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 June 30, 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  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.

                                119,918 shares
<PAGE>


<TABLE>									
<CAPTION>
                                                                       
SOUTHERN BANCSHARES (N.C.), INC                                                                    June 30,         December 31,
CONSOLIDATED BALANCE SHEETS                                                                          1997                1996
                                                                                                   ________            ________
(Dollars in thousands except per share data)                                                     (Unaudited)
<S>                                                                                           <C>                     <C>
ASSETS									
Cash and due from banks                                                                             $28,557             $21,445
Federal funds sold                                                                                    6,375              11,020
Investment securities: 									 
   Held-to-maturity,  at amortized cost  (fair value $55,855 and $64,559, respectively)              55,023              63,676
   Available-for-sale, at fair value (amortized cost $97,080 and $88,504, respectively)             114,565             105,013
Loans, net of unearned income                                                                       346,965             317,755
   Less allowance for loan losses                                                                    (6,149)             (6,163)
                                                                                                    _______             _______
Net Loans                                                                                           340,816             311,592
Premises and equipment                                                                               17,896              15,439
Accrued interest receivable                                                                           4,526               3,999
Intangible assets                                                                                     6,546               5,991
Other assets                                                                                            789               2,583
                                                                                                    _______             _______
       Total assets                                                                                $575,093            $540,758
                                                                                                    =======             =======
LIABILITIES
Deposits:
   Noninterest-bearing                                                                             $ 63,040            $ 64,089
   Interest-bearing                                                                                 442,797             416,477
                                                                                                    _______             _______
Total deposits                                                                                      505,837             480,566
									 
Short-term borrowings                                                                                 6,732               5,064
Long-term obligations                                                                                 5,650               1,400
Accrued interest payable                                                                              4,564               3,204
Other liabilities                                                                                     5,290               5,746
                                                                                                    _______             _______
        Total liabilities                                                                           528,073             495,980
                                                                                                    _______             _______
SHAREHOLDERS' EQUITY
Series B non-cumulative preferred stock, no par value; 408,728 shares authorized and
    406,344 shares issued and outstanding at June 30, 1997 and 407,752 shares issued
    and outstanding at December 31, 1996                                                              1,980               1,986
Series C non-cumulative preferred stock, no par value;  43,631 shares authorized and
    43,631 shares issued and outstanding at June 30, 1997 and December 31,1996                          578                 578
Common stock,  $5 par value; 158,485 shares authorized and 119,918 shares issued and
    outstanding at June 30, 1997 and December 31, 1996                                                  600                 600
Surplus                                                                                              10,000              10,000
Retained earnings                                                                                    22,322              20,718
Unrealized gain on securities available-for-sale, net of tax                                         11,540              10,896
                                                                                                    _______             _______
              Total shareholders' equity                                                             47,020              44,778
                                                                                                    _______             _______
              Total liabilities and shareholders' equity                                           $575,093            $540,758
                                                                                                    =======             =======

The accompanying notes are an integral part of these consolidated financial statements.					 				 
</TABLE>
<TABLE>
                                                                  
SOUTHERN BANCSHARES (N.C.), INC.                                                                (Unaudited)
CONSOLIDATED STATEMENTS OF INCOME                                                       Three Months Ended June 30,
<CAPTION>                                                                                   1997            1996
(Dollars in thousands except share and per share data)
<S>                                                                                    <C>             <C>
Interest income:
   Loans                                                                                   $7,191          $6,653
   Investment securities:									 
     U. S. Government                                                                       1,590           1,719
     State, county and municipal                                                              569             520
     Other                                                                                    266             146
                                                                                            _____           _____
        Total investment securities interest income                                         2,425           2,385
  Federal funds sold                                                                           95              64
                                                                                            _____           _____
           Total interest income                                                            9,711           9,102
									 
Interest expense:
   Deposits                                                                                 4,548           4,198
   Short-term borrowings                                                                       72              91
   Long-term obligations                                                                      118              55
                                                                                            _____           _____
           Total interest expense                                                           4,738           4,344
                                                                                            _____           _____
           Net interest income                                                              4,973           4,758
    Provision for loan losses                                                                 -                20
                                                                                            _____           _____
            Net interest income after provision for loan losses                             4,973           4,738
					 		 		 
Noninterest income:
    Service charges on deposit accounts                                                       677             674
    Other service charges and fees                                                            216             184
    Investment securities gains, net                                                           -                1
    Insurance commissions                                                                      30              28
    Gain (loss) on sale of loans                                                                4            (151)
    Other                                                                                      52             277
                                                                                            _____           _____
         Total noninterest income                                                             979           1,013
					 		 		 
Noninterest expense:
    Personnel                                                                               2,164           1,991
    Intangibles amortization                                                                  443             405
    Data processing                                                                           465             330
    Furniture and equipment                                                                   384             360
    Occupancy                                                                                 336             299
    FDIC insurance assessment                                                                  28              74
    Charitable contributions                                                                    2              10
    Other                                                                                     857             753
                                                                                            _____           _____
         Total noninterest expense                                                          4,679           4,222
                                                                                            _____           _____
Income before income taxes                                                                  1,273           1,529
Income taxes                                                                                  130             415
                                                                                            _____           _____
         Net income                                                                        $1,143          $1,114
                                                                                            =====           =====
Per share information:
  Net income applicable to common shares                                                    $8.71           $8.46
  Cash dividends declared on common shares                                                    .37             .375
  Weighted average common shares outstanding                                              119,918          119,918
                                                                                          =======          =======

The accompanying notes are an integral part of these consolidated financial statements.									 
</TABLE>		 							 

<PAGE>								 		   																									
<TABLE>
<CAPTION>
SOUTHERN BANCSHARES (N.C.), INC.                                                            (Unaudited)
CONSOLIDATED STATEMENTS OF INCOME                                                        Six Months Ended June 30,
(Dollars in thousands except share and per share data)                                      1997           1996
<S>                                                                                    <C>             <C>
Interest income:
   Loans                                                                                  $14,097          $13,008
   Investment securities:
     U. S. Government                                                                       3,178            3,358
     State, county and municipal                                                            1,102            1,075
     Other                                                                                    384              241
                                                                                            _____            _____
       Total investment securities interest income                                          4,664            4,674
   Federal funds sold                                                                         205              304
                                                                                            _____            _____
          Total interest income                                                            18,966           17,986

Interest expense:
   Deposits                                                                                 8,857            8,556
   Short-term borrowings                                                                      124              121
   Long-term obligations                                                                      120              115
                                                                                            _____            _____
            Total interest expense                                                          9,101            8,792
                                                                                            _____            _____
            Net interest income                                                             9,865            9,194
   Provision for loan losses                                                                   60               20
                                                                                            _____            _____
           Net interest income after provision for loan losses                              9,805            9,174

