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 September 30, 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 quarter covered by this report.

                                 116,839 shares

<PAGE>

Part i - FINANCIAL INFORMATION

Item 1 - Financial Statements.

<TABLE>
<CAPTION>
                                                                                              (Unaudited)
SOUTHERN BANCSHARES (N.C.), INC. AND SUBSIDIARIES                                             September 30,         December 31,
CONSOLIDATED BALANCE SHEETS                                                                       2000                  1999
                                                                                             ----------------      ---------------

(Dollars in thousands except per share data)
<S>                                                                                                 <C>                  <C>
ASSETS
Cash and due from banks                                                                             $ 34,779             $ 28,524
Federal funds sold                                                                                    24,005               20,370
Investment securities:
   Available-for-sale, at fair value (amortized cost $99,635 and $83,095, respectively)              111,071               94,084
   Held-to-maturity,  at amortized cost (fair value $93,824 and $99,979, respectively)                93,607              100,129
Loans                                                                                                430,001              398,060
    Less allowance for loan losses                                                                    (6,450)              (6,188)
                                                                                             ----------------      ---------------
Net loans                                                                                            423,551              391,872
Premises and equipment                                                                                24,344               21,257
Intangible assets                                                                                      8,068                6,411
Accrued interest receivable                                                                            6,720                4,730
Other assets                                                                                           2,061                1,855
                                                                                             ----------------      ---------------
              Total assets                                                                         $ 728,206            $ 669,232
                                                                                             ================      ===============

LIABILITIES
Deposits:
     Noninterest-bearing                                                                           $ 102,805             $ 89,181
     Interest-bearing                                                                                529,978              489,069
                                                                                             ----------------      ---------------
Total deposits                                                                                       632,783              578,250
Short-term borrowings                                                                                  9,656                6,658
Long-term obligations                                                                                 23,000               23,000
Accrued interest payable                                                                               3,823                4,471
Other liabilities                                                                                      1,826                1,909
                                                                                             ----------------      ---------------
          Total liabilities                                                                          671,088              614,288
                                                                                             ----------------      ---------------

SHAREHOLDERS' EQUITY
Series   B   non-cumulative  preferred  stock,  no  par  value; 408,728  shares  authorized;
      367,524  and  397,370  shares  issued  and  outstanding  at  September  30, 2000  and
      December 31, 1999, respectively                                                                  1,790                1,936
Series C non-cumulative preferred stock, no par value; 43,631 shares authorized;  39,825
      shares   issued   and   outstanding  at  September  30, 2000  and  December  31, 1999,
      respectively                                                                                       555                  555
Common  stock,  $5  par  value;  158,485  shares authorized; 116,839 and 118,912 shares
       issued and outstanding at September 30, 2000 and December 31, 1999, respectively                  584                  595
Surplus                                                                                               10,000               10,000
Retained earnings                                                                                     36,641               34,606
Accumulated other comprehensive income                                                                 7,548                7,252
                                                                                             ----------------      ---------------
        Total shareholders' equity                                                                    57,118               54,944
                                                                                             ----------------      ---------------

              Total liabilities and shareholders' equity                                           $ 728,206            $ 669,232
                                                                                             ================      ===============
</TABLE>

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

                                       2
<PAGE>

<TABLE>
<CAPTION>
SOUTHERN BANCSHARES (N.C.), INC. AND SUBSIDIARIES                                           (Unaudited)
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE                               Three Months Ended September 30,
           INCOME                                                                      2000                1999
                                                                                       ----                ----
(Dollars in thousands except share and per share data)
<S>                                                                                <C>               <C>
Interest income:
Loans                                                                                $ 9,508            $ 7,951
Investment securities:
    U. S. Government                                                                   2,268              1,858
    State, county and municipal                                                          492                400
    Other                                                                                145                178
                                                                               --------------       ------------
            Total investment securities interest income                                2,905              2,436
Federal funds sold                                                                       197                146
                                                                               --------------       ------------
                         Total interest income                                        12,610             10,533

Interest expense:
       Deposits                                                                        5,788              4,352
       Short-term borrowings                                                             115                 63
       Long-term obligations                                                             519                531
                                                                               --------------       ------------
             Total interest expense                                                    6,422              4,946
                                                                               --------------       ------------
                     Net interest income                                               6,188              5,587
      Provision for loan losses                                                          150                465
                                                                               --------------       ------------
                     Net interest income after provision for loan losses               6,038              5,122

Noninterest income:
     Service charges on deposit accounts                                               1,036                914
     Other service charges and fees                                                      330                315
     Credit card merchant discount                                                       255                160
     Investment securities (losses) gains, net                                            97                  -
     Other                                                                                91                 13
                                                                               --------------       ------------
           Total noninterest income                                                    1,809              1,402

Noninterest expense:
      Personnel                                                                        2,959              2,730
      Intangibles amortization                                                           634                389
      Data processing                                                                    548                458
      Occupancy                                                                          509                406
      Furniture and equipment                                                            438                494
      Professional fees                                                                  152                120
      Other                                                                              951                726
                                                                               --------------       ------------
             Total noninterest expense                                                 6,191              5,323
                                                                               --------------       ------------
Income before income taxes                                                             1,656              1,201
Income taxes                                                                             340                290
                                                                               --------------       ------------
                       Net income                                                      1,316                911
                                                                               --------------       ------------
Other comprehensive income (loss) net of tax:
   Unrealized gains (losses) arising during period                                     1,963               (866)
   Less: reclassification adjustment for gains included in net income                      -                  -
                                                                               --------------       ------------
       Total comprehensive (loss) income                                             $ 3,279               $ 45
                                                                               ==============       ============
Per share information:
   Net Income per common share                                                       $ 10.41             $ 6.81
   Cash dividends declared on common shares                                             0.38               0.38
   Weighted average common shares outstanding                                        117,481            119,172
                                                                               ==============       ============


