Less: reclassification adjustment for gains included in net income          (556)          --
                                                                             ---------      ---------
         Other comprehensive (loss) income .............................     $  (1,324)     $  (2,069)
                                                                             ---------      ---------
            Comprehensive income (loss) ................................     $    (819)     $  (1,377)
                                                                             =========      =========
Per share information:

   Net income per common share .........................................     $    3.44      $    4.99
   Cash dividends declared on common shares ............................          0.38           0.38
   Weighted average common shares outstanding ..........................       118,773        119,250
                                                                             =========      =========

</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
<PAGE>
<TABLE>
<CAPTION>
SOUTHERN BANCSHARES  (N.C.), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999

(Dollars in thousands except per share data)
(Unaudited)

                                           Preferred Stock          Common  Stock
                                          -----------------      -----------------
                                               Series B               Series C
                                          ------------------     -----------------                                      Retained
                                           Shares     Amount     Shares     Amount   Shares      Amount    Surplus      Earnings
                                           ------     ------     ------     ------   ------      ------    -------      --------
<S>                                        <C>        <C>        <C>         <C>     <C>          <C>       <C>          <C>
Balance, December 31, 1998                 398,653    $1,942     40,373      $562    119,266      $596      $10,000      $31,571
Net income                                                                                                                   692
Retirement of stock                                                                      (80)                                (14)
Cash dividends:
  Common stock ($.38 per share)                                                                                              (45)
  Preferred   B   ($.22   per   share)                                                                                       (88)
  Preferred   C    ($.22  per   share)                                                                                        (9)
Unrealized loss on securities
  available-for-sale, net of tax
                                           -------    ------     ------      ----    -------      ----      -------      -------
Balance, March 31, 1999                    398,653    $1,942     40,373      $562    119,186      $596      $10,000      $32,107
                                           =======    ======     ======      ====    =======      ====      =======      =======

Balance, December 31, 1999                 397,370    $1,936     39,825      $555    118,912      $595      $10,000      $34,606
Net income                                                                                                                   505
Retirement of stock                           (200)       (2)                           (386)       (2)                      (70)
Cash dividends:
  Common stock ($.38 per share)                                                                                              (45)
  Preferred   B   ($.22   per   share)                                                                                       (87)
  Preferred   C    ($.22  per   share)                                                                                        (9)
Unrealized loss on securities
  available-for-sale, net of tax
                                           -------    ------     ------      ----    -------      ----      -------      -------
Balance, March 31, 2000                    397,170    $1,934     39,825      $555    118,526      $593      $10,000      $34,900
                                           =======    ======     ======      ====    =======      ====      =======      =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                            Compre-            Total
                                            hensive        Shareholders'
                                             Income           Equity
                                             ------           ------
<S>                                          <C>               <C>
Balance, December 31, 1998                   $11,362           $56,033
Net income                                                         692
Retirement of stock                                                (14)
Cash dividends:
  Common stock ($.38 per share)                                    (45)
  Preferred   B   ($.22   per   share)                             (88)
  Preferred   C    ($.22  per   share)                              (9)
Unrealized loss on securities
  available-for-sale, net of tax              (2,069)           (2,069)
                                           ----------   ---------------
Balance, March 31, 1999                       $9,293           $54,500
                                           ==========   ===============

Balance, December 31, 1999                    $7,252           $54,944
Net income                                                         505
Retirement of stock                                                (74)
Cash dividends:
  Common stock ($.38 per share)                                    (45)
  Preferred   B   ($.22   per   share)                             (87)
  Preferred   C    ($.22  per   share)                              (9)
Unrealized loss on securities
  available-for-sale, net of tax              (1,324)           (1,324)
                                           ----------   ---------------
Balance, March 31, 2000                       $5,928           $53,910
                                           ==========   ===============

</TABLE>
The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
<PAGE>
<TABLE>
<CAPTION>
SOUTHERN BANCSHARES (N.C.), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                      (Unaudited)
(In thousands)                                                                Three Months ended March 31,
(Unaudited)                                                                       2000           1999
                                                                                --------      ---------
<S>                                                                             <C>           <C>
OPERATING ACTIVITIES:

Net income ................................................................     $    505      $    692
Adjustments to reconcile net income to net cash
      provided by operating activities:
            Provision for loan losses .....................................           75            60
            Losses (gains) on sales and issuer calls of securities ........          843            (1)
            Loss on sale and abandonment of premises and equipment ........            8             2
            Net accretion on discounts on investments .....................          (17)          (20)
            Amortization of intangibles ...................................          502           610
            Depreciation ..................................................          413           362
            Net increase in accrued interest receivable ...................         (485)         (297)
            Net decrease in accrued interest payable ......................          (41)         (918)
            Net decrease (increase) in other assets .......................           63           (70)
            Net increase (decrease) in other liabilities ..................         (117)          256
                                                                                --------      --------

