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, 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                                                                  September 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                                                                             $24,563             $21,445
Federal funds sold                                                                                    8,095              11,020
Investment securities: 									 
   Held-to-maturity,  at amortized cost  (fair value $52,030 and $64,559, respectively)              51,124              63,676
   Available-for-sale, at fair value (amortized cost $93,070 and $88,504, respectively)             115,196             105,013
Loans, net of unearned income                                                                       354,380             317,755
   Less allowance for loan losses                                                                    (6,113)             (6,163)
                                                                                                    _______             _______
Net Loans                                                                                           348,267             311,592
Premises and equipment                                                                               18,371              15,439
Accrued interest receivable                                                                           5,118               3,999
Intangible assets                                                                                     5,955               5,991
Other assets                                                                                          5,739               2,583
                                                                                                    _______             _______
       Total assets                                                                                $582,428            $540,758
                                                                                                    =======             =======
LIABILITIES
Deposits:
   Noninterest-bearing                                                                             $ 67,316            $ 64,089
   Interest-bearing                                                                                 440,966             416,477
                                                                                                    _______             _______
Total deposits                                                                                      508,282             480,566
									 
Short-term borrowings                                                                                 7,100               5,064
Long-term obligations                                                                                 5,200               1,400
Accrued interest payable                                                                              4,601               3,204
Other liabilities                                                                                     6,275               5,746
                                                                                                    _______             _______
        Total liabilities                                                                           531,458             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 September 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 September 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 September 30, 1997 and December 31, 1996                                             600                 600
Surplus                                                                                              10,000              10,000
Retained earnings                                                                                    23,578              20,718
Unrealized gain on securities available-for-sale, net of tax                                         14,234              10,896
                                                                                                    _______             _______
              Total shareholders' equity                                                             50,970              44,778
                                                                                                    _______             _______
              Total liabilities and shareholders' equity                                           $582,428            $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 September 30,
<CAPTION>                                                                                   1997            1996
(Dollars in thousands except share and per share data)
<S>                                                                                    <C>             <C>
Interest income:
   Loans                                                                                   $7,637          $6,922
   Investment securities:									 
     U. S. Government                                                                       1,586           1,588
     State, county and municipal                                                              479             531
     Other                                                                                    218             280
                                                                                            _____           _____
        Total investment securities interest income                                         2,283           2,399
  Federal funds sold                                                                           69             -
                                                                                            _____           _____
           Total interest income                                                            9,989           9,321
									 
Interest expense:
   Deposits                                                                                 4,649           4,132
   Short-term borrowings                                                                      105             168
   Long-term obligations                                                                       91              45
                                                                                            _____           _____
           Total interest expense                                                           4,845           4,345
                                                                                            _____           _____
           Net interest income                                                              5,144           4,976
    Provision for loan losses                                                                 -                60
                                                                                            _____           _____
            Net interest income after provision for loan losses                             5,144           4,916
					 		 		 
Noninterest income:
    Service charges on deposit accounts                                                       768             674
    Other service charges and fees                                                            213             211
    Investment securities gains, net                                                            1              -
    Insurance commissions                                                                      23              27
    Gain (loss) on sale of loans                                                               31             (52)
    Other                                                                                     130             158
                                                                                            _____           _____
         Total noninterest income                                                           1,166           1,018
					 		 		 
Noninterest expense:
    Personnel                                                                               2,280           2,051
    Intangibles amortization                                                                  461             411
    Data processing                                                                           411             397
    Furniture and equipment                                                                   373             269
    Occupancy                                                                                 351             337
    FDIC insurance assessment                                                                  28             637
    Charitable contributions                                                                    1              28
    Other                                                                                     969             938
                                                                                            _____           _____
         Total noninterest expense                                                          4,874           5,068
                                                                                            _____           _____
Income before income taxes                                                                  1,436             866
Income taxes                                                                                   30             221
                                                                                            _____            ____
         Net income                                                                        $1,406            $645
                                                                                            =====            ====
Per share information:
  Net income applicable to common shares                                                   $10.87           $4.51
  Cash dividends declared on common shares                                                    .38             .37
  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                                                    Nine Months Ended September 30,
(Dollars in thousands except share and per share data)                                      1997           1996
<S>                                                                                    <C>             <C>
Interest income:
   Loans                                                                                  $21,734          $19,930
   Investment securities:
     U. S. Government                                                                       4,764            4,946
     State, county and municipal                                                            1,581            1,606
     Other                                                                                    602              521
                                                                                            _____            _____
       Total investment securities interest income                                          6,947            7,073
   Federal funds sold                                                                         274              304
                                                                                            _____            _____
          Total interest income                                                            28,955           27,307