<CAPTION>
SOUTHERN BANCSHARES (N.C.), INC. AND SUBSIDIARIES                                         (Unaudited)
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE                              Nine Months Ended September 30,
           INCOME                                                                     2000              1999
                                                                                      ----              ----
(Dollars in thousands except share and per share data)
<S>                                                                                <C>               <C>
Interest income:
Loans                                                                              $ 26,966          $ 23,015
Investment securities:
    U. S. Government                                                                  6,462             5,607
    State, county and municipal                                                       1,461             1,287
    Other                                                                               442               552
                                                                               -------------      ------------
            Total investment securities interest income                               8,365             7,446
Federal funds sold                                                                      808               576
                                                                               -------------      ------------
                         Total interest income                                       36,139            31,037

Interest expense:
       Deposits                                                                      15,853            13,053
       Short-term borrowings                                                            275               160
       Long-term obligations                                                          1,554             1,566
                                                                               -------------      ------------
             Total interest expense                                                  17,682            14,779
                                                                               -------------      ------------
                     Net interest income                                             18,457            16,258
      Provision for loan losses                                                         300               585
                                                                               -------------      ------------
                     Net interest income after provision for loan losses             18,157            15,673

Noninterest income:
     Service charges on deposit accounts                                              2,891             2,637
     Other service charges and fees                                                     954               877
     Credit card merchant discount                                                      413               335
     Investment securities (losses) gains, net                                         (746)                1
     Other                                                                              233              (139)
                                                                               -------------      ------------
           Total noninterest income                                                   3,745             3,711

Noninterest expense:
      Personnel                                                                       8,684             8,137
      Intangibles amortization                                                        1,685             1,257
      Data processing                                                                 1,607             1,419
      Occupancy                                                                       1,519             1,185
      Furniture and equipment                                                         1,250             1,220
      Professional fees                                                                 561               398
      Other                                                                           2,768             2,408
                                                                               -------------      ------------
             Total noninterest expense                                               18,074            16,024
                                                                               -------------      ------------
Income before income taxes                                                            3,828             3,360
Income taxes                                                                            800               800
                                                                               -------------      ------------
                       Net income                                                     3,028             2,560
                                                                               -------------      ------------
Other comprehensive income (loss) net of tax:
   Unrealized gains (losses) arising during period                                      296            (3,054)
   Less: reclassification adjustment for gains included in net income                  (556)                -
                                                                               -------------      ------------
       Total comprehensive (loss) income                                            $ 2,768            $ (494)
                                                                               =============      ============
Per share information:
   Net Income per common share                                                      $ 23.22           $ 19.02
   Cash dividends declared on common shares                                            1.13              1.13
   Weighted average common shares outstanding                                       118,171           119,203
                                                                               =============      ============
</TABLE>

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

                                       3
<PAGE>

SOUTHERN BANCSHARES  (N.C.), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999

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

<TABLE>
<CAPTION>
                                                                       Preferred Stock                       Common  Stock
                                                  ----------------------------------------------------   ------------------------
                                                             Series B                   Series C
                                                  --------------------------   -----------------------
                                                       Shares         Amount        Shares       Amount       Shares        Amount
                                                  ------------   -----------   -----------   ---------   ------------   ---------
<S>                                                   <C>           <C>            <C>         <C>           <C>          <C>
Balance, December 31, 1998                            398,653       $ 1,942        40,373      $  562        119,266      $  596
Net income
Retirement of stock                                    (1,015)           (5)         (548)         (7)          (266)         (1)
Cash dividends:
  Common stock ($1.13 per share)
  Preferred B ($.66 per share)
  Preferred C ($.66 per share)
Unrealized loss on securities
  available-for-sale, net of tax
  benefit of $1,573
                                                  ------------   -----------   -----------   ---------   ------------   ---------
Balance, September 30, 1999                           397,638       $ 1,937        39,825      $  555        119,000      $  595
                                                  ============   ===========   ===========   =========   ============   =========

Balance, December 31, 1999                            397,370       $ 1,936        39,825      $  555        118,912      $  595
Net income
Retirement of stock                                   (29,846)         (146)                                  (2,073)        (11)
Cash dividends:
  Common stock ($1.13 per share)
  Preferred B ($.66 per share)
  Preferred C ($.66 per share)
Unrealized gain on securities
  available-for-sale, net of tax
  expense of $151
                                                  ------------   -----------   -----------   ---------   ------------   ---------
Balance, September 30, 2000                           367,524       $ 1,790        39,825      $  555        116,839      $  584
                                                  ============   ===========   ===========   =========   ============   =========



<CAPTION>
                                                                                      Accumulated
                                                                                          Other
                                                                                         Compre-                Total
                                                                        Retained         hensive            Shareholders'
                                                         Surplus        Earnings         Income                Equity
                                                    ------------   -------------  ----------------  ----------------------
<S>                                                    <C>             <C>               <C>                    <C>
Balance, December 31, 1998                             $ 10,000        $ 31,571          $ 11,362               $  56,033
Net income                                                                2,560                                     2,560
Retirement of stock                                                         (54)                                      (67)
Cash dividends:
  Common stock ($1.13 per share)                                           (135)                                     (135)
  Preferred B ($.66 per share)                                             (265)                                     (265)
  Preferred C ($.66 per share)                                              (28)                                      (28)
Unrealized loss on securities
  available-for-sale, net of tax
  benefit of $1,573                                                                        (3,054)                 (3,054)
                                                    ------------   -------------  ----------------  ----------------------
Balance, September 30, 1999                            $ 10,000        $ 33,649          $  8,308               $  55,044
                                                    ============   =============  ================  ======================