NET CASH PROVIDED BY OPERATING ACTIVITIES .................................        1,749           676
                                                                                --------      --------

INVESTING ACTIVITIES:
      Proceeds from maturities and issuer calls of investment
          securities available-for-sale ...................................        6,598         6,090
      Proceeds from maturities and issuer calls of investment
          securities held-to-maturity .....................................       15,228        11,196
      Purchases of investment securities held-to-maturity .................      (33,089)       (6,967)
      Purchases of investment securities available-for-sale ...............       (5,000)      (15,678)
      Net cash received for branches acquired .............................        5,157          --
      Net decrease (increase) in loans ....................................       (6,364)          620
      Purchases of fixed assets ...........................................         (543)         (651)
                                                                                --------      --------

NET CASH USED IN INVESTING ACTIVITIES .....................................      (18,013)       (5,390)
                                                                                --------      --------
FINANCING ACTIVITIES:
     Net increase (decrease) in demand and interest-bearing demand deposits        2,470        (9,631)
     Net increase in time deposits ........................................        5,399         2,106
     Net proceeds of short-term borrowed funds ............................            9           294
     Cash dividends paid ..................................................         (141)         (142)
     Purchase and retirement of stock .....................................          (74)          (14)
                                                                                --------      --------

NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES ..........................        7,663        (7,387)
                                                                                --------      --------

NET DECREASE IN CASH AND CASH EQUIVALENTS .................................     $ (8,601)     $(12,101)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR ........................       48,894        56,954
                                                                                --------      --------

CASH AND CASH EQUIVALENTS AT THE END OF PERIOD ............................     $ 40,293      $ 44,853
                                                                                ========      ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                             <C>           <C>
SUPPLEMENTAL DISCLOSURES OF CASH PAID DURING THE PERIOD FOR:
     Interest .............................................................     $  5,360      $  5,861
     Income taxes .........................................................     $    233      $    145
                                                                                ========      ========

</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

<PAGE>
SOUTHERN  BANCSHARES (N. C.), INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Note 1. Summary Of Significant Accounting Policies

Basis of Financial Statement Presentation

Southern  BancShares  (N. C.), Inc.  ("BancShares")  is the holding  company for
Southern Bank and Trust Company ("Southern"),  which operates 46 banking offices
in eastern  North  Carolina,  and  Southern  Capital  Trust I (the  "Trust"),  a
statutory  business trust that issued $23.0 million of 8.25% Capital  Securities
("the Capital Securities") in June 1998 maturing in 2028. Southern,  which began
operations January 29, 1901, 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.  BancShares  and  Southern  are
headquartered in Mount Olive, North Carolina.

The  consolidated  financial  statements  in this report are  unaudited.  In the
opinion of  management,  all  adjustments  (none of which were other than normal
accruals)  necessary  for a fair  presentation  of the  financial  position  and
results of operations for the periods presented have been included.

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  liabilities at the date of the financial statements and the reported
amounts of revenues and expenses  during the reporting  period.  Actual  results
could differ from those estimates.  The statements should be read in conjunction
with the consolidated  financial  statements and accompanying notes for the year
ended December 31, 1999,  incorporated by reference in the 1999 Annual Report on
Form 10-K.

Principles Of Consolidation

The consolidated financial statements include the accounts of BancShares and its
wholly-owned  subsidiaries,  Southern and the Trust. The statements also include
the accounts of Goshen, Inc., a wholly-owned subsidiary of Southern. BancShares'
financial  resources  are primarily  provided by dividends  from  Southern.  All
significant intercompany balances have been eliminated in consolidation.

Cash And Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash and
due from banks and federal funds sold.  Federal funds are purchased and sold for
one day periods.

Reclassifications

Certain prior period  balances have been  reclassified to conform to the current
period  presentation.  Such  reclassifications  had no effect  on net  income or
shareholders' equity as previously reported.
<PAGE>
Note 2. Investment securities
<TABLE>
<CAPTION>
                                                      March  31, 2000                               December 31, 1999
                                                        (Unaudited)

                                      -----------------------------------------------  ---------------------------------------------
(In thousands)                                       Gross       Gross     Estimated                 Gross       Gross     Estimated
                                      Amortized   Unrealized   Unrealized      Fair    Amortized  Unrealized  Unrealized      Fair
                                         Cost        Gains       Losses       Value       Cost       Gains      Losses        Value
                                      --------     -------     -------       --------   --------   -------    -------     --------
<S>                                    <C>         <C>         <C>            <C>        <C>       <C>         <C>        <C>
 SECURITIES HELD-TO-MATURITY:
      U.  S. Government                $79,969           -        (671)       $79,298    $80,298        12      ($499)     $79,811
      Obligations of states
          and political subdivisions    36,287         323         (81)        36,529     19,731       347         (6)      20,072
      Corporate debenture                  100           -          (4)            96        100         -         (4)          96
                                      --------     -------     -------       --------   --------   -------    -------     --------
                                       116,356         323        (756)       115,923    100,129       359       (509)      99,979
                                      --------     -------     -------       --------   --------   -------    -------     --------