Interest expense:
   Deposits                                                                                13,506           12,688
   Short-term borrowings                                                                      229              225
   Long-term obligations                                                                      211              224
                                                                                            _____            _____
            Total interest expense                                                         13,946           13,137
                                                                                            _____            _____
            Net interest income                                                            15,009           14,170
   Provision for loan losses                                                                   60               80
                                                                                            _____            _____
           Net interest income after provision for loan losses                             14,949           14,090

Noninterest income:
    Service charges on deposit accounts                                                     2,093            2,010
    Other service charges and fees                                                            637              574
    Investment securities gains, net                                                        3,535                1
    Insurance commissions                                                                      70              119
    Gain (loss) on sale of loans                                                               25             (167)
    Other                                                                                     255              545
                                                                                            _____            _____
         Total noninterest income                                                           6,615            3,082

Noninterest expense:
    Personnel                                                                               6,532            5,907
    Intangibles amortization                                                                1,306            1,229
    Data processing                                                                         1,229            1,087
    Furniture and equipment                                                                 1,141              975
    Occupancy                                                                               1,012              922
    FDIC insurance assessment                                                                  83              773
    Charitable contributions                                                                4,075               42
    Other                                                                                   2,640            2,455
                                                                                           ______            _____
         Total noninterest expense                                                         18,018           13,390
                                                                                           ______            _____
Income before income taxes                                                                  3,546            3,782
Income taxes                                                                                  240            1,091
                                                                                            _____            _____
         Net income                                                                        $3,306           $2,691
                                                                                            =====            =====
Per share information:
  Net income applicable to common shares                                                   $25.05           $19.91
  Cash dividends declared on common shares                                                   1.12             1.12
  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 NINE MONTHS ENDED SEPTEMBER 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                                                                               2,691                       2,691

Cash dividends:
 Common stock ($1.12 per share)                                                           (134)                       (134)
 Preferred B  ($ .66 per share)                                                           (274)                       (274)
 Preferred C  ($ .66 per share)                                                            (29)                        (29)

Change in unrealized gain on
 available-for-sale securities,
 net of taxes                                                                                          2,108         2,108
                                   _______  _____ ______  ___   _______  ___   ______   ______         _____        ______
BALANCE, SEPTEMBER 30, 1996        408,728 $1,991 43,631 $578   119,918 $600  $10,000  $19,202        $9,154       $41,525
                                   =======  ===== ======  ===   =======  ===   ======   ======         =====        ======

BALANCE,  DECEMBER 31, 1996        407,752 $1,986 43,631 $578   119,918 $600  $10,000  $20,718       $10,896       $44,778
																																			
Net income                                                                               3,306                       3,306

Purchases and retirements of stock  (1,408)    (6)                                         (10)                        (16)

Cash dividends:																																			
  Common stock ($1.12 per share)                                                          (134)                       (134)
  Preferred B  ($ .67 per share)                                                          (273)                       (273)
  Preferred C  ($ .67 per share)                                                           (29)                        (29)

Change in unrealized gain on
  available-for-sale securities,
  net of taxes                                                                                         3,338         3,338
                                   _______  _____ ______  ___   _______  ___   ______   ______        ______        ______
BALANCE, SEPTEMBER 30, 1997        406,344 $1,980 43,631 $578   119,918 $600  $10,000  $23,578       $14,234       $50,970
                                   =======  ===== ======  ===   =======  ===   ======   ======        ======        ======