Balance, December 31, 1999                             $ 10,000        $ 34,606          $  7,252               $  54,944
Net income                                                                3,028                                     3,028
Retirement of stock                                                        (575)                                     (732)
Cash dividends:
  Common stock ($1.13 per share)                                           (134)                                     (134)
  Preferred B ($.66 per share)                                             (258)                                     (258)
  Preferred C ($.66 per share)                                              (26)                                      (26)
Unrealized gain on securities
  available-for-sale, net of tax
  expense of $151                                                                             296                     296
                                                    ------------   -------------  ----------------  ----------------------
Balance, September 30, 2000                            $ 10,000        $ 36,641          $  7,548               $  57,118
                                                    ============   =============  ================  ======================
</TABLE>

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

                                       4
<PAGE>

<TABLE>
<CAPTION>
SOUTHERN BANCSHARES (N.C.), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                             (Unaudited)
                                                                                                    Nine months ended September 30,
(Thousands)                                                                                           2000                 1999
                                                                                                ----------------      --------------

OPERATING ACTIVITIES:
<S>                                                                                                   <C>                  <C>
Net income                                                                                           $  3,028            $   2,560
Adjustments to reconcile net income to net cash
      provided by operating activities:
            Provision for loan losses                                                                     300                  585
            Losses (gains) on sales and issuer calls of securities available-for-sale                     746                   (1)
            Loss on sale and abandonment of premises and equipment                                          8                   95
            Amortization of intangibles                                                                 1,685                1,257
            Depreciation and net accretion on investments                                               1,147                1,051
            Net increase in accrued interest receivable                                                (1,990)              (1,118)
            Net decrease in accrued interest payable                                                     (648)                (506)
            Net decrease (increase) in other assets                                                      (148)                 446
            Net decrease in other liabilities                                                             (94)              (1,331)
                                                                                                --------------      ---------------

NET CASH PROVIDED BY OPERATING ACTIVITIES                                                               4,034                3,038
                                                                                                --------------      ---------------

INVESTING ACTIVITIES:
      Proceeds from maturities and issuer calls of investment securities available-for-sale            12,022               26,188
      Proceeds from maturities and issuer calls of investment securities held-to-maturity              49,556               32,131
      Proceeds from sales of investment securities available-for-sale                                   1,600                   30
      Purchases of investment securities held-to-maturity                                             (48,014)             (31,537)
      Purchases of investment securities available-for-sale                                           (26,000)             (23,000)
      Net increase in loans                                                                           (25,507)             (19,512)
      Proceeds from net cash received for branches acquired                                            26,074                3,991
      Purchases of premises and equipment                                                              (3,749)              (2,096)
                                                                                                --------------      ---------------

NET CASH USED BY INVESTING ACTIVITIES                                                                 (14,018)             (13,805)
                                                                                                --------------      ---------------

FINANCING ACTIVITIES:
     Net increase in demand and interest-bearing demand deposits                                         (153)              (4,143)
     Net increase (decrease) in time deposits                                                          18,179                 (715)
     Net proceeds of short-term borrowed funds                                                          2,998                2,036
     Cash dividends paid                                                                                 (418)                (428)
     Purchase and retirement of stock                                                                    (732)                 (67)
                                                                                                --------------      ---------------

NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES                                                       19,874               (3,317)
                                                                                                --------------      ---------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                 $  9,890            $ (14,084)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR                                                     48,894               56,954
                                                                                                --------------      ---------------

CASH AND CASH EQUIVALENTS AT THE END OF PERIOD                                                       $ 58,784            $  42,870
                                                                                                ==============      ===============

SUPPLEMENTAL DISCLOSURES OF CASH PAID DURING THE PERIOD FOR:

     Interest                                                                                        $ 18,330            $  15,285
     Income taxes                                                                                       $ 915            $     543
                                                                                                ==============      ===============

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Unrealized gain (loss) on securities available-for-sale, net of tax (expense) and benefit
   of $151 and $1,573, respectively                                                                  $    296            $  (3,054)
                                                                                                ==============      ===============
</TABLE>

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


                                       5
<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 48 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 quarters presented have been included.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions.
These estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent liabilities at the date of the
financial statements and the reported amounts of revenues and expenses for the
reporting periods. 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.

                                       6
<PAGE>
Cash And Cash Equivalents

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

Reclassifications

Certain prior year year-to-date and quarter-to-date 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.

<TABLE>
<CAPTION>
                                                                                       Unaudited
Note 2. Investment securities                                                       September 30, 2000

                                                              ------------------------------------------------------------------
(In thousands)                                                                       Gross           Gross           Estimated
                                                                  Amortized       Unrealized       Unrealized          Fair
                                                                     Cost            Gains           Losses            Value
                                                              ---------------  --------------   -------------   ----------------

<S>                                                               <C>                     <C>           <C>          <C>
    SECURITIES HELD-TO-MATURITY:
         U.  S. Government                                        $   72,693              69            (211)        $   72,551
         Obligations of states
             and political subdivisions                               20,814             365              (1)            21,178
         Corporate debenture                                             100               -              (5)                95
                                                              ---------------  --------------   -------------   ----------------
                                                                      93,607             434            (217)            93,824
                                                              ---------------  --------------   -------------   ----------------

    SECURITIES AVAILABLE-FOR-SALE:
         U.  S. Government                                        $   76,987             122            (221)        $   76,888
         Marketable equity securities                                 13,326          11,429            (109)            24,646
         Obligations of states
            and political subdivisions                                 8,177             246             (18)             8,405
        Mortgage-backed securities                                     1,145              12             (25)             1,132
                                                              ---------------  --------------   -------------   ----------------
                                                                      99,635          11,809            (373)           111,071
                                                              ---------------  --------------   -------------   ----------------

                          Totals                                  $  193,242       $  12,243        $   (590)        $  204,895
                                                              ===============  ==============   =============   ================

<CAPTION>
Note 2. Investment securities                                                          December 31, 1999

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

    SECURITIES AVAILABLE-FOR-SALE:
         U.  S. Government                                        $   57,968                -           (551)      $   57,417
         Marketable equity securities                                 10,262           12,559         (1,112)          21,709
         Obligations of states
            and political subdivisions                                13,472              178            (72)          13,578
        Mortgage-backed securities                                     1,393               14            (27)           1,380
                                                              ---------------   --------------  -------------  ---------------
                                                                      83,095           12,751         (1,762)          94,084
                                                              ---------------   --------------  -------------  ---------------

                          Totals                                  $  183,224       $   13,110      $  (2,271)      $  194,063
                                                              ===============   ==============  =============  ===============


</TABLE>
During the nine months ended September 30, 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) during the first quarter of
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.