 SECURITIES AVAILABLE-FOR-SALE:

      U.  S. Government                 57,967           -        (626)        57,341     57,968         -       (551)      57,417
      Marketable equity securities      15,338       9,735        (196)        24,877     10,262    12,559     (1,112)      21,709
      Obligations of states
         and political subdivisions      8,342         182         (43)         8,481     13,472       178        (72)      13,578
     Mortgage-backed securities          1,294          13         (36)         1,271      1,393        14        (27)       1,380
                                      --------     -------     -------       --------   --------   -------    -------     --------
                                        82,941       9,930        (901)        91,970     83,095    12,751     (1,762)      94,084
                                      --------     -------     -------       --------   --------   -------    -------     --------
             Totals                   $199,297     $10,253     $(1,657)      $207,893   $183,224   $13,110    $(2,271)    $194,063
                                      ========     =======     =======       ========   ========   =======    =======     ========

</TABLE>

During the three months ended March 31, 2000,  management of BancShares reviewed
its  portfolio of  securities  available-for-sale  and  determined  that certain
marketable  equity securities had declines in their value that were deemed to be
other than temporary.  Accordingly,  BancShares recorded a charge of $855,000 to
investment securities gains (losses) in the accompanying  consolidated statement
of income and comprehensive income for the three months ended March 31, 2000 for
this  amount  and  reduced  the  carrying  amount  of  the  related  investments
accordingly. There can be no certainty that future charges to earnings for other
than  temporary  declines  in the fair  values  of  these  or  other  investment
securities will not be required.
<PAGE>
Note 3.  LOANS
<TABLE>
<CAPTION>
                                                        (Unuadited)
      (Dollars in thousands)                              March 31,   December 31,
                                                             2000          1999
                                                          --------      --------
<S>                                                       <C>           <C>
Commercial, financial and agricultural .............      $101,855      $101,128
Real estate:
      Construction .................................        11,186         8,647
Mortgage:
            One to four family residential .........       106,421       111,793
            Commercial .............................        84,774        74,873
            Equity line ............................        29,964        30,152
            Other ..................................        32,500        32,851
Consumer ...........................................        34,115        34,309
Lease financing ....................................         4,865         4,307
                                                          --------      --------
      Total loans ..................................      $405,680      $398,060
                                                          ========      ========
Loans held for sale ................................      $  6,508      $  3,508
Loans serviced for others ..........................      $178,316      $180,345

</TABLE>
Note 4.  ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>

      (Dollars in thousands)                                 (Unaudited)
                                                    Three Months Ended March 31,
                                                    ----------------------------
                                                        2000              1999
                                                      -------           --------
<S>                                                   <C>               <C>
Balance at beginning of year ...............          $ 6,188           $ 5,962
  Provision for loan losses ................               75                60
  Loans charged off ........................             (101)             (186)
  Loan recoveries ..........................               22                62
                                                      -------           -------
Balance at end of the period ...............          $ 6,184           $ 5,898
                                                      =======           =======
</TABLE>

Note 5. Earnings Per Common Share

Earnings per common share are computed by dividing  income  applicable to common
shares by the weighted  average number of common shares  outstanding  during the
period.  Income  applicable to common shares  represents  net income  reduced by
dividends paid to preferred  shareholders.  Since  BancShares had no potentially
dilutive  securities  during 2000 or 1999, the  computation of basic and diluted
earnings per share is the same.
<PAGE>
<TABLE>
<CAPTION>
Note 5. EARNINGS PER COMMON SHARE                             (Unaudited)
      (Dollars in thousands)                          Three Months Ended March 31,
                                                      ----------------------------
                                                        2000             1999
                                                      ----------      ---------
<S>                                                   <C>             <C>
Net income .....................................      $     505       $     692
  Less: Preferred dividends ....................            (96)            (97)
                                                      ---------       ---------
Net income applicable to common shares .........      $     409       $     595
                                                      =========       =========

Weighted average common shares
  outstanding during the period ................        118,773         119,250
                                                      =========       =========
</TABLE>

Note 6. Related Parties

BancShares has entered into various service  contracts with another bank holding
company  (the  "Corporation")  and  its  subsidiary.  The  Corporation  has  two
significant shareholders, who also are significant shareholders of BancShares.