Noninterest income:
    Service charges on deposit accounts                                                     1,325            1,336
    Other service charges and fees                                                            424              363
    Investment securities gains, net                                                        3,534                1
    Insurance commissions                                                                      47               92
    Gain (loss) on sale of loans                                                               (6)            (115)
    Other                                                                                     125              387
                                                                                            _____            _____
         Total noninterest income                                                           5,449            2,064

Noninterest expense:
    Personnel                                                                               4,252            3,856
    Intangibles amortization                                                                  845              818
    Data processing                                                                           818              690
    Furniture and equipment                                                                   768              706
    Occupancy                                                                                 661              585
    FDIC insurance assessment                                                                  55              136
    Charitable contributions                                                                4,074               14
    Other                                                                                   1,671            1,517
                                                                                           ______            _____
         Total noninterest expense                                                         13,144            8,322
                                                                                           ______            _____
Income before income taxes                                                                  2,110            2,916
Income taxes                                                                                  210              870
                                                                                            _____            _____
         Net income                                                                        $1,900           $2,046
                                                                                            =====            =====
Per share information:
  Net income applicable to common shares                                                   $14.19           $15.40
  Cash dividends declared on common shares                                                    .74              .75
  Weighted average common shares outstanding                                              119,918          119,918
                                                                                          =======          =======

The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

<PAGE>
 
SOUTHERN BANCSHARES  (N.C.), INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY 										
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996

<TABLE>
<CAPTION>

                                          Preferred Stock                                           Unrealized
                                          _______________          Common                            gain on
                                      Series B       Series C      Stock                            securities
                                      ________       ________      _____                            available-      Total
(dollars in thousands                                                                 Retained       for-sale    Shareholders'
  except per share data)            Shares Amount Shares Amount Shares Amount Surplus Earnings     net of taxes     Equity
                                    ______ ______ ______ ______ ______ ______ _______ ________     ____________     ______
<S>                               <C>     <C>    <C>    <C>    <C>    <C>    <C>     <C>         <C>            <C>
																																			
BALANCE, DECEMBER 31, 1995         408,728 $1,991 43,631 $578   119,918 $600  $10,000  $16,948        $7,046       $37,163

Net Income                                                                               2,046                       2,046

Cash dividends:
 Common stock ($.75 per share)                                                            (90)                        (90)
 Preferred B  ($.44 per share)                                                           (180)                       (180)
 Preferred C  ($.44 per share)                                                            (19)                        (19)

Change in unrealized gain on
 available-for-sale securities,
 net of taxes                                                                                            765           765
                                   _______  _____ ______  ___   _______  ___   ______   ______         _____        ______
BALANCE, JUNE 30, 1996             408,728 $1,991 43,631 $578   119,918 $600  $10,000  $18,705        $7,811       $39,685

BALANCE,  DECEMBER 31, 1996        407,752 $1,986 43,631 $578   119,918 $600  $10,000  $20,718       $10,896       $44,778
																																			
Net income                                                                               1,900                       1,900

Purchases and retirements of stock  (1,408)    (6)                                          (9)                        (15)

Cash dividends:																																			
  Common stock ($.74 per share)                                                            (89)                        (89)
  Preferred B  ($.44 per share)                                                           (179)                       (179)
  Preferred C  ($.44 per share)                                                            (19)                        (19)

Change in unrealized gain on
  available-for-sale securities,
  net of taxes                                                                                           644           644
                                   _______  _____ ______  ___   _______  ___   ______   ______        ______         ______
BALANCE, JUNE 30, 1997             406,344 $1,980 43,631 $578   119,918 $600  $10,000  $22,322       $11,540        $47,020
                                   =======  ===== ======  ===   =======  ===   ======   ======        ======         ======

The accompanying notes are an integral part of these consolidated financial statements.																																			
</TABLE>																																			

<PAGE>		 																
																		
SOUTHERN BANCSHARES (N.C.), INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS																		
																		
<TABLE>				 														
<CAPTION>																		
                                                                                                 (Unaudited)
                                                                                           Six months ended June 30,
(Thousands)                                                                                  1997            1996
<S>                                                                                     <C>             <C>
OPERATING ACTIVITIES:																		
     Net income                                                                            $1,900          $2,046
     Adjustments to reconcile net income to net cash
         provided by operating activities:
            Provision for loan losses                                                          60              20
            Contribution expense for donation of marketable equity securities               4,071            -
            Gain on contribution of marketable equity securities                           (3,529)           -
            Gains on issuer calls of securities                                                (5)             (1)
            Loss (gain) on sale and abandonment of premises and equipment                      32             (34)
            Net accretion on investments                                                      (44)            (29)
            Amortization of intangibles                                                       845             818
            Depreciation                                                                      486             472
            Net increase in accrued interest receivable                                      (527)         (3,267)
            Net increase (decrease) in accrued interest payable                             1,360            (480)
            Net decrease in other assets                                                    1,794             247
            Net increase (decrease) in other liabilities                                     (456)          1,068
                                                                                            _____           _____
NET CASH PROVIDED BY OPERATING ACTIVITIES                                                   5,987             860
                                                                                            _____           _____
INVESTING ACTIVITIES:																		
   Proceeds from maturities and issuer calls of investment securities held-to-maturity     26,177          24,660
   Proceeds from maturities and issuer calls of investment securities available-for-sale    3,105             185
   Purchases of investment securities held-to-maturity                                    (17,764)         (4,685)
   Purchases of investment securities available-for-sale                                  (12,264)        (31,495)
   Net increase in loans                                                                  (27,694)        (29,769)
   Additions to premises and equipment                                                     (2,700)         (1,829)
   Net cash received for branches acquired                                                 19,730           3,018
                                                                                           ______           _____
NET CASH USED IN INVESTING ACTIVITIES                                                     (11,410)        (39,915)
                                                                                           ______           _____
FINANCING ACTIVITIES:																		
   Net decrease in demand and interest bearing demand deposits                            (14,195)         (7,586)
   Net increase in time deposits                                                           16,469           4,957
   Net proceeds (repayments) of long-term obligations                                       4,250            (600)
   Net proceeds of short-term borrowings                                                    1,668          21,677
   Cash dividends paid                                                                       (287)           (289)
   Purchase and retirement of stock                                                           (15)            -
                                                                                           ______          ______
NET CASH PROVIDED BY FINANCING ACTIVITIES                                                   7,890          18,159
                                                                                           ______          ______
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                        2,467         (20,896)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR                                         32,465          42,906
                                                                                           ______          ______
CASH AND CASH EQUIVALENTS AT THE END OF PERIOD                                            $34,932         $22,010
                                                                                           ======          ======
SUPPLEMENTAL DISCLOSURES OF CASH PAID DURING THE PERIOD FOR:																		
    Interest                                                                               $7,740          $5,545
    Income taxes                                                                             $799            $383
                                                                                           ======           =====
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Unrealized gain (loss) on securities available-for-sale                                      $976          $1,159
                                                                                              ===           =====