<TABLE>
<CAPTION>
Note 3.  LOANS                                                          Unuadited
      (Dollars in thousands)                                           September 30,         December 31,
                                                                             2000                1999
                                                                  ------------------    ------------------
<S>                                                                        <C>                   <C>
    Commercial, financial and agricultural                                 $107,155              $101,128
    Real estate:
          Construction                                                       15,923                 8,647
          Mortgage:
                One to four family residential                              109,353               111,793
                Commercial                                                   92,413                74,873
                Equityline                                                   30,535                30,152
                Other                                                        32,929                32,851
    Consumer                                                                 35,866                34,309
    Lease financing                                                           5,827                 4,307
                                                                  ------------------    ------------------
      Total loans                                                          $430,001              $398,060
                                                                  ==================    ==================
    Loans held for sale, included above                                    $  1,353              $  3,508
    Loans serviced for others, not included above                          $178,938              $180,345
</TABLE>

<TABLE>
<CAPTION>
Note 4.  ALLOWANCE FOR LOAN LOSSES
      (Dollars in thousands)                                             (Unaudited)
                                                                Nine Months Ended September 30,
                                                          ----------------------------------------
                                                                    2000                  1999
                                                          ------------------    ------------------
<S>                                                                  <C>                   <C>
    Balance at beginning of year                                     $6,188                $5,962
      Provision for loan losses                                         300                   585
      Loans charged off                                                (301)                 (537)
      Loan recoveries                                                   263                   123
                                                          ------------------    ------------------
    Balance at end of the period                                     $6,450                $6,133
                                                          ==================    ==================
</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. The following table presents the components of
the earnings per share computations:

<TABLE>
<CAPTION>
                                                           (Unaudited)                                  (Unaudited)
   (Dollars in thousands)                      Three Months Ended September 30,               Nine Months Ended September 30,
                                            ----------------------------------------     -----------------------------------------
                                                    2000                  1999                  2000                    1999
                                            ------------------    ------------------     ---------------        ------------------
<S>                                                    <C>                     <C>               <C>                       <C>
 Net income                                            $1,316                  $911              $3,028                    $2,560
   Less: Preferred dividends                              (93)                 (100)               (284)                     (293)
                                            ------------------    ------------------     ---------------        ------------------
 Net income applicable to common shares                $1,223                  $811              $2,744                    $2,267
                                            ==================    ==================     ===============        ==================

 Weighted average common shares
   outstanding during the period                      117,481               119,172             118,171                   119,203
                                            ==================    ==================     ===============        ==================
</TABLE>
                                       7
<PAGE>

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 September
30, 2000, beneficially owned 32,526 shares, or 27.84%, of BancShares'
outstanding common stock and 4,966 shares, or 1.35%, of BancShares' outstanding
Series B preferred stock. At the same date, the second significant shareholder
beneficially owned 27,577 shares, or 23.60%, of BancShares' outstanding common
stock.

These two significant shareholders are directors and executive officers of the
Corporation and at September 30, 2000, beneficially owned 2,533,097 shares, or
28.79%, and 1,491,324 shares, or 16.92%, of the Corporation's outstanding Class
A common stock, and 649,188 shares, or 37.79%, and 199,052 shares, or 11.57%, of
the Corporation's outstanding Class B common stock. The above totals include
487,557 Class A common shares, or 5.53%, 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 two
Rocky Mount, North Carolina offices and one Nashville, North Carolina office of
First Citizens containing approximately $80.0 million of deposits and
approximately $80.0 million of loans. Southern expects to pay approximately $7.2
million to First Citizens for this acquisition.

The following table lists the various charges paid to the Corporation in
accordance with the aforementioned service contracts:

<TABLE>
<CAPTION>
      (Dollars in thousands)                                          (Unaudited)
                                                            Nine Months Ended September 30,
                                                       ----------------------------------------
                                                             2000                  1999
                                                       ------------------    ------------------
<S>                                                               <C>                   <C>
    Data and item processing                                      $1,816                $1,620
    Forms, supplies and equipment                                    213                   216
    Trustee for employee benefit plans                                74                    66
    Consulting fees                                                   55                    66
    Other services                                                    65                    95
                                                       ------------------    ------------------

                                                                  $2,223                $2,063
                                                       ==================    ==================
</TABLE>

                                       8
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

SOUTHERN BANCSHARES (N.C.), INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - NINE MONTHS ENDED
2000 VS. NINE MONTHS ENDED 1999


INTRODUCTION

In the first nine months of 2000, the net income of BancShares increased
approximately $387,000 from $2.6 million in the first nine months of 1999 to
$3.0 million in the first nine months of 2000, an increase of 14.65%. This
increase resulted due to several factors including a reduction in the provision
for loan loss for 2000. In 1999 the provision for loan losses had been increased
as a result of the impact of several hurricanes within BancShares market. One
branch acquisition in September 1999, the opening of Southern's first Clinton,
North Carolina office in November 1999, one branch acquisition in February 2000,
three branch acquisitions in April 2000 and the September 1, 2000 opening of
Southern's first Greenville, North Carolina office resulted in increased
personnel expense and other related operating expenses for the nine months ended
September 30, 2000. BancShares also recorded a charge of $855,000 to investment
securities gains (losses) to reduce the carrying values of certain marketable
equity securities in the first three months of 2000.