The first significant  shareholder is a director of BancShares and, at March 31,
2000,  beneficially  owned 32,294 shares, or 27.22%, of BancShares'  outstanding
common stock and 22,171 shares,  or 5.58%, of BancShares'  outstanding  Series B
preferred  stock.  At  the  same  date,  the  second   significant   shareholder
beneficially  owned 27,577 shares, or 23.25%, of BancShares'  outstanding common
stock, and 17,205 shares, or 4.33%, of BancShares' Series B preferred stock. The
above  totals  include  17,205  Series B preferred  shares,  or 4.33%,  that are
considered to be beneficially owned by both of the shareholders and,  therefore,
are included in each of their totals.

These two significant  shareholders are directors and executive  officers of the
Corporation  and at March 31, 2000,  beneficially  owned  2,533,689  shares,  or
28.63%, and 1,491,324 shares, or 16.87%, of the Corporation's  outstanding Class
A common stock, and 644,631 shares, or 37.47%, and 194,497 shares, or 11.31%, of
the  Corporation's  outstanding  Class B common stock.  The above totals include
487,557 Class A common shares,  or 5.51%, and 104,644 Class B Common shares,  or
6.08 %, that are considered to be beneficially owned by both of the shareholders
and, therefore, are included in each of their totals.

A subsidiary of the Corporation is  First-Citizens  Bank & Trust Company ("First
Citizens").  Southern  acquired a branch in Ahoskie,  North  Carolina from First
Citizens in 1999.  In the fourth  quarter of 2000  Southern  expects to acquire,
subject to regulatory approval,  two Rocky Mount, North Carolina offices and one
Nashville,  North  Carolina  office of First Citizens  containing  approximately
$71.0 million of deposits and  approximately  $64.0  million of loans.  Southern
expects  to  pay   approximately   $6.4  million  to  First  Citizens  for  this
acquisition.
<PAGE>
<TABLE>
(Dollars in thousands)
                                                       Six Months Ended March 31,
                                                       --------------------------
                                                       2000               1999
                                                        ----              ----
<S>                                                     <C>               <C>
Data and item processing ...............                $605              $558
Forms, supplies and equipment ..........                  62                63
Trustee for employee benefit plans .....                  22                22
Consulting fees ........................                  20                26
Other services .........................                  29                22
                                                        ----              ----

                                                        $738              $691
                                                        ====              ====
</TABLE>

Note 7. Subsequent Events

On April 17, 2000, Southern acquired the Battleboro, North Carolina,  Nashville,
North  Carolina and  Sharpsburg,  North  Carolina  offices of Centura  Bank.  In
connection with these  acquisitions,  Southern assumed total deposit liabilities
of $32.6  million,  purchased $5.1 million of loans and recorded $3.2 million of
intangible assets.

In the fourth  quarter of 2000  Southern  expects to  complete  the  acquisition
discussed above under "Related Parties".
<PAGE>
SOUTHERN BANCSHARES (N.C.), INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - FIRST THREE MONTHS OF 2000 VS. FIRST THREE MONTHS OF 1999


INTRODUCTION

In the first  three  months of 2000,  the net  income  of  BancShares  decreased
$187,000  from  $692,000  in the first  three  months of 1999 to $505,000 in the
first  three  months of 2000,  a decrease  of  27.02%.  This  decrease  resulted
primarily  from  an  adjustment  for  unrealized   investment  security  losses,
considered other than temporary,  that more than offset  increased  interest and
fees on commercial loans. One branch  acquisition in September 1999, the opening
of one new branch in November 1999 and one branch  acquisition  in February 2000
resulted in increased net interest income,  increased other  noninterest  income
and increased  personnel  expense and other related  operating  expenses for the
three months ended March 31, 2000.

Annualized  per share net income  available to common shares for the first three
months of 2000 was $3.44,  a decrease of $1.55,  or 31.06%,  from $4.99 in 1999.
The return on average equity  decreased to 3.72%, for the period ended March 31,
2000,  from 4.96% for the period  ended March 31, 1999 and the return on average
assets  decreased to 0.30%,  for the period ended March 31, 2000, from 0.43% for
the period ended March 31, 1999.

At March 31, 2000,  BancShares'  assets totaled $683.0  million,  an increase of
$13.8 million,  or 2.06%, from the $669.2 million reported at December 31, 1999.
During this three month period,  loans  increased $7.6 million,  or 1.91%,  from
$398.1 million to $405.7  million.  During the three months ended March 31, 2000
investment  securities  increased $14.1 million, or 7.27% from $194.2 million at
December 31, 1999 to $208.3 million at March 31, 2000. Total deposits  increased
$15.0  million,  or 2.59% from  $578.3  million at  December  31, 1999 to $593.2
million at March 31,  2000.  The above  changes  resulted  principally  from the
acquisitions discussed below and the seasonal impact of the agricultural markets
served by Southern .