The accompanying notes are an integral part of these consolidated financial statements.																		
</TABLE>																		

<PAGE>	 	 												
														
SOUTHERN  BANCSHARES (N. C.), INC.
Notes to consolidated financial statements														
(Dollars in thousands)
														
Note 1. Summary of significant accounting policies

BancShares

    Southern BancShares (N. C.), Inc. ("BancShares") is the holding company for
Southern Bank and Trust Company ("Southern"), which operates 41 banking offices
in  eastern North Carolina.  Southern, which began operations in January, 1901,
has  a  non-bank subsidiary, Goshen, Inc. whose insurance operations complement
the  operations  of  its  parent.  BancShares and Southern are headquartered in
Mount Olive, North Carolina.
														
Principles of Consolidation

    The  consolidated  financial statements include the accounts of BancShares,
and  its  wholly-owned  subsidiary,  Southern.  The statements also include the
accounts  of  Goshen, Inc., a  wholly-owned  subsidiary of Southern, and Goshen
Properties, Inc., a  wholly-owned  property  management subsidiary of Southern,
which  was  dissolved  on  April  17, 1997  with  no  material  gain  or  loss.
BancShares' financial  resources  are  primarily  provided  by  dividends  from
Southern  and  there  are  no  material  differences  between  the  results  of
operations or financial position of BancShares or of Southern.  All significant
intercompany balances have been eliminated in consolidation.

Basis of Financial Statement Presentation

    The  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  most significant
estimates  made  by BancShares in the preparation of its consolidated financial
statements  are  the  determination  of  the  allowance  for  loan  losses, the
valuation  of  other  real  estate and the valuation allowance for deferred tax
assets.  The  statements  should  be  read in conjunction with the consolidated
financial  statements  and  accompanying  notes for the year ended December 31,
1996, incorporated by reference in the 1996 Annual Report on Form 10-K.

Reclassifications

    Certain  prior  year  balances  have  been  reclassified  to conform to the
current  year presentation.  Such reclassifications had no effect on net income
or shareholders' equity as previously reported.

<PAGE>  

<TABLE>							 												
<CAPTION>
                                                                                                                               
Note 2.  Investment securities                          June 30, 1997                                 December 31, 1996
                                                      Gross       Gross    Estimated                  Gross      Gross   Estimated
(Dollars in thousands)                    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                     $32,302         70       -      $32,372        $36,311        91        -      $36,402
      Obligations of states
       and political subdivisions            22,521        777      (12)     23,286         27,165       799       (4)      27,960
      Corporate securities                      200                  (3)        197            200        -        (3)         197
                                             ______       ____      ____     ______         ______     _____       ___     _______
                                             55,023        847      (15)     55,855         63,676       890       (7)      64,559
                                             ======       ====      ====     ======         ======     =====       ===     =======
    SECURITIES AVAILABLE-FOR-SALE:						 													
      U.  S. Government                      79,136         78      (88)     79,126         70,121       -        (15)      70,106
      Marketable equity securities            8,334     17,140       -       25,474          8,612    16,296      (97)      24,811
      Obligations of states
       and political subdivisions             7,542        314       -        7,856          7,647       278       (4)       7,921
      Mortgage-backed securities              2,068         41       -        2,109          2,124       106      (55)       2,175
                                             ______     ______      ____     ______         ______    ______      ___      _______
                                             97,080     17,573      (88)    114,565         88,504    16,680     (171)     105,013
                                             ======     ======      ====     ======         ======    ======      ===      =======
   				 		 		 		 		 		 		 			
         TOTALS                            $152,103    $18,420    ($103)   $170,420       $152,180   $17,570    ($178)    $169,572
                                            =======     ======     ====     =======        =======    ======      ===      =======
</TABLE>								 											
 																			
<PAGE>
																			
SOUTHERN BANCSHARES (N.C.), INC.
Notes to consolidated financial statements
(Dollars in thousands except share and per share data)
																			
<TABLE>
<CAPTION>                                                     June 30,        December 31,
                                                                1997              1996
                                                                ____              ____
<S>                                                        <C>               <C>
Note 3. LOANS

   Loans by type were as follows:

   Commercial, financial and agricultural                     $87,746            $70,881
   Real estate - construction                                   4,800              2,470
   Real estate - mortgage                                     216,051            206,870
   Consumer                                                    35,701             35,512
   Lease financing                                              3,105              2,370
                                                              _______            _______
    Total loans                                               347,403            318,103
     Less unearned income                                        (438)              (348)
                                                              _______            _______
      Total loans less unearned income                       $346,965           $317,755
                                                              =======            =======
   Loans held for sale                                       $  2,914           $  4,143
   Loans serviced for others                                 $ 75,555           $ 73,202
</TABLE>
																			
<TABLE>
<CAPTION>
                                                               June 30,        June 30,
(In thousands)                                                   1997            1996
                                                                 ____            ____
<S>                                                         <C>             <C>
Note 4. ALLOWANCE FOR LOAN LOSSES

   Balance at beginning of year                                $6,163           $6,321
   Provision for loan losses                                       60               20
   Loans charged off                                             (178)            (206)
   Loan recoveries                                                104              145
                                                                _____            _____
   Balance at end of the period                                $6,149           $6,280
                                                                =====            =====
</TABLE>
<PAGE>

SOUTHERN BANCSHARES (N.C.), INC.
Notes to consolidated financial statements
(Dollars in thousands except share and per share data)

<PAGE>
<TABLE>
<CAPTION>                                         June 30,     December 31,
                                                    1997           1996
(In thousands)                                      ____           ____

<S>                                           <C>              <C>
Note 5. Premises and Equipment

    Land                                         $ 3,017          $2,783
    Buildings and improvements                    10,998           9,262
    Furniture and equipment                        6,253           5,804
    Construction-in-progress                       3,869           3,467
                                                  ______          ______
                                                  24,137          21,316
        Less: accumulated depreciation            (6,241)         (5,877)
                                                  ______          ______
                                                 $17,896         $15,439
                                                  ======          ======
</TABLE>

Note 6. 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.