Per share net income available to common shares for the first nine months of
2000 was $23.22, an increase of $4.20, or 22.08%, from $19.02 for the first nine
months of 1999. The annualized return on average equity increased to 7.33%, for
the period ended September 30, 2000, from 6.15% for the period ended September
30, 1999 and the return on average assets increased to 0.56%, for the period
ended September 30, 2000, from 0.53% for the period ended September 30, 1999.

At September 30, 2000, BancShares' assets totaled $728.2 million, an increase of
$59.0 million, or 8.82%, from the $669.2 million reported at December 31, 1999.
During this nine month period, cash and due from banks increased $6.3 million,
or 21.93% from $28.5 million to $34.8 million. During this nine month period,
federal funds sold increased $3.6 million, or 17.84% from $20.4 million to $24.0
million. During this nine month period, loans increased $31.9 million, or 8.02%,
from $398.1 million to $430.0 million. During the nine months ended September
30, 2000 investment securities increased $10.5 million, or 5.39% from $194.2
million at December 31, 1999 to $204.7 million at September 30, 2000. Total
deposits increased $54.5 million, or 9.43% from $578.3 million at December 31,
1999 to $632.8 million at September 30, 2000. The above changes resulted
principally from the acquisitions and new branch openings discussed below and
the seasonal impact of the agricultural markets served by Southern .


                                       9
<PAGE>

ACQUISITIONS

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.

In April 2000, Southern acquired $5.1 million of the loans and $29.4 million of
the deposits of the Battleboro, Nashville and Sharpsburg offices of Centura
Bank. Southern recorded intangible assets of $3.2 million for the Centura
acquisitions.

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, as though they
had been made at the beginning of the period presented, is not material to
BancShares' consolidated financial statements.

In September 2000 Southern opened its first Greenville, North Carolina branch.

The comparisons of the nine months ended September 30, 2000 to the nine months
ended September 30, 1999 are accordingly impacted by the above transactions.


INTEREST INCOME

Interest and fees on loans increased $4.0 million, or 17.17%, from $23.0 million
for the nine months ended September 30, 1999 to $27.0 million for the nine
months ended September 30, 2000. This increase resulted from both overall higher
loan portfolio yields and increased balances. Average loans for the nine months
ended September 30, 2000 were $414.4 million, an increase of 10.10% from $376.4
million for the prior year period. This increase in average loans was
principally the result of loan growth in the existing branches as the
acquisitions discussed above resulted in growth of only approximately $6.5
million in average loans. The yield on the loan portfolio was 8.08% for the nine
months ended September 30, 1999 and 8.89% in the nine months ended September 30,
2000.

Interest income from investment securities, including U. S. Treasury and
Government obligations, obligations of state and county subdivisions and other
securities increased $920,000 or 12.36%, from $7.4 million in the nine months
ended September 30, 1999 to $8.4 million in the nine months ended September 30,
2000. This increase was due to an increase in the volume of average investment
securities for the nine months ended September 30, 2000 to $209.8 million as
compared to $197.0 million for the same 1999 period and an overall increase in
portfolio yields. The increase in volume principally resulted from the
acquisitions discussed above. The yield on investment securities was 5.23% for
the nine-month period ended September 30, 1999 and 5.53% for the nine-month
period ended September 30, 2000.


                                       10
<PAGE>

Interest income on federal funds sold increased $232,000, or 40.28%, from
$576,000 for the nine months ended September 30, 1999 to $808,000 for the nine
months ended September 30, 2000. This increase in income resulted from both an
increase in the average federal funds sold to $17.9 million for the nine months
ended September 30, 2000 from an average of $15.7 million for the nine months
ended September 30, 1999 and an increase in the yield on federal funds. The
increase in average federal funds sold resulted primarily from the acquisitions
discussed above. Average federal funds sold yields were 5.95% for the nine
months ended September 30, 2000, up from 4.83% for the nine months ended
September 30, 1999.

Total interest income increased $5.1 million or 16.44%, from $31.0 million for
the nine months ended September 30, 1999 to $36.1 million for the nine months
ended September 30, 2000. This increase was the result of a 51 basis point
increase in average earning asset yields and an increase of $50.0 million in
average earning assets.

Average earning asset yields for the nine months ended September 30, 2000
increased to 7.58% from the 7.07% yield on average earning assets for the nine
months ended September 30, 1999. Average earning assets increased from $583.1
million in the nine months ended September 30, 1999 to $633.1 million in the
nine months ended September 30, 2000. This $50.0 million increase in the average
earning assets resulted primarily from the acquisitions discussed above.


INTEREST EXPENSE

Total interest expense increased $2.9 million, or 19.65%, from $14.8 million in
the nine months ended September 30, 1999 to $17.7 million for the nine months
ended September 30, 2000. The principal reasons for this increase were the
increase in the cost of deposits and increased deposits primarily from the
acquisitions discussed above. BancShares' total cost of funds increased from
3.91% for the nine months ended September 30, 1999 to 4.34% for the nine months
ended September 30, 2000. Average interest-bearing deposits were $513.3 million
in the nine months ended September 30, 2000, an increase of $39.9 million from
the $473.4 million average in the nine months ending September 30, 1999. The
increase in interest-bearing deposits was primarily the result of the
aforementioned acquisitions.


NET INTEREST INCOME

Net interest income was $18.5 million for the nine months ended September 30,
2000 and $16.3 million for the nine months ended September 30, 1999.

The interest rate spread for the nine months ended September 30, 2000 was 3.25%,
an increase of 9 basis points from the 3.16% interest rate spread for the nine
months ended September 30, 1999.


                                       11
<PAGE>

ASSET QUALITY AND PROVISION FOR LOAN LOSSES

For the nine months ended September 30, 2000 management recorded $300,000 as a
provision for loan losses. Management made a $585,000 addition to the provision
for loan losses for the nine months ended September 30, 1999 including a
$465,000 provision related to the September 1999 hurricanes' impact on
Southern's market area.