ACQUISITIONS

In September 1999, Southern acquired $9.2 million of the loans and $14.8 million
of the deposits of the Ahoskie office of First-Citizens  Bank & Trust Company, a
related  party.  Southern  recorded  intangible  assets of $1.3  million for the
Ahoskie acquisition.

In February 2000,  Southern  acquired $1.3 million of the loans and $7.1 million
of the deposits of the  Robersonville  office of  Cooperative  Bank for Savings,
Inc.  Southern  recorded  intangible  assets of $532,000  for the  Robersonville
acquisition.

These acquisitions were accounted for as purchases,  and, therefore, the results
of  operations  prior to the  purchases  are not  included  in the  consolidated
financial statements.  The proforma impact of the acquisitions and dispositions,
as though they had been made at the  beginning of the period  presented,  is not
material to BancShares' consolidated financial statements.

The  comparisons  of the three  months  ended March 31, 2000 to the three months
ended March 31, 1999 are accordingly impacted by the above transactions.
<PAGE>
INTEREST INCOME

Interest and fees on loans increased $995,000,  or 13.38%, from $7.4 million for
the three months ended March 31, 1999 to $8.4 million for the three months ended
March 31, 2000.  This  increase  was due to higher  overall  interest  rates and
increased loans as a result of the acquisitions  discussed above.  Average loans
increased  $35.2  million,  or 9.68%,  from $363.5  million for the three months
ended March 31,  1999 to $398.7  million  for the three  months  ended March 31,
2000.  The yield on the loan portfolio was 8.19% in the three months ended March
31, 1999 and 8.52% in the three months ended March 31, 2000.

Interest  income  from  investment  securities,  including  U. S.  Treasury  and
Government  obligations,  obligations of state and county subdivisions and other
securities  increased  3.23%,  from $2.5 million in the three months ended March
31, 1999 to $2.6 million in the three  months ended March 31, 2000.  This change
was  principally  due  to an  increase  in  the  volume  of  average  investment
securities  from  $190.3  million for the three  months  ended March 31, 1999 to
$201.6 million for the three months ended March 31, 2000. In addition, the yield
on investment  securities  increased from 5.35% for the three-month period ended
March 31, 1999 to 5.43% for the three-month period ended March 31, 2000.

Interest income on federal funds sold increased $33,000 or 11.91%, from $277,000
for the three months ended March 31, 1999 to $310,000 for the three months ended
March 31, 2000. This increase in income  resulted from increased  interest rates
as average  federal funds sold decreased from $23.3 million for the three months
ended March 31, 1999 to an average of $21.9  million for the three  months ended
March 31, 2000.  Average federal funds sold yields  increased from 4.76% for the
three  months ended March 31, 1999 to 5.67% for the three months ended March 31,
2000.

Total interest income  increased $1.1 million or 10.84%,  from $10.2 million for
the three  months  ended  March 31, 1999 to $11.3  million for the three  months
ended March 31, 2000. This increase was primarily the result of volume increases
resulting from the acquisitions discussed above and a 33 basis point increase in
average earning asset yields.

Average  earning  asset yields  increased  from 7.12% for the three months ended
March 31,  1999 to 7.45% for the three  months  ended  March 31,  2000.  Average
earning assets increased from $577.1 million in the three months ended March 31,
1999 to $613.1  million in the period ended March 31, 2000.  This $36.0  million
increase in the average earning assets resulted  primarily from the acquisitions
discussed above.

INTEREST EXPENSE

Total interest  expense  increased  $375,000 or 7.59%,  from $4.9 million in the
three  months  ended March 31, 1999 to $5.3  million for the three  months ended
March 31, 2000. The principal  reason for this increase was the overall increase
in financial market rates by the Federal Reserve Bank. BancShares' total cost of
funds  increased  from 3.96% for the three  months ended March 31, 1999 to 4.10%
for the three  months ended March 31, 2000.  Average  interest-bearing  deposits
were $496.1  million in the three months  ended March 31,  2000,  an increase of
$21.2 million from the $474.9  million  average in the three months ending March
31, 1999. The increase in interest-bearing  liabilities was primarily the result
of the aforementioned acquisitions.

NET INTEREST INCOME

Net interest  income  increased to $6.0 million for the three months ended March
31, 2000 from $5.3 million for the three months ended March 31, 1999.
<PAGE>
The interest rate spread for the three months ended March 31, 2000 was 3.35%, an
increase of 20 basis  points from the 3.15%  interest  rate spread for the three
months ended March 31, 1999.

ASSET QUALITY AND PROVISION FOR LOAN LOSSES

For the three  months  ended  March 31,  2000  management  recorded  $75,000  as
provision  for loan  losses.  Management  recorded  a  $60,000  addition  to the
provision for loan losses for the three months ended March 31, 1999.