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)
                                                                                      Nine months ended September 30,
(Thousands)                                                                                  1997            1996
<S>                                                                                     <C>             <C>
OPERATING ACTIVITIES:																		
     Net income                                                                            $3,306          $2,691
     Adjustments to reconcile net income to net cash
         provided (used) by operating activities:
            Provision for loan losses                                                          60              80
            Contribution expense for donation of available-for-sale securities              4,071             -
            Gain on contribution of marketable equity securities                           (3,529)            -
            Gains on issuer calls of securities                                                (6)            -
            Loss on sale and abandonment of premises and equipment                            112             -
            Net accretion on investments                                                      (66)            (45)
            Amortization of intangibles                                                     1,306           1,229
            Depreciation                                                                      762             703
            Net increase in accrued interest receivable                                    (1,119)         (1,219)
            Net increase (decrease) in accrued interest payable                             1,397            (116)
            Net increase in other assets                                                   (3,152)          (4,700)
            Net increase (decrease) in other liabilities                                      600            (149)
                                                                                            _____           _____
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES                                            3,742          (1,526)
                                                                                            _____           _____
INVESTING ACTIVITIES:																		
   Proceeds from maturities and issuer calls of investment securities held-to-maturity     35,610          31,596
   Proceeds from maturities and issuer calls of investment securities available-for-sale    9,105             185
   Purchases of investment securities held-to-maturity                                    (26,114)        (10,713)
   Purchases of investment securities available-for-sale                                  (13,364)        (34,667)
   Net increase in loans                                                                  (35,291)        (30,121)
   Additions to premises and equipment                                                     (3,531)         (2,845)
   Net cash received for branches acquired                                                 17,996           3,380
                                                                                           ______           _____
NET CASH USED IN INVESTING ACTIVITIES                                                     (15,589)        (43,185)
                                                                                           ______           _____
FINANCING ACTIVITIES:																		
   Net (decrease) increase in demand and interest bearing demand deposits                  (8,224)          8,300
   Net increase in time deposits                                                           14,880           4,824
   Net proceeds (repayments) of long-term obligations                                       3,800            (900)
   Net proceeds of short-term borrowings                                                    2,036           6,683
   Cash dividends paid                                                                       (436)           (437)
   Purchase of federal funds                                                                   -            6,245
   Purchase and retirement of stock                                                           (16)            -
                                                                                           ______          ______
NET CASH PROVIDED BY FINANCING ACTIVITIES                                                  12,040          24,715
                                                                                           ______          ______
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                          193         (19,996)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR                                         32,465          42,906
                                                                                           ______          ______
CASH AND CASH EQUIVALENTS AT THE END OF PERIOD                                            $32,658         $22,910
                                                                                           ======          ======
SUPPLEMENTAL DISCLOSURES OF CASH PAID DURING THE PERIOD FOR:																		
    Interest                                                                              $12,549         $12,688
    Income taxes                                                                             $899            $851
                                                                                           ======           =====
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Unrealized gain (loss) on securities available-for-sale                                    $5,617          $3,194
                                                                                            =====           =====

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 42 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                        September 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                     $30,300         98       (4)    $30,394        $36,311        91        -      $36,402
      Obligations of states
       and political subdivisions            20,624        814       (1)     21,437         27,165       799       (4)      27,960
      Corporate securities                      200                  (1)        199            200        -        (3)         197
                                             ______       ____      ____     ______         ______     _____       ___     _______
                                             51,124        912       (6)     52,030         63,676       890       (7)      64,559
                                             ======       ====      ====     ======         ======     =====       ===     =======
    SECURITIES AVAILABLE-FOR-SALE:						 													
      U.  S. Government                      75,144        124      (27)     75,241         70,121       -        (15)      70,106
      Marketable equity securities            8,334     21,570       (3)     29,901          8,612    16,296      (97)      24,811
      Obligations of states
       and political subdivisions             7,541        422       (6)      7,957          7,647       278       (4)       7,921
      Mortgage-backed securities              2,051         47       (1)      2,097          2,124       106      (55)       2,175
                                             ______     ______      ____     ______         ______    ______      ___      _______
                                             93,070     22,163      (37)    115,196         88,504    16,680     (171)     105,013
                                             ======     ======      ====     ======         ======    ======      ===      =======
   				 		 		 		 		 		 		 			
         TOTALS                            $144,194    $23,075     ($43)   $167,226       $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>                                                   September 30,     December 31,
                                                                1997              1996
                                                                ____              ____
<S>                                                        <C>               <C>
Note 3. LOANS

   Loans by type were as follows:

   Commercial, financial and agricultural                     $91,566            $70,881
   Real estate - construction                                   4,631              2,470
   Real estate - mortgage                                     218,659            206,870
   Consumer                                                    34,646             35,512
   Lease financing                                              6,275              2,370
                                                              _______            _______
    Total loans                                               355,777            318,103
     Less unearned income                                      (1,397)              (348)
                                                              _______            _______
      Total loans less unearned income                       $354,380           $317,755
                                                              =======            =======
   Loans held for sale                                       $  2,956           $  4,143
   Loans serviced for others                                 $ 77,108           $ 73,202
</TABLE>
																			
<TABLE>
<CAPTION>
                                                            September 30,    September 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               80
   Loans charged off                                             (261)            (344)
   Loan recoveries                                                151              215
                                                                _____            _____
   Balance at end of the period                                $6,113           $6,272
                                                                =====            =====
</TABLE>
<PAGE>

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

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

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

    Land                                         $ 3,249          $2,783
    Buildings and improvements                    12,297           9,262
    Furniture and equipment                        6,462           5,804
    Construction-in-progress                       2,785           3,467
                                                  ______          ______
                                                  24,793          21,316
        Less: accumulated depreciation            (6,422)         (5,877)
                                                  ______          ______
                                                 $18,371         $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 September 30,   Nine Months Ended September 30,
                                                 1997         1996                 1997         1996
                                                 ____        ____                  ____         ____
<S>                                          <C>         <C>                 <C>         <C>
   Net income                                  $1,406         $645               $3,306       $2,691
    Less: Preferred dividends                    (102)        (104)                (302)        (303)
                                                _____        _____                _____        _____
   Net income applicable to common shares      $1,304         $541               $3,004       $2,388
                                                =====        =====                =====        =====
   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  September  30, 1997, beneficially owned 31,474 shares, or 26.25 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 4.29 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 September 30, 1997, beneficially owned 2,568,088 shares,
or  26.71 percent, and 1,694,936 shares, or 17.63 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 5.77 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
third quarter of 1996.

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

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

    Data and item processing            $1,355              $1,282
    Forms, supplies and equipment          133                 261
    Trustee for employee benefit plans      48                  47
    Consulting Fees                         57                  61
    Trust investment services               17                  18
    Internal auditing services              41                  40
    Other services                          61                  63
                                         _____               _____
                                        $1,712              $1,772
                                         =====               =====

     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  $6,276  at  September 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 NINE MONTHS OF 1997 VS. FIRST NINE MONTHS OF 1996

(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE DATA)

INTRODUCTION

     In  the  first  nine months of 1997, the net income of Southern BancShares
increased  $615  from  $2,691 in the first nine months of 1996 to $3,306 in the
first  nine  months  of  1997, an  increase  of  23 percent.  This increase was
principally the result of a September 1996 one-time Congress mandated FDIC SAIF
insurance  assessment  of  $569 and a September 1996 $176 nonrecurring external
credit card fraud.  Excluding the after tax effect of the above SAIF assessment
and  fraud expense, the net income for Southern BancShares would have increased
approximately  $92,  or 3 percent, for the nine months ended September 30, 1997
compared  to the nine months ended September 30, 1996.  Two branch acquisitions
in 1996, three branch acquisitions in 1997, the opening of new branches in 1996
and  1997  and  the  sale  of  an  existing  branch in 1996 for a gain of $213,
resulted  in  increased net interest income for the nine months ended September
30, 1997.  The  above  net  branch  additions  also resulted in increased other
noninterest  income  for the nine months ended September 30, 1997 and increased
personnel  expense  and  other  related  operating expenses for the nine months
ended  September 30, 1997.  Losses on the sales of mortgage loans held-for-sale
decreased $192 in the nine months ended September 30, 1997 compared to the nine
months   ended   September   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 the resulting reduction in income taxes.

     Net  income per common share for the first nine months of 1997 was $25.05,
an  increase  of  $5.14, or  26  percent, from  $19.91  in 1996.  The return on
average  equity  improved to 10.40 percent, for the period ending September 30,
1997, from 9.84 percent for the period ending September 30, 1996 and the return
on average assets improved to .85  percent, for the period ending September 30,
1997, from .73  percent for the period ending September 30, 1996.  At September
30, 1997, BancShares' assets  totaled  $582,428, an  increase  of $41,670, or 8
percent, from  the  $540,758  reported  at December 31, 1996.  During this nine
month  period, net  loans  increased  $36,675  or 12  percent, from $311,592 to
$348,267.  During   the   nine   months  ended  September  30, 1997  investment
securities decreased $2,369, or 1 percent from $168,689 at December 31, 1996 to
$166,320 at September 30, 1997.  Total deposits increased $27,716, or 6 percent
from  $480,566  at  December  31, 1996  to $508,282 at September 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.  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 June 1996 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 for 1996, on the June 1996 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.