During the first nine months of 2000 management charged-off loans totaling
$302,000 and received recoveries of $264,000, resulting in net charge-offs of
$38,000. During the same period in 1999, $537,000 in loans were charged-off and
recoveries of $123,000 were received, resulting in net charge-offs of $414,000.
For the nine months ended September 30, 2000 $300,000 was added to the allowance
for loan losses through charges to the operations of BancShares. The allowance
for loan losses accordingly increased $262,000 from December 31, 1999. The
following table presents comparative Asset Quality ratios of BancShares:


<TABLE>
<CAPTION>
                                                               (Unaudited)
                                                              September 30,         December 31,
                                                                  2000                  1999
                                                            ------------------    ------------------
<S>                                                               <C>                   <C>
Ratio of annualized net loans charged off
          to average loans                                        0.01%                 0.16%

Allowance for loan losses
          to loans                                                1.50%                 1.55%

Non-performing loans
          to loans                                                0.41%                 0.19%

Non-performing loans and assets
          to total assets                                         0.25%                 0.17%

Allowance for loan losses
          to non-performing loans                               364.41%               830.60%
</TABLE>

The ratio of annualized net charge-offs to average loans outstanding decreased
to 0.01% for the nine months ended September 30, 2000 from 0.16% for the year
ended December 31, 1999. The allowance for loan losses represented 1.50% of
loans at September 30, 2000. The allowance for loan losses represented 1.55% of
loans at December 31, 1999. The allowance for loan losses to loans ratio was
also impacted by growth in loans of $31.9 million, or 8.02% from $398.1 million
at December 31, 1999 to $430.0 million at September 30, 2000.

The ratio of nonperforming loans to loans increased from 0.19% at December 31,
1999 to 0.41% at September 30, 2000. Nonperforming loans and assets to total
assets increased to 0.25% at September 30, 2000 from 0.17% at December 31, 1999.
The allowance for loan losses to nonperforming loans represented 364.41% of
nonperforming loans at September 30, 2000, a decrease from the 830.60% at
December 31, 1999. The above performance declines resulted primarily from an
increase in nonperforming loans to $1.8 million at September 30, 2000 from
$745,000 at December 31, 1999. The nonperforming loans at September 30, 2000
included $297,000 of nonaccrual loans, $1.5 million of accruing loans 90 days or
more past due and $41,000 of restructured loans. BancShares had $37,000 of
assets classified as other real estate at September 30, 2000. BancShares had
$414,000 of assets classified as other real estate at December 31, 1999.

Management considers the September 30, 2000 allowance for loan losses to be
adequate to cover the losses and risks inherent in the loan portfolio at
September 30, 2000 and will continue to monitor its portfolio and to adjust the
relative level of the allowance as needed.

                                       12
<PAGE>

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 adjustments to the allowances based on the examiners' judgments about
information available to them at the time of their examinations.


NONINTEREST INCOME

During the nine months ended September 30, 2000, BancShares realized a $34,000
increase in noninterest income primarily as a result of a $746,000 net loss
recorded for available-for-sale investment securities.

During the nine months ended September 30, 2000 investment securities were sold
for a net gain of $109,000. During the nine months ended September 30, 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
nine months ended September 30, 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.

Service charges on deposit accounts for the nine months ended September 30, 2000
increased $254,000 and other service charges and fees for the nine months ended
September 30, 2000 increased $82,000 over the nine months ended September 30,
1999 primarily as a result of the acquisitions discussed above.


                                       13
<PAGE>

NONINTEREST EXPENSE

Noninterest expense increased $2.1 million or 12.87%, from $16.0 million in the
nine months ended September 30, 1999 to $18.1 million in the nine months ended
September 30, 2000.

This increase was primarily due to an increase in personnel expense of $547,000,
or 6.72%, from $8.1 million at September 30, 1999 to $8.7 million at September
30, 2000 and increased occupancy, furniture and equipment expense and other
expenses resulting principally from the branch acquisitions discussed above.


INCOME TAXES

In the nine months ended September 30, 2000 and the nine months ended September
30, 1999, BancShares recorded income tax expense of $800,000. The resulting
effective tax rate for the nine months ended September 30, 2000 was 20.90%. The
effective tax rate for the nine months ended September 30, 1999 was 23.81%. The
effective tax rates in 2000 of 20.90% and in 1999 of 23.81% differ from the
federal statutory rate of 35.00% primarily due to tax exempt income.



                                       14
<PAGE>

SOUTHERN BANCSHARES (N.C.), INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - THIRD QUARTER OF
2000 VS. THIRD QUARTER OF 1999


INTRODUCTION

In the three months ended September 30, 2000, the net income of BancShares
increased $405,000 from $911,000 in the three months ended September 30, 1999 to
$1.3 million in the three months ended September 30, 2000, an increase of
44.46%. The increase in net income for the quarter ended September 30, 2000 was
attributed to several factors including a decrease in the provision for loan
losses. The third quarter provision for loan losses was higher than the 2000
provision for loan losses, primarily due to the impact of several hurricanes in
1999 in BancShares' market. Also impacting net income in 2000 was an increase in
net interest income and noninterest income which were partially offset by an
increase in noninterest expense.

Per share net income available to common shares for the three months ended
September 30, 2000 was $10.36, an increase of $3.55, or 52.13%, from $6.81 in
the three months ended September 30, 1999.


ACQUISITIONS

In September 1999 Southern acquired $9.2 million of the loans and $14.8 million
of the deposits of the Ahoskie, North Carolina office of First Citizens Bank.
Southern recorded intangible assets of $1.3 million for the Ahoskie acquisition.
Southern had no acquisitions in the quarter ended September 30, 2000. The
comparisons of the three months ended September 30, 2000 to the three months
ended September 30, 1999 are accordingly impacted by the acquisitions discussed
above.