<TABLE>
<CAPTION>
                                            Three Months Ended June 30,    Six Months Ended June 30,
                                                 1997         1996              1997         1996
                                                 ____        ____               ____         ____
<S>                                          <C>         <C>              <C>         <C>
   Net income                                  $1,143       $1,114            $1,900       $2,046
    Less: Preferred dividends                     (98)         (99)             (198)        (199)
                                                _____        _____             _____        _____
   Net income applicable to common shares      $1,045       $1,015            $1,702       $1,847
                                                =====        =====             =====        =====
   Weighted average common shares
      outstanding during the period           119,918      119,918           119,918      119,918
                                              =======      =======           =======      =======
</TABLE>
<PAGE>
																			
SOUTHERN BANCSHARES ((N.C.), INC.
Notes to consolidated financial statements
(Dollars in thousands except share and per share data)

Note 7. RELATED PARTIES

    BancShares  has  entered  into  various service contracts with another bank
holding  company  and  its subsidiary (the "Corporation").  The Corporation has
two   significant  shareholders,  who  also  are  significant  shareholders  of
BancShares.  The first significant shareholder is a director of BancShares and,
at  June  30,  1997,  beneficially  owned  31,424  shares, or 26.20 percent, of
BancShares'  outstanding  common  stock and 22,171 shares, or  5.46 percent, of
BancShares' outstanding Series B preferred stock.  At the same date, the second
significant  shareholder beneficially owned 28,127 shares, or 23.46 percent, of
BancShares'  outstanding  common  stock, and 17,205 shares, or 4.23 percent, of
BancShares' Series B preferred stock.  The above totals include 17,205 Series B
preferred shares, or 4.23 percent, 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 June 30, 1997, beneficially owned 2,568,053 shares, or
26.65  percent,  and  1,694,936  shares, or 17.59 percent, respectively, of the
Corporation's  outstanding  Class  A common stock, and 632,146 shares, or 35.99
percent,   and   184,632   shares,  or  10.51  percent,  respectively,  of  the
Corporation's  outstanding  Class  B  common  stock.   The above totals include
555,104  Class  A  common  shares,  or 5.76 percent, and 109,944 Class B Common
shares,  or  6.26 percent, 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  from First Citizens in the
second quarter of 1996.

The  following  table  lists the various charges paid to the Corporation during
the three months ended:

<PAGE>
<TABLE>
<CAPTION>
                                         June 30,          June 30,
                                           1997              1996
                                         ________          ________
<S>                                   <C>               <C>

    Data and item processing              $867                $798
    Forms, supplies and equipment           93                  87
    Trustee for employee benefit plans      31                  32
    Consulting Fees                         38                  43
    Trust investment services               11                  12
    Internal auditing services              40                  26
    Other services                          42                  50
                                          ____               _____
                                        $1,122              $1,048
                                          ====               =====

     Data  and  item  processing  expenses  include courier services, proof and
encoding,  microfilming, check storage, statement rendering and item processing
forms.  BancShares  also has a correspondent relationship with the Corporation.
Correspondent  account  balances  with the Corporation included in cash and due
from banks totaled $11,268 at June 30, 1997 and $8,673 at December 31, 1996.

<PAGE>

SOUTHERN BANCSHARES (N.C), INC.
MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL CONDITION AND RESULTS OF
  OPERATIONS - FIRST SIX MONTHS OF 1997 VS. FIRST SIX MONTHS OF 1996

(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE DATA)

INTRODUCTION

     In  the  first  six  months of 1997, the net income of Southern BancShares
decreased  $146  from  $2,046  in the first six months of 1996 to $1,900 in the
first  six  months of 1997, a decrease of 7 percent.  One branch acquisition in
1996, three  branch  acquisitions  in 1997, the opening of a new branch in 1996
and  the  sale  of an existing branch in 1996 for a non-recurring gain of $213,
resulted  in  increased  net  interest income for the six months ended June 30,
1997, increased other noninterest income for the six months ended June 30, 1996
and  increased  personnel  expense and other related operating expenses for the
six  months  ended  June  30, 1997.  Losses  on  the  sales  of  mortgage loans
held-for-sale  decreased $109 in the six months ended June 30, 1997 compared to
the  six  months  ended  June  30,  1996.  A  first  quarter  1997  donation of
available-for-sale  securities resulted in a significant increase in charitable
contributions  expense  which  was more than offset by the resulting investment
securities gains and resulting reduction in income taxes.

     Net income per common share for the first six months of 1997 was $14.19, a
decrease  of  $1.21,  or 8 percent, from $15.40 in 1996.  The return on average
equity  declined  to  9.37  percent, for  the period ending June 30, 1997, from
11.58  percent  for  the  period ending June 30, 1996 and the return on average
assets  declined  to .75 percent, for the period ending June 30, 1997, from .87
percent  for  the  period  ending June 30, 1996.  At June 30, 1997, BancShares'
assets  totaled  $575,093, an  increase  of  $34,335, or  6  percent, from  the
$540,758  reported  at  December  31, 1996.  During  this six month period, net
loans  increased  $29,224  or 9 percent, from $311,592 to $340,816.  During the
six  months  ended  June 30, 1997  investment  securities  increased $899, or 1
percent from $168,689 at December 31, 1996 to $169,588 at June 30, 1997.  Total
deposits  increased $25,271, or 5 percent from $480,566 at December 31, 1996 to
$505,837  at  June 30, 1997.  The above increases resulted principally from the
1997 branch acquisitions discussed below.

     Southern  opened  a branch in Whitakers, North Carolina in March, 1996 and
in June 1996, Southern acquired approximately $7 million of the deposits of the
Windsor,  North  Carolina  office  of  First Citizens and sold approximately $4
million of the deposits of its Scotland Neck, North Carolina office to Triangle
Bank.  Southern  purchased  $83  of  the  loans of the First Citizens', Windsor
branch  and sold $42 of the loans of its Scotland Neck branch.  Southern paid a
premium  of  $539, or approximately 7%, for the deposits of the Windsor branch.
This  acquisition  was accounted for as a purchase, and, therefore, the results
of  operations  prior  to  the  purchase  are  not included in the consolidated
financial  statements.  Southern  had a gain of $213, that is included in other
noninterest  income, on the sale of the Scotland Neck branch.  Southern did not
sell any branches in the 1997 period.

     Southern  acquired  approximately  $12 million, $4 million and $5 million,
respectively, of  the  deposits of the Aurora, Hamilton and Aulander offices of
Wachovia  Bank  of  North  Carolina,  N.A.  in  May  1997.  Southern  purchased
approximately  $.8  million, $.4  million  and  $.2 million of the loans of the
respective  branches  and  paid a premium of $1.3 million, or approximately 6%,
for  the deposits of the three branches.  This acquisition was accounted for as
a purchase, and, therefore, the results of operations prior to the purchase are
not included in the consolidated financial statements.

     The  comparisons  of the six months ending June 30, 1997 to the six months
ending June 30, 1996 are accordingly impacted by the above transactions.