During the first three  months of 2000  management  charged-off  loans  totaling
$100,000 and received  recoveries of $21,000,  resulting in net  charge-offs  of
$79,000.  During the same period in 1999, $186,000 in loans were charged-off and
recoveries of $62,000 were received,  resulting in net  charge-offs of $124,000.
The following table presents comparative Asset Quality ratios of BancShares:

<TABLE>
<CAPTION>
                                                           (Unaudited)
                                                             March 31,     December 31,
                                                                2000           1999
                                                                ----           ----
<S>                                                           <C>           <C>
Ratio of annualized net loans charged off
          to average loans .........................            0.08%         0.16%

Allowance for loan losses
           to loans ................................            1.52%         1.55%

Non-performing loans

            to loans ...............................            0.38%         0.19%

Non-performing loans and assets
            to total assets ........................            0.27%         0.17%

Allowance for loan losses
            to non-performing loans ................          398.20%       830.60%

</TABLE>

The ratio of annualized net charge-offs to average loans  outstanding  decreased
to 0.08% for the three months ended March 31, 2000 from 0.16% for the year ended
December 31, 1999. The allowance for loan losses  represented  1.52% of loans at
March 31, 2000.  The  allowance  for loan losses  represented  1.55% of loans at
December 31, 1999. Loans increased $7.6 million, or 1.91% from $398.1 million at
December 31, 1999 to $405.7 million at March 31, 2000.

The ratio of nonperforming loans to loans,  increased from 0.19% at December 31,
1999 to 0.38% at March 31, 2000.  Nonperforming loans and assets to total assets
increased  to 0.27% at March 31,  2000 from  0.17% at  December  31,  1999.  The
allowance  for  loan  losses  to  nonperforming  loans  represented  398.20%  of
nonperforming  loans at March 31, 2000, a decrease  from the 830.60% at December
31, 1999. The above performance  declines resulted primarily from an increase in
nonperforming  loans to $1.6 million at March 31, 2000 from $745,000 at December
31,  1999.  The  nonperforming  loans at March 31,  2000  included  $183,000  of
nonaccrual  loans,  $1.4 million of accruing  loans 90 days or more past due and
$42,000 of restructured  loans.  BancShares had $279,000 of assets classified as
other  real  estate  at March  31,  2000.  BancShares  had  $414,000  of  assets
classified as other real estate at December 31, 1999.
<PAGE>
Management considers the March 31, 2000 allowance for loan losses to be adequate
to cover the losses and risks  inherent in the loan  portfolio at March 31, 2000
and will continue to monitor its  portfolio and to adjust the relative  level of
the  allowance  as  needed.  BancShares'  impaired  loans  were  less  than  the
nonaccrual  and  restructured  loan amounts  presented  above and no  additional
allowances for loan losses were required for these impaired loans.

Management  actively  maintains a current  loan watch list and knows of no other
loans  which  are  material   and  (i)   represent  or  result  from  trends  or
uncertainties which management  reasonably expects will materially impact future
operating results,  liquidity or capital  resources,  or (ii) represent material
credits  about  which  management  is  aware  of any  information  which  causes
management to have serious  doubts as to the ability of such borrowers to comply
with the loan repayment terms.

Management  believes  it  has  established  the  allowance  in  accordance  with
generally  accepted  accounting  principles and in  consideration of the current
economic  environment.  While management uses the best information  available to
make  evaluations,  future  adjustments  may be  necessary if economic and other
conditions differ substantially from the assumptions used.

In  addition,  various  regulatory  agencies,  as  an  integral  part  of  their
examination  process,  periodically review Southern's  allowance for loan losses
and losses on other real estate  owned.  Such  agencies may require  Southern to
recognize  additions to the allowances  based on the examiners'  judgments about
information available to them at the time of their examinations.

NONINTEREST INCOME

During the three  months ended March 31,  2000,  BancShares  realized a $625,000
decrease  in  noninterest  income  primarily  as a  result  of  a  net  loss  on
available-for-sale investment securities of $843,000.

During the three months ended March 31, 2000,  management of BancShares reviewed
its  portfolio of  securities  available-for-sale  and  determined  that certain
marketable  equity securities had declines in their value that were deemed to be
other than temporary.  Accordingly,  BancShares recorded a charge of $855,000 to
investment securities gains (losses) in the accompanying  consolidated statement
of income and comprehensive income for the three months ended March 31, 2000 for
this  amount  and  reduced  the  carrying  amount  of  the  related  investments
accordingly. There can be no certainty that future charges to earnings for other
than  temporary  declines  in the fair  values  of  these  or  other  investment
securities will not be required.

NONINTEREST EXPENSE

Noninterest  expense including  personnel,  occupancy,  furniture and equipment,
data processing, FDIC insurance and state assessments, printing and supplies and
other  expenses,  increased  $391,000 or 7.24%,  from $5.4  million in the three
months  ended March 31, 1999 to $5.8 million in the three months ended March 31,
2000.