INTEREST INCOME

Interest and fees on loans increased $1.6 million, or 19.58%, from $8.0 million
for the quarter ended September 30, 1999 to $9.5 million for the quarter ended
September 30, 2000. This increase was due to both increased balances and higher
overall 2000 interest rates. Average loans for the quarter ended September 30,
2000 were $428.2 million, an increase of 12.65% from $380.1 million for the
prior year quarter. The yield on the loan portfolio was 8.14% for the three
months ended September 30, 1999 and 8.77% for the three months ended September
30, 2000.

Interest income from investment securities, including U. S. Treasury and
Government obligations, obligations of state and county subdivisions and other
securities increased $469,000, or 19.25%, from $2.4 million in the three months
ended September 30, 1999 to $2.9 million in the three months ended September

                                       15
<PAGE>

30, 2000. This increase was due to both higher overall interest rates and an
increase in the average investment portfolio. The acquisitions discussed above
resulted in increased average investment securities for the quarter ended
September 30, 2000 to $212.7 million as compared to $197.9 million for the same
1999 quarter. The yield on investment securities was 5.17% for the quarter ended
September 30, 1999 and 5.62% for the quarter ended September 30, 2000.

Interest income on federal funds sold increased $51,000, or 34.93%, from
$146,000 for the quarter ended September 30, 1999 to $197,000 for the quarter
ended September 30, 2000. This increase in income resulted from both an increase
in rates and an increase in volume. The volume increase resulted primarily from
the acquisitions discussed above. The average federal funds sold was $12.0
million for the quarter ended September 30, 2000 compared to an average of $11.2
million for the quarter ended September 30, 1999. Average federal funds sold
yields were 6.67% for the quarter ended September 30, 2000 up from 5.08% for the
quarter ended September 30, 1999.

Total interest income increased $2.1 million, or 19.72%, from $10.5 million for
the quarter ended September 30, 1999 to $12.6 million for the quarter ended
September 30, 2000. This increase was the result of both an increase in average
earning asset yields and an increase in the average earning assets resulting
primarily from the acquisitions discussed above.

Average earning asset yields for the quarter ended September 30, 2000 increased
to 7.73% from the 7.13% yield on average earning assets for the quarter ended
September 30, 1999. Average earning assets increased from $582.9 million in the
quarter ended September 30, 1999 to $653.5 million in the quarter ended
September 30, 2000. This $70.6 million increase in the average earning assets
resulted primarily from the acquisitions discussed above.


INTEREST EXPENSE

Total interest expense increased $1.5 million or 29.84%, from $4.9 million in
the three months ended September 30, 1999 to $6.4 million for the third quarter
ended September 30, 2000. The principal reason for this increase was both
increased balances resulting from the acquisitions discussed above and higher
costs of deposits and short-term borrowings.


NET INTEREST INCOME

Net interest income was $6.2 million for the three months ended September 30,
2000 and $5.6 million for the three months ended September 30, 1999.

The interest rate spread for the quarter ended September 30, 2000 was 3.15%, a
decrease of 9 basis points from the 3.24% interest rate spread for the quarter
ended September 30, 1999.

                                       16
<PAGE>

ASSET QUALITY AND PROVISION FOR LOAN LOSSES

For the three months ended September 30, 2000 management recorded $150,000 as a
provision for loan losses. Management made a $465,000 provision for loan losses
for the quarter ended September 30, 1999 primarily as a result of the impact of
the September 1999 hurricanes on Southern's market.

During the three months ended September 30, 2000 management charged-off loans
totaling $146,000 and received recoveries of $95,000, resulting in net
charge-offs for the three months ended September 30, 2000 of $51,000. During the
three months ended September 30, 1999, $114,000 in loans were charged-off and
recoveries of $37,000 were received, resulting in net charge-offs of $77,000 for
the three months ended September 30, 1999.


NONINTEREST INCOME

During the three months ended September 30, 2000, BancShares' noninterest income
increased $407,000 principally as a result of the acquisitions discussed above.
Service charges on deposit accounts for the three months ended September 30,
2000 increased $122,000 and other service charges and fees for the three months
ended September 30, 2000 increased $16,000 over the three months ended September
30, 1999 primarily as a result of the acquisitions discussed above.


NONINTEREST EXPENSE

Noninterest expense including personnel, occupancy, furniture and equipment,
data processing, FDIC insurance, state assessments, printing, supplies and other
expenses, increased $868,000 or 16.31%, from $5.3 million in the three months
ended September 30, 1999 to $6.2 million in the three months ended September 30,
2000.

This increase was primarily due to an increase in personnel expense of $229,000,
or 8.39%, from $2.7 million for the quarter ended September 30, 1999 to $3.0
million for the quarter ended September 30, 2000 and increased occupancy,
furniture and equipment expense and other expenses resulting principally from
the branch acquisitions discussed above.


                                       17
<PAGE>

INCOME TAXES

In the three months ended September 30, 2000, BancShares had income tax expense
of $340,000, an increase of $50,000 from $290,000 in the prior year quarter. The
majority of this increase is due to increased earnings that more than offset a
reduction in the estimated effective tax rate of 20.53% for the quarter ended
September 30, 2000. The estimated effective tax rate for the quarter ended
September 30, 1999 was 24.15%. The effective tax rates for the quarters ended
September 30, 2000 of 20.53% and September 30, 1999 of 24.15% differ from the
federal statutory rate of 35.00% primarily due to tax exempt income.


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. 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
September 30, 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 September 30, 2000 was 8.20%. 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 September 30, 2000, Southern's Total RBC
ratio was 15.79%. 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.