     Southern  opened  a second branch office in Rocky Mount in September 1997.
At September 30, 1997 this office had $1.2 million in deposits.

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

INTEREST INCOME

     Interest  and  fees  on loans increased $1,804, or 9 percent, from $19,930
for  the  nine  months  ended September 30, 1996 to $21,734 for the nine months
ended  September  30, 1997.  This  increase  was  due to increased loan volume.
Average  loans  for the nine months ended September 30, 1997 were $337 million,
an  increase of 9 percent from $308 million for the nine months ended September
30, 1996.  The  yield  on the loan portfolio was 8.6 percent in the nine months
ended September 30, 1996 and 8.5 percent in the nine months ended September 30,
1997.

     Interest  income  from investment securities, including U. S. Treasury and
Government  obligations, obligations of state and county subdivisions and other
securities decreased  $126, or 2  percent, from $7,073 in the nine months ended
September 30, 1996 to $6,947 in the nine months ended September 30, 1997.  This
decrease  was  due  to a decrease in the yield of the investment portfolio and
an increase in the volume of average investment securities for the nine  months
ended  September 30, 1997 to $150 million compared to $146 million for the nine
months  ended  September  30, 1996.  The yield on investment securities was 6.3
percent  for  the nine months ending September 30, 1996 and 6.0 percent for the
nine months ending September 30, 1997.

     Interest  income  on federal funds sold decreased $30, or 10 percent, from
$304  for  the nine months ended September 30, 1996 to $274 for the nine months
ended  September 30, 1997.  This decrease in income resulted primarily from the
decrease  in  the  average federal funds sold to $7 million for the nine months
ended  September  30, 1997  from  an  average of $8 million for the nine months
ended  September  30, 1996.  Average federal funds sold yields were 5.3 percent
for the nine months ended September 30, 1997 down from 5.4 percent for the nine
months ended September 30, 1996.

     Total interest income increased $1,648, or 6 percent, from $27,307 for the
nine  months  ended  September  30, 1996  to  $28,955 for the nine months ended
September 30, 1997.  This increase was the result of volume increases partially
offset by a slight decrease in average earning asset interest yields.

     Average  earning asset interest yields for the nine months ended September
30,  1997  decreased  to  7.7  percent  from  the  7.8 percent yield on average
earning  assets  for the nine months ended September 30, 1996.  Average earning
assets  increased from $461 million in the nine months ended September 30, 1996
to  $494  million  in  the  period  ended September 30, 1997.  This $33 million
increase in the average earning assets resulted primarily from the acquisitions
discussed above.

INTEREST EXPENSE

     Total  interest  expense increased  $809 or 6 percent, from $13,137 in the
nine months  ended  September  30, 1996  to  $13,946  for the nine months ended
September 30, 1997.  The principal reason for the increase was the acquisitions
discussed  above.  BancShares' total  cost of funds decreased from 4.24 percent
at September 30, 1996 to 4.22 percent one year later.  Average interest bearing
deposits  were  $430  million  in  the nine months ended September 30, 1997, an
increase  of  $27  million  from  the  $403  million  in the nine months ending
September 30, 1996.

NET INTEREST INCOME

     Net  interest  income  increased  $859, or 6 percent, from $14,090 for the
nine  months ended  September  30, 1996  to  $14,949  for the nine months ended
September  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 September 30, 1997 was 3.50 percent, a decrease of
7 basis points from the 3.57 percent net interest margin at September 30, 1996.