INTEREST INCOME

     Interest  and  fees  on loans increased $1,089, or 8 percent, from $13,008
for the six months ended June 30, 1996 to $14,097 for the six months ended June
30, 1997.  This  increase  was due to increased loan volume.  Average loans for
the  six  months  ending  June 30, 1997  were  $330  million, an increase of 10
percent  from  $301  million for the prior year six month period.  The yield on
the  loan  portfolio  was 8.7 percent in the six months ended June 30, 1996 and
8.8 percent in the six months ended June 30, 1997.

     Interest  income  from investment securities, including U. S. Treasury and
Government  obligations, obligations of state and county subdivisions and other
securities  decreased  $10, or .2  percent, from $4,674 in the six months ended
June  30,  1996 to $4,664 in the six months ended June 30, 1997.  This decrease
was  due  to a decrease in the yield of the investment portfolio that more than
offset  an  increase in the volume of average investment securities for the six
months  ended June 30, 1997 to $152 million as compared to $145 million for the
1996  period.   The yield on investment securities was 6.3 percent for the 1996
period ending June 30 and 6.0 percent in the 1997 period ending June 30.

     Interest  income  on federal funds sold decreased $99, or 33 percent, from
$304  for  the  six months ended June 30, 1996 to $205 for the six months ended
June  30, 1997. This decrease in income resulted primarily from the decrease in
the  average federal funds sold to $8 million for the six months ended June 30,
1997  from  an  average  of $11 million for the six months ended June 30, 1996.
Average  federal  funds  sold  yields were 5.2 percent for the six months ended
June 30, 1997 down from 5.4 percent for the six months ended June 30, 1996.

     Total  interest  income increased $980, or 5 percent, from $17,986 for the
six  months  ended  June  30, 1996 to $18,966 for the six months ended June 30,
1997.  This  increase was primarily the result of volume increases and a slight
overall increase in average earning asset interest yields.

     Average  earning  asset  interest yields for the six months ended June 30,
1997  increased  to 7.85 percent from the 7.84 percent yield on average earning
assets  for  the  six  months  ended  June 30, 1996.   Average  earning  assets
increased  from  $457  million  in  the  six months ended June 30, 1996 to $489
million  in  the  period ended June 30, 1997.  This $32 million increase in the
average  earning  assets  resulted  primarily  from  the acquisitions discussed
above.

INTEREST EXPENSE

     Total interest expense increased $309 or 4 percent, from $8,792 in the six
months  ended  June  30, 1996 to $9,101 for the six months ended June 30, 1997.
The  principal  reason  for  the increase was the acquisitions discussed above.
BancShares' total cost of funds decreased from 4.35 percent at June 30, 1996 to
4.20  percent  one  year  later.   Average  interest bearing deposits were $427
million  in the six months ended June 30, 1997, an increase of $28 million from
the $399 million in the six months ending June 30, 1996.

NET INTEREST INCOME

     Net  interest income increased $671, or 7 percent, from $9,194 for the six
months  ended  June 30, 1996  to $9,865 for the six months ended June 30, 1997.
This  increase  was  primarily  due to the impact of the acquisitions discussed
above, which increased interest earning assets.

The  net  interest  margin at June 30, 1997 was 3.65 percent, an increase of 16
basis points from the 3.49 percent interest margin at June 30, 1996.

ASSET QUALITY AND PROVISION FOR LOAN LOSSES

     For  the  six  months ended June 30, 1997 management added $60 as a volume
related  addition  to  the  provision  for  loan losses.  Management made a $20
addition  to  the  provision  for loan losses for the six months ended June 30,
1996.  During  the  first  six  months  of  1997  management  charged-off loans
totaling $178 and  received recoveries of $104, resulting in net charge-offs of
$74.  During  the  same  period  in  1996,  $206  in loans were charged-off and
recoveries  of  $145  were  received,  resulting in net charge-offs of $61. The
increase  in  net  charge-offs  was  principally due to decreased recoveries in
1997.  The  following  table  presents  comparative  Asset  Quality  ratios  of
BancShares:


</TABLE>
<TABLE>
<CAPTION>                                                                                     					
                                                   June 30,    December 31,
                                                     1997          1996
<S>                                              <C>            <C>
Ratio of net loans charged off
       to average loans, net of unearned income      .04%  *        .10%

Allowance for loan losses
       to loans, net of unearned income             1.77%          1.94%

Non-performing loans
       to loans, net of unearned income              .31%           .16%

Non-performing loans and assets
       to total assets                               .19%           .09%

Allowance for loan losses
       to non-performing loans                       564%         1,238%

  *  Annualized


</TABLE>

<PAGE>                              

     The  ratio of net annualized charge-offs to average loans, net of unearned
income  outstanding  decreased to .04 percent at June 30, 1997 from .10 percent
at  December 31, 1996 primarily due to increased loans.  The allowance for loan
losses  represented  1.77  percent of loans, net of unearned income at June 30,
1997,  a decrease of 17 basis points from the December 31, 1996  ratio  of 1.94
percent.  Loans,  net  of  unearned income increased $29 million, or 9 percent,
from December 31, 1996 to June 30, 1997.

     The  ratio  of  nonperforming  loans  to  loans,  net  of  unearned income
increased  from  .16  percent  at  December 31, 1996 to .31 percent at June 30,
1997.  Nonperforming  loans and assets to total assets increased to .19 percent
at June 30, 1997 from .09 percent at December 31, 1996.  The allowance for loan
losses to nonperforming loans represented 564 percent of nonperforming loans at
June 30, 1997,  a  decrease  from  the 1,238 percent at December 31, 1996.  The
above performance declines resulted primarily from an increase in nonperforming
loans  to  $1,091  at  June  30, 1997  from  $498  at  December  31, 1996.  The
nonperforming  loans  at  June 30, 1997 included $327 of nonaccrual loans, $754
of  accruing  loans  90  days  or  more  past  due  and  no restructured loans.
BancShares  had  no  assets  classified  as other real estate at June 30, 1997.
Other real estate at June 31, 1996 was $35.

     Management  considers the June 30, 1997 allowance for loan losses adequate
to  cover  the losses and risks inherent in the loan portfolio at June 30, 1997
and  will continue to monitor its portfolio and to adjust the relative level of
the  allowance  as  needed.  BancShares'  impaired  loans  have  not materially
changed since December 31, 1996.  At  June  30,  1997, Southern has $4 of loans
classified for regulatory purposes as loss, no loans classified as doubtful and
$995  of  loans  classified  as  substandard.  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.

NONINTEREST INCOME

    Bancshares had an increase of $3,533 in net investment securities gains, in
the  six  months  ended  June  30,  1997 principally related to the donation of
available-for-sale securities discussed above.