This increase was primarily due to an increase in personnel  expense of $90,000,
or 3.29%,  from $2.7 million at March 31, 1999 to $2.8 million at March 31, 2000
and increased  occupancy,  furniture and  equipment  expense and other  expenses
resulting principally from acquisitions discussed above.

INCOME TAXES

In the three months ended March 31, 2000,  BancShares  had income tax expense of
$130,000,  a decrease of $110,000 from  $240,000 in the prior year period.  This
decrease is due primarily to decreased earnings resulting from the write-down of
investment  securities discussed above. The resulting effective tax rate for the
three months  ended March 31, 2000 was 20.47%.  The  effective  tax rate for the
three months ended March 31, 1999 was 25.75%.  The  effective  tax rates in 1999
and 2000 differ from the federal  statutory  rates of 34.00% for 1999 and 35.00%
for 2000 primarily due to tax exempt income.
<PAGE>
SHAREHOLDERS' EQUITY AND CAPITAL ADEQUACY

Sufficient levels of capital are necessary to sustain growth and absorb losses.

In June  1998,  the Trust  issued  $23.0  million  of 8.25%  Capital  Securities
maturing  in 2028.  The Trust  invested  the $23.0  million  proceeds  in Junior
Subordinated  Debentures issued by BancShares (the "Junior  Debentures")  which,
upon consolidation of BancShares, are eliminated. The Junior Debentures,  with a
maturity  of 2028,  are the  primary  assets of the Trust.  With  respect to the
Capital Securities,  BancShares  irrevocably and unconditionally  guarantees the
Trust's obligations.

BancShares  contributed Capital Securities proceeds of $12.0 million to Southern
which are included in Tier I capital for Southern's  regulatory capital adequacy
requirements. BancShares has similar regulatory capital adequacy requirements as
Southern and is in compliance with those capital adequacy  requirements at March
31, 2000.

The Federal Reserve Board, which regulates  BancShares,  and the Federal Deposit
Insurance  Corporation,  which  regulates  Southern,  have  established  minimum
capital guidelines for the institutions they supervise.

Regulatory  guidelines  define  minimum  requirements  for  Southern's  leverage
capital  ratio.  Leverage  capital equals total equity less goodwill and certain
other  intangibles and is measured  relative to total adjusted assets as defined
by regulatory  guidelines.  According to these guidelines,  Southern's  leverage
capital  ratio at March 31, 2000 was 8.60%.  At December  31,  1999,  Southern's
leverage  capital  ratio was 8.47%.  Both of these  ratios are greater  than the
level designated as "well capitalized" by the FDIC.

Southern is also  required to meet minimum  requirements  for Risk Based Capital
("RBC").  Southern's  assets,  including loan commitments and other  off-balance
sheet  items,  are  weighted  according  to  federal  guidelines  for  the  risk
considered inherent in each asset. At March 31, 2000, Southern's Total RBC ratio
was 16.45%. At December 31, 1999 the RBC ratio was 16.28%.  Both of these ratios
are greater than the level designated as "well capitalized" by the FDIC.

The regulatory  capital ratios reflect  increases in assets and liabilities from
the  acquisitions  Southern  has made.  Each of the  acquisitions  required  the
payment of a premium for the deposits received.  Each of these premiums resulted
in increased intangible assets, which is deducted from total equity in the ratio
calculations.

The accumulated other  comprehensive  income was $5.9 million at March 31, 2000,
and $7.3 million at December 31, 1999. Comprehensive income consists entirely of
unrealized gains on securities available-for-sale, net of taxes. Although a part
of total  shareholders'  equity,  comprehensive  income is not  included  in the
calculation of either the RBC or leverage  capital ratios pursuant to regulatory
definitions of these capital requirements.  The following table presents capital
adequacy calculations and ratios of Southern:
<PAGE>
<TABLE>
<CAPTION>
                                                 (Unaudited)
                                                   March 31,          December 31,
                                                      2000                1999
                                                      ----                ----
(Dollars in thousands)
<S>                                                 <C>                <C>
Risk-based capital:
Tier 1 capital ...........................          $ 56,437           $ 55,398
Total capital ............................            63,389             62,967
Risk-adjusted assets .....................           385,276            386,761
Average tangible assets ..................           655,935            654,268

Tier 1 capital ratio  (1) ................             14.65%             14.32%
Total capital ratio  (1) .................             16.45%             16.28%
Leverage capital ratio  (1) ..............              8.60%              8.47%
</TABLE>
-----------
(1)    These  ratios  exceed  the  minimum  ratios  required  for a  bank  to be
       classified as "well capitalized" as defined by the FDIC.


At March 31, 2000 and December 31, 1999,  BancShares was also in compliance with
its regulatory  capital  requirements  and all of its regulatory  capital ratios
exceeded the minimum ratios required by the regulators to be classified as "well
capitalized".