ASSET QUALITY AND PROVISION FOR LOAN LOSSES

     For  the  nine  months  ended September 30, 1997 management added $60 as a
volume  related  addition  to the provision for loan losses.  Management made a
$80  addition  to  the  provision  for  loan  losses  for the nine months ended
September  30,  1996.  During   the   first  nine  months  of  1997  management
charged-off  loans  totaling $261 and received recoveries of $151, resulting in
net  charge-offs  of  $110.  During the same period in 1996, $344 in loans were
charged-off  and recoveries of $215 were received, resulting in net charge-offs
of $129.  The 1997 decrease in net charge-offs was the result of both decreased
charge-offs  and  decreased  recoveries for the nine months ended September 30,
1997  as  compared  to the nine months ended September 30, 1996.  The following
table presents comparative Asset Quality ratios of BancShares:


</TABLE>
<TABLE>
<CAPTION>                                                                                     					
                                                 September 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             1.72%           1.94%

Non-performing loans
       to loans, net of unearned income              .06%            .16%

Non-performing loans and assets
       to total assets                               .05%            .09%

Allowance for loan losses
       to non-performing loans                     2,705%          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  September 30, 1997 from .10
percent  at  December  31, 1996  due  to  increased average loans and lower net
charge-offs.  The  allowance for loan losses represented 1.72 percent of loans,
net  of  unearned  income  at September 30, 1997, a decrease of 22 basis points
from  the  December  31, 1996  ratio  of  1.94 percent.  Loans, net of unearned
income  increased  $37  million,  or  12  percent, from  December  31, 1996  to
September 30, 1997.

     The  ratio  of  nonperforming  loans  to  loans,  net  of  unearned income
decreased from .16 percent at December 31, 1996 to .06 percent at September 30,
1997.  Nonperforming  loans and assets to total assets decreased to .05 percent
at September 30, 1997 from .09 percent at December 31, 1996.  The allowance for
loan losses to  nonperforming  loans represented 2,705 percent of nonperforming
loans at September 30, 1997, an increase from the 1,238 percent at December 31,
1996.  The above performance improvements resulted primarily from a decrease in
nonperforming  loans  to $226 at September 30, 1997 from $498 at  December  31,
1996.  The   nonperforming  loans  at  September  30,  1997  included  $102  of
nonaccrual  loans, $124  of  accruing  loans  90  days  or more past due and no
restructured  loans.  BancShares  had  $48  of  assets classified as other real
estate  at  September 30, 1997 and no assets classified as other real estate at
September  30, 1996.  Foregone  interest  income and interest income recognized
during  the  nine  months ended September 30, 1997 and 1996 on both non-accrual
and impaired loans was not material.

     Management  considers  the  September  30, 1997  allowance for loan losses
adequate  to  cover  the  losses  and  risks  inherent in the loan portfolio at
September 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 September 30, 1997, Southern
has no loans classified for regulatory purposes as loss, no loans classified
as  doubtful  and $929 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 $3,534 in net investment securities gains, in
the nine months ended September 30, 1997 principally related to the donation of
available-for-sale securities discussed above.

    BancShares  had  gains  on  the  sale  of mortgage loans of $25 in the nine
months  ended  September  30,  1997  compared to $167 in losses on the sales of
mortgage  loans  in  the  nine months ended September 30, 1996.  Southern had a
1996  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  September  30,  1997.  Income  from service charges on
deposit  accounts,  other  service  charges and fees, insurance commissions and
other  noninterest  income not detailed above increased $20, or 1 percent, from
$3,035  for  the  nine  months  ended September 30, 1996 to $3,055 for the nine
months ended September 30, 1997.

NONINTEREST EXPENSE

     BancShares  had  an  increase in charitable contribution expense of $4,033
in  the  nine  months  ended  September 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 $595 or 4
percent, from $13,348 in the nine months ended September 30, 1996 to $13,943 in
the nine months ended September 30, 1997.

     Excluding  the  non-recurring  items  discussed  below, this  increase was
primarily  due to an increase in personnel expense of $625, or 11 percent, from
$5,907  at  September  30, 1996  to $6,532 at September 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.

     In  addition  in September 1996 Congress mandated a one-time assessment on
the  Savings  Association  Insurance  Fund  ("SAIF")  insured  deposits  of all
financial  institutions.  BancShares  has  deposits  insured  under both of the
FDIC's  insurance  funds, the  Bank  Insurance  Fund  ("BIF") and the SAIF.  In
September  1996  BancShares  recorded  $569  as a one-time additional FDIC SAIF
insurance  expense.  BancShares also recorded a non-recurring loss in September
1996 of $176 related to an external credit card fraud.