                                       18
<PAGE>

The regulatory capital ratios above 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 accumulated other comprehensive income was $7.5 million at September 30,
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:

<TABLE>
<CAPTION>
                                                     (Unaudited)
                                                      September 30,         December 31,
                                                          2000                  1999
                                                    ------------------    ------------------
      (Dollars in thousands)
<S>                                                    <C>                   <C>
Risk-based capital:
   Tier 1 capital                                      $   57,100            $   55,398
   Total capital                                           65,244                62,967
Risk-adjusted assets                                      413,129               386,761
Average tangible assets                                   696,300               654,268

Tier 1 capital ratio  (1)                                   13.82%                14.32%
Total capital ratio  (1)                                    15.79%                16.28%
Leverage capital ratio  (1)                                  8.20%                 8.47%


(1) These ratios exceed the minimum ratios required for a bank to be classified
    as "well capitalized" as defined by the FDIC.
</TABLE>


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 29.69% at September 30, 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 nine months ended
September 30, 2000 and for the nine months ended September 30, 1999. Southern
has no brokered deposits. Jumbo time deposits are considered to include all time
deposits of $100,000 or more. Southern 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 September 30, 2000 jumbo time deposits represented 11.38% of total
deposits. At December 31, 1999 jumbo time deposits represented 10.44% of total
deposits.

                                       19
<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 Statements 137 and 138, 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

Southern has announced 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 $80.0 million, to purchase approximately $80.0 million of loans
and to record approximately $7.2 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.


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<PAGE>

Item 3 - Quantitative and Qualitative Disclosures About Market Risk:

Market risk reflects the risk of economic loss resulting from adverse changes in
market price and interest rates. This risk of loss can be reflected in either
diminished current market values or reduced potential net interest income in
future periods. BancShares' market risk arises primarily from interest rate risk
inherent in its lending and deposit taking activities. The structure of
BancShares' loan and deposit portfolios is such that a significant increase in
the prime rate may adversely impact net interest income. Historical prepayment
experience is considered as well as management's expectations based on the
interest rate environment and the core deposits without contractual maturity
level as of September 30, 2000. Management seeks to manage this risk through the
use of shorter term maturities. The composition and size of the investment
portfolio is managed so as to reduce the interest rate risk in the deposit and
loan portfolios while at the same time maximizing the yield generated from the
loan portfolio.

The table below presents in tabular form the contractual balances and the
estimated fair value of financial instruments at their expected maturity dates
as of September 30, 2000. The expected maturity categories take into
consideration historical prepayment experience as well as management's
expectations based on the interest rate environment as of September 30, 2000.
For core deposits without contractual maturity (i.e., interest bearing checking,
savings and money market accounts), the table presents principal cash flows as
maturing in 2001 since they are subject to immediate repricing. Weighted average
variable rates in future periods are based on the implied forward rates in the
yield curve as of September 30, 2000.

<TABLE>
<CAPTION>
      (Dollars in thousands, unaudited)                  Maturing in the years ended September 30
                                      2001         2002       2003        2004       2005      Thereafter     Total      Fair Value
<S>                                  <C>        <C>        <C>         <C>        <C>          <C>        <C>            <C>
Assets
      Loans
          Fixed rate                 $ 53,442   $ 32,729   $ 45,810    $ 33,658   $ 19,246     $ 73,277   $ 258,162      $ 205,658
          Average rate (%)              8.58%      8.82%      8.49%       8.66%      8.64%        6.99%       8.16%

         Variable rate               $ 99,397   $ 13,855   $  8,317    $  5,857   $  6,744     $ 37,669   $ 171,839      $ 171,839
          Average rate (%)              9.76%      9.58%      9.74%       9.86%      9.65%        8.85%       9.57%

       Investment securities
          Fixed rate                 $ 89,456   $ 74,964   $  2,240    $  2,240   $  1,775     $ 21,474   $ 192,333      $ 203,986
          Average rate (%)              5.42%      6.41%      8.30%       8.34%      8.36%        7.09%       6.09%

         Variable rate                      -          -          -           -          -     $    909   $     909      $     909
          Average rate (%)                  -          -          -           -          -        6.43%       6.43%

Liabilities
         Savings and interest
             bearing checking

          Fixed rate                $ 192,028          -          -           -          -            -   $ 192,028      $ 192,028
          Average rate (%)              1.81%          -          -           -          -            -       1.81%

Certificates of deposit
          Fixed rate                $ 267,752   $ 42,139   $ 14,745    $  6,085          -            -   $ 330,721      $ 330,860
          Average rate (%)              5.94%      6.48%      6.33%       5.53%          -            -       6.02%

         Variable rate              $   4,972   $  2,257          -           -          -            -   $   7,229      $   7,229
          Average rate (%)              5.13%      5.33%          -           -          -            -       5.19%

Long-term debt

          Fixed rate                        -          -          -           -          -       23,000   $  23,000      $  20,988
          Average rate (%)                  -          -          -           -          -        8.25%       8.25%
</TABLE>

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<PAGE>

Part ii - OTHER INFORMATION

Item 5. Other Information.

Forward-looking statements

The foregoing discussion may contain statements that could be deemed
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934 and the Private Securities Litigation Reform Act, which
statements are inherently subject to risks and uncertainties. Forward-looking
statements are statements that include projections, predictions, expectations or
beliefs about future events or results or otherwise are not statements of
historical fact. Such statements are often characterized by the use of
qualifiers such as "expect," "believe," "estimate," "plan," "project" or other
statements concerning opinions or judgments of BancShares and its management
about future events. Factors that could influence the accuracy of such
forward-looking statements include, but are not limited to, the financial
success or changing strategies of BancShares' customers, actions of government
regulators, the level of market interest rates, and general economic conditions.


                                       22
<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.



October 26, 2000            /s/ John C. Pegram, Jr.
----------------            ----------------------------------------------------
    Date                        John C. Pegram, Jr.,
                                President and Chief Executive Officer



November 03, 2000           /s/ David A. Bean
-----------------           ----------------------------------------------------
    Date                        David A. Bean,
                                Secretary, Treasurer and Chief Financial Officer



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