LIQUIDITY

Liquidity refers to the ability of Southern to generate sufficient funds to meet
its financial  obligations  and  commitments at a reasonable  cost.  Maintaining
liquidity  ensures  that  funds  will be  available  for  reserve  requirements,
customer  demand for loans,  withdrawal  of deposit  balances and  maturities of
other deposits and  liabilities.  Past  experiences  help management  anticipate
cyclical demands and amounts of cash required.  These  obligations can be met by
existing cash reserves or funds from maturing loans and investments,  but in the
normal course of business are met by deposit growth.

In  assessing  liquidity,  many  relevant  factors  are  considered,   including
stability  of  deposits,  quality of  assets,  economy  of the  markets  served,
business   concentrations,   competition  and  BancShares'   overall   financial
condition.  BancShares'  liquid assets include cash and due from banks,  federal
funds sold and investment  securities  available-for-sale.  The liquidity ratio,
which is defined as cash plus short term  available-for-sale  securities divided
by deposits plus short term liabilities, was 38.16% at March 31, 2000 and 29.34%
at December 31, 1999.

The Statement of Cash Flows  discloses  the  principal  sources and uses of cash
from  operating,  investing and financing  activities for the three months ended
March 31, 2000 and for the three months ended March 31, 1999.  BancShares has no
brokered  deposits.  Jumbo time  deposits  are  considered  to include  all time
deposits of $100,000 or more.  BancShares  has never  aggressively  bid on these
deposits.  Almost all jumbo time deposit customers have other relationships with
Southern,  including savings, demand and other time deposits, and in some cases,
loans.  At March  31,  2000  jumbo  time  deposits  represented  10.77% of total
deposits compared to 10.44% of total deposits at December 31, 1999.
<PAGE>
Management  believes  that  BancShares  has the ability to  generate  sufficient
amounts of cash to cover normal  requirements and any additional needs which may
arise,  within realistic  limitations,  and management is not aware of any known
demands,  commitments or uncertainties  that will affect liquidity in a material
way.

ACCOUNTING AND OTHER MATTERS

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
133,  "Accounting  for  Derivative  Instruments  and Hedging  Activities."  This
statement   establishes   accounting  and  reporting  standards  for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts, and for hedging activities.  It requires that an entity recognize all
derivatives  as either  assets or  liabilities  in the balance sheet and measure
those instruments at fair value. The accounting for changes in the fair value of
a derivative  depends on the intended use of the  derivative  and the  resulting
designation.  This statement,  as amended by Statement 137, is effective for all
fiscal  quarters  of  fiscal  years  beginning  after  June  15,  2000.  Earlier
application of all provisions of this statement is encouraged.  BancShares plans
to adopt this  statement on January 1, 2001 and does not anticipate any material
effect on its consolidated financial statements.

The FASB also  issues  exposure  drafts for  proposed  statements  of  financial
accounting  standards.  Such  exposure  drafts are  subject to comment  from the
public, to revisions by the FASB and to final issuance by the FASB as statements
of  financial  accounting  standards.  Management  considers  the  effect of the
proposed statements on the consolidated  financial  statements of BancShares and
monitors  the  status of  changes  to issued  exposure  drafts  and to  proposed
effective dates.

Other matters

In  April  2000,  BancShares  acquired  the  Battleboro,   North  Carolina,  the
Nashville, North Carolina and the Sharpsburg,  North Carolina offices of Centura
Bank.  BancShares has received  regulatory  approval to open de novo branches in
three new eastern North Carolina  markets.  These offices are planned to open in
the fourth quarter of 2000.

On April 28,  2000  Southern  announced,  subject to  regulatory  approval,  the
planned fourth quarter 2000  acquisitions  of one Nashville,  North Carolina and
two Rocky Mount, North Carolina offices of First-Citizens  Bank & Trust Company,
a related party.  In connection  with these  acquisitions,  Southern  expects to
assume total deposit  liabilities of  approximately  $71.0 million,  to purchase
approximately $64.0 million of loans and to record approximately $6.4 million of
intangible assets.

Management is not aware of any other trends, events,  uncertainties,  or current
recommendations by regulatory  authorities that will have or that are reasonably
likely to have a material effect on BancShares' liquidity,  capital resources or
other operations.
<PAGE>
Signatures

Pursuant  to the  requirements  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.

                               SOUTHERN BANCSHARES (N.C.), INC.

                               /s/John C. Pegram, Jr.
Dated: May 9, 2000             ----------------------
                               John C. Pegram, Jr.,
                               President and Chief Executive Officer


                                /s/David A. Bean
Dated: May 8, 2000             -----------------
                               David A. Bean,
                               Secretary, Treasurer and Chief Financial Officer