INCOME TAXES

     In  the  nine  months  ended  September 30, 1997 BancShares had income tax
expense  of  $240, a  decrease of $851, or 78 percent, from $1,091 in the prior
year  period.  This  decrease was principally due to the resulting tax benefits
of  the  donation  of  the  available-for-sale securities discussed above.  The
resulting  effective  tax rates based on the accruals for the nine months ended
in September 1997 and 1996 were 7 percent and 29 percent, respectively.

<PAGE>

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

(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE DATA)

INTRODUCTION

     In  the  third  quarter  of  1997, the  net  income of Southern BancShares
increased  $761  from  $645 in the third quarter of 1996 to $1,406 in the third
quarter of 1997, an increase of 118 percent.  This increase was principally the
result  of  the aforementioned September 1996 FDIC SAIF insurance assessment of
$569  and fraud of $176.  Excluding the 1996 assessment and fraud the after tax
income  for  the  three  months  ended  September 30, 1997 would have increased
approximately  $244, or  20  percent  over  the net income for the three months
ended September 30, 1996.

     Two  1996  branch acquisitions and three 1997 branch acquisitions resulted
in increased net interest income for the three months ended September 30, 1997,
increased  other  noninterest  income  in  the three months ended September 30,
1997, and increased personnel expense and other  related  operating expenses in
the  three  months  ended  September 30, 1997.  Losses on the sales of mortgage
loans held-for-sale in the three months ended September 30, 1996 were  $52.  In
the  three  months  ended  September 30, 1997 gains of $31 were realized on the
sales  of  mortgage  loans  held-for-sale.  The  tax benefits of the 1997 first
quarter contribution of available-for-sale securities resulted in significantly
lower income taxes on the third quarter income before income taxes.

     Net  income  per share for the third quarter of 1997 was $10.87 per common
share, an increase of  $6.36, or 141  percent, from  $4.51  for  the 1996 third
quarter.

INTEREST INCOME

     Interest  and fees on loans increased $715, or 10 percent, from $6,922 for
the  quarter ended September 30, 1996 to $7,637 for the quarter ended September
30, 1997.  This  increase  was due to increased loan volume.  Average loans for
the  quarter  ending  September  30, 1997  were $353 million, an increase of 10
percent  from  $321  million for the prior year quarter.  The yield on the loan
portfolio  was  8.5  percent  in  the  quarter ended September 30, 1996 and 8.6
percent in the quarter ended September 30, 1997.

     Interest  income  from investment securities, including U. S. Treasury and
Government  obligations, obligations of state and county subdivisions and other
securities  decreased  $116, or  5 percent, from  $2,399  in  the quarter ended
September  30, 1996  to  $2,283  in the quarter ended September 30, 1997.  This
decrease  was  due  to  a  decrease in the yield of the investment portfolio to
5.91% for the quarter ended September 30, 1997 from 6.21% for the quarter ended
September  30, 1996  combined  with  a  decrease  in  the  volume  of  average
investment  securities for the quarter ended September 30, 1997 to $147 million
as compared to $149 million for the quarter ended September 30, 1996.

     Interest  income  on  federal  funds  sold  was $69 for the quarter  ended
September 30, 1997.  Average  federal funds sold was $5 million for the quarter
ended  September 30, 1997. The average federal funds sold yield was 5.8 percent
for  the quarter ended September 30, 1997.  There were no federal funds sold in
the quarter ended September 30, 1996.

     Total  interest  income  increased $668, or 7 percent, from $9,321 for the
quarter  ended September 30, 1996 to $9,989 for the quarter ended September 30,
1997.  This increase was the result of volume increases.  Average earning asset
interest yields for both the quarter ended September 30, 1997 and September 30,
1996  were  7.8 percent.  Average earning assets increased from $470 million in
the  quarter  ended  September  30, 1996  to  $504 million in the quarter ended
September  30,  1997.  This  $34 million increase in the average earning assets
resulted primarily from the acquisitions discussed above.

INTEREST EXPENSE

     Total interest  expense  increased  $500 or 12 percent, from $4,345 in the
quarter  ended September 30, 1996 to $4,845 for the quarter ended September 30,
1997.  The  principal  reason  for  the increase was the acquisitions discussed
above.  BancShares' total  cost  of  funds  increased from 4.19 percent for the
quarter  ended  September  30, 1996  to  4.24  percent  for  the  quarter ended
September 30, 1997.  Average interest bearing deposits were $437 million in the
quarter  ended  September  30, 1997, an  increase  of $40 million from the $397
million in the quarter ending September 30, 1996.