BancShares  had  losses  on  the sale of mortgage loans of $6 in the six months
ended  June  30, 1997 compared to $115 in losses on the sales of mortgage loans
in  the  six  months ended June 30, 1996.  Southern had a gain of $213, that is
included  in  other  noninterest  income, on  the  Scotland  Neck  branch  sale
discussed  above.  Southern did not sell any branches in the period ending June
30, 1997.  Income  from  service  charges  on  deposit  accounts, other service
charges  and  fees, insurance  commissions  and  other  noninterest  income not
detailed  above  decreased  $44, or  2  percent, from $1,965 for the six months
ended June 30, 1996 to $1,921 for the six months ended June 30, 1997.

NONINTEREST EXPENSE

     BancShares  had  an  increase in charitable contribution expense of $4,060
in   the   six   months   ended  June  30,  1997  principally  related  to  the
available-for-sale  securities  donation discussed above.

     Noninterest expense, other than contribution expense, including personnel,
occupancy,  furniture  and equipment, data processing, FDIC insurance and state
assessments,  printing  and  supplies  and  other expenses, increased $762 or 9
percent, from $8,308 in the six months ended June 30, 1996 to $9,070 in the six
months ended June 30, 1997.

     This  increase  was  primarily  due to an increase in personnel expense of
$396, or 10 percent, from $3,856 at June 30 1996 to $4,252 at June 30, 1997 and
increased  occupancy,  furniture and equipment expense and other volume related
expenses  resulting from the branch acquisitions in June and August of 1996 and
May 1997 discussed above.

INCOME TAXES

     In the six months ended June 30, 1997 BancShares had income tax expense of
$210,  a  decrease  of $660, or 76 percent, from $870 in the prior year period.
This decrease was due both to reduced profitability resulting from the donation
of  the  available-for-sale  securities  discussed  above and the resulting tax
benefits  of  this  donation.  The  resulting  effective tax rates based on the
accruals  for the six months ended in June 1997 and 1996 were 10 percent and 30
percent, respectively.

<PAGE>

SOUTHERN BANCSHARES (N.C), INC.
MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL CONDITION AND RESULTS OF
  OPERATIONS - SECOND QUARTER OF 1997 VS. SECOND QUARTER OF 1996

(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE DATA)

INTRODUCTION

     In  the  second  quarter  of  1997, the  net income of Southern BancShares
increased $29 from $1,114 in the second quarter of 1996 to $1,143 in the second
quarter  of  1997, an  increase  of 3 percent.  One branch acquisition in 1996,
three 1997 branch acquisitions and the sale of an existing branch in 1996 for a
non-recurring  gain  of $213, resulted in increased net interest income for the
three  months  ended  June  30, 1997, increased other noninterest income in the
three  months  ended  June  30, 1996, and increased personnel expense and other
related  operating expenses in the three months ended June 30, 1997.  Losses on
the  sales  of  mortgage loans held-for-sale in the three months ended June 30,
1996  were  $151.  In  the  three  months  ended  June 30 1997 gains of $4 were
realized on the sales of mortgage loans held-for-sale.  The tax benefits of the
1997  first  quarter  contribution  of available-for-sale securites resulted in
significantly  lower  income  taxes  on the second quarter income before income
taxes.

     Net  income  per share for the second quarter of 1997 was $8.71 per common
share, an  increase  of  $.25, or  3  percent, from  $8.46  for the 1996 second
quarter.

     In June 1996 Southern acquired approximately $7 million of the deposits of
the  Windsor,  North  Carolina branch of First Citizens and sold its $4 million
deposit  Scotland  Neck,  North  Carolina  branch  to  Triangle Bank.  Southern
purchased  $83  of  the  loans of the First Citizens branch and sold $42 of the
loans  of  its Scotland Neck branch.  Southern paid First Citizens a premium of
$539,  or  approximately  7%,  for  the  deposits  of the Windsor branch.  This
acquisition  was  accounted  for  as  a  purchase, and therfore, the results of
operations  prior  to  the  purchase  are  not  included  in  the  consolidated
financial statements.  Southern  had  a gain of $213 on the 1996 second quarter
sale of the Scotland Neck branch which is included in other noninterest income.
Southern did not sell any branches in the second quarter of 1997.

     Southern  acquired approximately $12 million, $4 million and $5 million of
the  deposits  of the Aurora, Hamilton and Aulander offices of Wachovia Bank of
North  Carolina, N.A. in May 1997.  Southern purchased $.8 million, $.4 million
and  $.2  million  of  the  loans  of  the respective branches and paid a total
premium of approximately $1.3 million, or approximately 6%, for the deposits of
the  three  branches.  This  acquisition  was accounted for as a purchase, and,
therefore, the  results of operations prior to the purchase are not included in
the financial statements.

     The  following  comparisons  of  the  quarter  ending June 30, 1997 to the
quarter   ending   June  30,  1996   are  accordingly  impacted  by  the  above
transactions.

INTEREST INCOME

     Interest  and  fees on loans increased $538, or 8 percent, from $6,653 for
the  quarter ended June 30, 1996 to $7,191 for the quarter ended June 30, 1997.
This  increase was due to increased loan volume.  Average loans for the quarter
ending  June  30,  1997  were  $337 million, an increase of 9 percent from $309
million  for  the  prior year quarter.  The yield on the loan portfolio was 8.7
percent in the quarter ended June 30, 1996 and 8.6 percent in the quarter ended
June 30, 1997.

     Interest  income  from investment securities, including U. S. Treasury and
Government  obligations, obligations of state and county subdivisions and other
securities  increased  $40, or 2 percent, from $2,385 in the quarter ended June
30,  1996  to $2,425 in the quarter ended June 30, 1997.  This increase was due
to a decrease in the yield of the investment portfolio to 5.87% for the quarter
ended  June  30, 1997  from  6.29% for the quarter ended June 30, 1996 combined
with an increase in the volume of average investment securities for the quarter
ended June 30, 1997 to $154 million as compared to $147 million for the quarter
ended June 30, 1996.

     Interest  income  on federal funds sold increased $31, or 48 percent, from
$64  for  the quarter ended June 30, 1996 to $95 for the quarter ended June 30,
1997.  This  increase  in  income  resulted  primarily from the increase in the
average  federal  funds  sold to $7 million for the quarter ended June 30, 1997
from  $5  million  for  the quarter ended June 30, 1996.  Average federal funds
sold  yields  were  5.3 percent for the quarter ended June 30, 1997 up from 5.2
percent for the quarter ended June 30, 1996.

     Total  interest  income  increased $609, or 7 percent, from $9,102 for the
quarter ended June 30, 1996 to $9,711 for the quarter ended June 30, 1997. This
increase  was  primarily  the result of volume increases more than offsetting a
slight  overall  decrease  in  average  earning asset interest yields.  Average
earning  asset interest yields for the quarter ended June 30, 1997 decreased to
7.7  percent  from  the  7.8  percent  yield  on average earning assets for the
quarter  ended  June  30,  1996.   Average  earning  assets increased from $463
million in the quarter ended June 30, 1996 to $498 million in the quarter ended
June  30,  1997.  This  $35  million  increase  in  the  average earning assets
resulted primarily from the acquisitions discussed above.