NET INTEREST INCOME

     Net interest income was up $228, or 5 percent, from $4,916 for the quarter
ended  September  30, 1996  to $5,144 for the quarter ended September 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 September 30, 1997 was 3.53
percent, a decrease of 4 basis points from 3.57 percent interest margin for the
quarter ending September 30, 1996.

ASSET QUALITY AND PROVISION FOR LOAN LOSSES

     For  the quarter ended September 30, 1996 management added $60 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 September 30, 1997.
During  the  third quarter of 1997 Southern had net charge-offs of $36.  During
the  same  period  in  1996  net  charge-offs  were  $68.  The  decrease in net
charge-offs  was  due to both decreased charge-offs and decreased recoveries in
the third quarter of 1997 compared to the third quarter of 1996.

<PAGE>                              

NONINTEREST INCOME

     BancShares  had  gains on the sale of mortgage loans of $31 in the quarter
ended  September  30, 1997  compared  to $52 in losses on the sales of mortgage
loans  in the quarter ended September 30, 1996.  Income from service charges on
deposit  accounts, other  service  charges  and fees, insurance commissions and
other  noninterest  income not detailed above increased $65, or 6 percent, from
$1,070 for the quarter ended September 30, 1996 to $1,135 for the quarter ended
September 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, decreased $194 or 4 percent, from $5,068 in the
quarter  ended  September 30, 1996 to $4,874 in the quarter ended September 30,
1997.

     This  decrease  was  primarily due to the net result of the aforementioned
SAIF assessment of $569 on September 30, 1996, the aforementioned $176 fraud in
the quarter ended September 30, 1996, an increase in personnel expense of $229,
or  11  percent, from  $2,051 for the quarter ended September 30 1996 to $2,280
for the quarter ended September 30, 1997 and increased occupancy, furniture and
equipment  expense  and other volume related expenses resulting from the branch
additions discussed above.

INCOME TAXES

     In  the quarter ended September 30, 1997 BancShares had income tax expense
of  $30, a  decrease  of  $191, or  86 percent, from $221 for the quarter ended
September  30,  1996.  This  decrease  was  principally  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  September 1997 and 1996 were 2 percent and 29 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  million  and  increased  its  investment  in  Southern  by $5 million 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 September  30, 1997 was  6.14 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 September 30, 1997, the Total RBC
ratio was 12.34 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 September 30,
1997  of  $21.6 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>
                                        September 30,  December 31,
                                            1997            1996
<S>                                    <C>             <C>
Tier 1 capital                           $ 33,598        $ 27,891
Total capital                              37,622          31,861
Risk-adjusted assets                      304,784         298,862
Average tangible assets                   547,408         510,574

Tier 1 capital ratio                      11.02%  (1)      9.33%  (1)
Total capital ratio                       12.34%  (1)     10.66%  (1)
Leverage capital ratio                     6.14%  (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 30 percent at both September
30, 1997 and December 31, 1996.

     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, 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 September 30, 1997 and at December
31,  1996   jumbo   time   deposits  represented  10  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>
                                                    September 30,  December 31, Regulatory
                                                        1997           1996     Guidelines
<S>                                                  <C>            <C>       <C>
Loans, net of unearned income to total deposits          70%            66%      80% (1)

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

Jumbo interest-bearing deposits to total deposits        10%             9%       N/A

Loans, net of unearned income to total assets            61%            59%      70% (1)

Liquidity                                                30%            30%      25% (2)

Temporary investments to volatile liabilities (3)       125%           120%     100% (2)

Volatile liability dependency                            -3%            -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
because BancShares does not have any common stock equivalents outstanding.

     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
aggregate   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  has  not determined the impact of this pronouncement 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 has not determined
the   impact  of  this  pronouncement  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  and Lumberton 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: November 10, 1997                    ___________________________________
                                            John C. Pegram, Jr., Vice President
                                            /s/David A. Bean
Dated: November 10, 1997                    ___________________________________
                                            David A. Bean, Secretary/Treasurer