INTEREST EXPENSE

     Total interest  expense  increased  $394  or 9 percent, from $4,344 in the
quarter ended June 30, 1996 to $4,738 for the quarter ended June 30, 1997.  The
principal  reason  for  the  increase  was  the  acquisitions  discussed above.
BancShares'  total  cost  of  funds decreased from 4.24 percent for the quarter
ended  June  31,  1996  to  4.23  percent  for the quarter ended June 30, 1997.
Average  interest  bearing deposits were $433 million in the quarter ended June
30,  1997,  an  increase  of  $26  million from the $407 million in the quarter
ending June 30, 1996.

NET INTEREST INCOME

     Net interest income was up $215, or 5 percent, from $4,758 for the quarter
ended  June  30, 1996  to  $4,973  for  the  quarter  ended June 30, 1997. This
increase was primarily due to the increased earning asset volume resulting from
the acquisitions discussed above.

     The  net  interest  margin  for  the  quarter ended June 30, 1997 was 3.50
percent, an  increase  of  7 basis points from 3.43 percent interest margin for
the quarter ending June 30, 1996.

ASSET QUALITY AND PROVISION FOR LOAN LOSSES

     For  the  quarter  ended  June  30,  1996 management added $20 as a volume
related addition to the provision for loan losses.  Management made no addition
to  the  provision for loan losses for the quarter ended June 30, 1997.  During
the  second  quarter  of  1997 Southern had net charge-offs of $97.  During the
same  period in 1996 net charge-offs were $30.  The increase in net charge-offs
was  due  to  both increased charge-offs and decreased recoveries in the second
quarter of 1997 compared to the second quarter of 1996.

<PAGE>                              

NONINTEREST INCOME

     BancShares  had  gains  on the sale of mortgage loans of $4 in the quarter
ended  June  30, 1997 compared to $151 in losses on the sales of mortgage loans
in  the  quarter  ended  June  30,  1996.  Southern had a gain of $213, that is
included  in  other noninterest income, on the sale of the Scotland Neck branch
as  discussed  above.  Southern  did not sell any branches in the quarter ended
June  30, 1997.  Income from service charges on deposit accounts, other service
charges  and  fees,  insurance  commissions  and  other  noninterest income not
detailed  above  increased  $24, or  3 percent, from $951 for the quarter ended
June 30, 1996 to $975 for the quarter ended June 30, 1997.

NONINTEREST EXPENSE

     Noninterest   expense   including   personnel,  occupancy,  furniture  and
equipment,  data processing, FDIC insurance and state assessments, printing and
supplies  and  other expenses, increased $457 or 11 percent, from $4,222 in the
quarter ended June 30, 1996 to $4,679 in the quarter ended June 30, 1997.

     This  increase  was  primarily  due to an increase in personnel expense of
$173,  or  9  percent, from $1,991 for the quarter ended June 30 1996 to $2,164
for  the  quarter  ended  June  30, 1997 and increased occupancy, furniture and
equipment  expense  and other volume related expenses resulting from the branch
acquisitions discussed above.

INCOME TAXES

     In  the  quarter  ended June 30, 1997 BancShares had income tax expense of
$130,  a  decrease of $285, or 69 percent, from $415 for the quarter ended June
30,  1996.  This  decrease  was  due  to  tax benefits resulting from the first
quarter   donation   of  available-for-sale  securities  discussed  above.  The
resulting  effective  tax  rates based on the accruals for the quarter ended in
June 1997 and 1996 were 10 percent and 27 percent, respectively.

SHAREHOLDERS' EQUITY AND CAPITAL ADEQUACY

     Sufficient  levels  of  capital are necessary to sustain growth and absorb
losses.  To  this  end,  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.

     In  the  quarter  ended  March  31, 1997 BancShares borrowed an additional
$5,000 and gave Southern an additional $5,000 in capital which improved each of
Southern's capital ratios from the levels calculated at December 31, 1996.

     One   of   the  regulator  guidelines  defines  minimum  requirements  for
Southern's  leverage  capital ratio.  Leverage capital equals total equity less
goodwill  and  certain  other  intangibles.   According  to  these  guidelines,
Southern's  leverage  capital  ratio  at  June  30, 1997 was  6.01 percent.  At
December 31, 1996, Southern's leverage capital ratio was 5.46 percent.  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 June 30, 1997, the Total RBC ratio
was 11.63 percent.  At December 31, 1996 the RBC ratio was 10.66 percent.  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 on BancShares' financial statements,
which is deducted from total equity in the ratio calculations.

     The  unrealized gains on securities available for sale at June 30, 1997 of
$17.5  million  and  $16.5  million  at  December  31, 1996, although a part of
total  shareholders'  equity, are 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:

<TABLE>
<CAPTION>
                                          June 30,       December 31,
                                            1997            1996
<S>                                    <C>             <C>
Tier 1 capital                           $ 32,215        $ 27,891
Total capital                              36,290          31,861
Risk-adjusted assets                      312,057         298,862
Average tangible assets                   536,428         510,574

Tier 1 capital ratio                      10.32%  (1)      9.33%  (1)
Total capital ratio                       11.63%  (1)     10.66%  (1)
Leverage capital ratio                     6.01%  (1)      5.46%  (1)

(1) These  ratios  exceed  the  minimum ratios for tier 1 capital of 6.00%, for
    total  capital  of  10.00% and for leverage capital of 5.00% required for a
    bank to be classified as "well capitalized," by  the FDIC.
     
</TABLE>
<PAGE>
                          
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 net cash plus short term and marketable securities divided
by net deposits and short term liabilities, was 29 percent at June 30, 1997 and
30 percent at December 31, 1996.

     The  Statement  of  Cash Flows discloses the principal sources and uses of
cash  from  operating, investing  and  financing  activities for the six months
ended June 30, 1997 and 1996, respectively.

     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 June 30, 1997 and at December 31,
1996 jumbo time deposits represented 11 percent and 9 percent, respectively, of
total deposits.

     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.  The following table presents comparative liquidity ratios of BancShares:
                                            
<TABLE>
<CAPTION>
                                                      June 30,     December 31, Regulatory
                                                        1997           1996     Guidelines
<S>                                                  <C>            <C>       <C>
Loans, net of unearned income to total deposits          69%            66%      80% (1)

Interest-bearing deposits to total deposits              88%            87%       N/A

Jumbo interest-bearing deposits to total deposits        11%             9%       N/A

Loans, net of unearned income to total assets            60%            59%      70% (1)

Liquidity                                                29%            30%      25% (2)

Temporary investments to volatile liabilities (3)       137%           120%     100% (2)

Volatile liability dependency                            -5%            -3%     0 or (-)

(1)  Maximum            
(2)  Minimum
(3)  Volatile Liabilities include certificates of deposit of $100,000 or more, repurchase
     agreements, and the Treasury Tax and Loan Account.

</TABLE>
<PAGE>

ACCOUNTING AND REGULATORY MATTERS

     In September 1996, the FASB issued SFAS No. 125, "Accounting for Transfers
and  Servicing  of Financial Assets and Extinguishments of Liabilities," ("SFAS
No.  125")  which  establishes  accounting  standards  for  determining  when a
liability should be considered extinguished through the transfer of assets to a
creditor  or  the  setting  aside  of assets dedicated to eventually settling a
liability.  The  statement  provides conditions for determining if a transferor
has  surrendered control over transferred financial assets and requirements for
derecognizing  a  liability  when  it  is  extinguished.   The  statement  also
requires  the  recognition of either a servicing asset or a servicing liability
when  an  entity  undertakes  an  obligation to service financial assets.  Such
servicing  assets  or  liabilities shall be amortized in proportion to and over
the  period of the estimated net servicing income or loss, as appropriate. SFAS
125   is  effective  for  transfers  and  servicing  of  financial  assets  and
extinguishments  of  liabilities occurring after December 31, 1996 and is to be
only  applied  on  a  prospective  basis.   The application of SFAS 125 did not
have  a  material  impact  on  BancShares  financial  condition  or  results of
operations.

     In December 1996, the FASB issued SFAS No. 127, "Deferral of the Effective
Date  of  Certain  Provisions  of  FSAB Statement No. 125, an Amendment to FASB
Statement  No. 125" ("Statement 127").  Statement 127 delays the implementation
of  certain provisions of Statement 125 because the changes required to be made
to  information  systems  and  accounting  processes  to  allow compliance with
certain provisions of Statement 125 could not reasonably be expected to be made
in  time  for  adoption  on  January  1, 1997.  As  a  result of Statement 127,
Statement  125  guidance  on  transactions  involving  secured  borrowings  and
collateral,  repurchase agreements, dollar-roll, securities lending and similar
transactions  has  been  deferred  until  January 1,  1998.   The  impact  from
BancShares'  adoption  of  Statement  125,  as  amended  by  Statement  127, is
anticipated to be immaterial to BancShares' consolidated financial statements.

     In  February  1997,  the  FASB  issued  SFAS No. 128, "Earnings per Share"
("Statement 128").  Statement  128  establishes  standards  for  computing  and
presenting  earnings  per  share  ("EPS") and applies to entities with publicly
held  common  stock  or  potential common stock.  This statement simplifies the
standards  for  computing EPS previously found in APB Opinion No. 15, "Earnings
per Share", and makes them comparable to international EPS standards. Statement
128  replaces the presentation of primary EPS with a presentation of basic EPS.
Statement  128  also requires dual presentation of basic and diluted EPS on the
face  of  the income statement for all entities with complex capital structures
and requires a reconciliation of the numerator and denominator of the basic EPS
computation  to  the  numerator and denominator of the diluted EPS computation.
Statement  128  provides  specific  guidance  for  the computation of basic and
diluted EPS and supercedes Opinion 15, AICPA Accounting Interpretation 1-102 of
Opinion  15,  and  other  related  accounting pronouncements.  Statement 128 is
effective for financial statements issued for periods ending after December 15,
1997,  including  interim  periods,  with  earlier  application  not permitted.
Additionally,  once adopted, restatement of all prior-period EPS data presented
is  required.  Management  does  not expect that adoption of this pronouncement
will have a material effect on BancShares' consolidated financial statements.

     In February 1997, the FASB issued SFAS No. 129, "Disclosure of Information
about   Capital   Structure"   ("Statement 129").   Statement  129  establishes
standards  for  disclosing  capital  structure information for all entities and
continues  the  requirements  to disclose certain capital structure information
found  in  APB  Opinions  No. 10, Omnibus Opinion-1996 and No. 15, Earnings per
Share  and  FASB  Statement  No.  47,  "Disclosure  of  Long-Term Obligations".
Statement  129  requires  summary explanations within the equity section of the
financial  statements  of  pertinent  rights  and  privileges  of  the  various
securities  outstanding  such  as  dividend and liquidation preferences, voting
rights,  call   or  redemption  terms,  additional  issue  contract  terms  and
aggregrate   and  per-share  amounts  of  arrearages  in  cumulative  preferred
dividends.  Statement  129  is  effective  for financial statements for periods
ending  after  December  15, 1997.  Management does not expect that adoption of
this  pronouncement  will  have  a  material effect on BancShares' consolidated
financial statements.

     In  June 1997, the FASB issued Statement of Financial Accounting Standards
No.  130, "Reporting  Comprehensive  Income"  ("SFAS No. 130").  SFAS  No.  130
establishes standards for reporting and display of comprehensive income and its
components  in a full set of general-purpose financial statements.  It does not
address  issues  of recognition or measurement for comprehensive income and its
components.  The  provisions  of  SFAS  No. 130  are effective for fiscal years
beginning   after   December   15,  1997.  Earlier  application  is  permitted.
Management  does  not  expect  that  adoption of this pronouncement will have a
material effect on BancShares' consolidated financial statements.

     In  June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosures  about Segments of an Enterprise and Related Information"
(SFAS  No. 131").  This  statement  requires  that  public business enterprises
report  certain  information  about  operating  segments  in  complete  sets of
financial  statements  issued  to  shareholders.  It  also requires that public
business  enterprises  report  certain  information  about  their  products and
services,  the  geographic  areas  in  which  they  operate,  and  their  major
customers.  SFAS No. 131 is effective for fiscal years beginning after December
15, 1997.  Earlier  application is encouraged.  Management does not expect that
adoption  of  this  pronouncement  will  have  a material effect on BancShares'
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 EVENTS

     BancShares  previously  announced  that Mr. John C. Pegram, Jr., Executive
Vice  President  of  Southern  and  Vice  President  of BancShares, will become
President  of Southern upon the retirement of Southern President M. J. McSorley
on July 1, 1998.

     Southern  has  received  regulatory  approval to open its first offices in
Wallace,  Lumberton  and Fairmont North Carolina.  Southern plans to open these
offices in 1998.

     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.
				
                                     
  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: July 31, 1997                        ___________________________________
                                            John C. Pegram, Jr., Vice President
                                            /s/David A. Bean
Dated: July 31, 1997                        ___________________________________
                                            David A. Bean, Secretary/Treasurer