UNITED STATES
                       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 Quarter Ended March 31, 1998              Commission File Number 0-20378

                              CENIT BANCORP, INC. 
             (Exact name of registrant as specified in its charter)

       Delaware                                         54-1592546
(State or other jurisdiction of               (I.R.S. Employer Identification
 incorporation or organization)                        Number)

       225 West Olney Road
          Norfolk, Virginia                               23510
(Address of principal executive                        (Zip code)
      office)

      Registrant's telephone number, including area code:        (757) 446-6600

     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 each of the issuer's  classes
     of common stock, as of the latest practicable date.


Common Stock $.01 Par Value                                  4,984,830
       Title of Class                              Number of Shares Outstanding
                                                       as of April 22, 1998

<PAGE>

                      CENIT BANCORP, INC. AND SUBSIDIARIES

                                    Contents
                -----------------------------------------------




                                                                            Page
PART I - FINANCIAL INFORMATION

Item 1
   Financial Statements

Consolidated  Statement of Financial  Condition as of March 31, 1998 (Unaudited)
and December 31, 1997......................................................... 1

Unaudited Consolidated Statement of Operations for the Three Months
Ended March 31, 1998 and March 31, 1997........................................2

Unaudited Consolidated Statement of Comprehensive Income for the Three
Months Ended March 31, 1998 and March 31, 1997.................................3

Unaudited Consolidated Statement of Cash Flows for the Three Months Ended 
March 31, 1998 and March 31, 1997..............................................4

Unaudited Consolidated Statement of Changes in Stockholders' Equity for the 
Three Months ended March 31, 1998..............................................5

Notes to Unaudited Consolidated Financial Statements...........................6

Item 2
   Management's Discussion and Analysis of Financial Condition and Results of 
   Operations..................................................................7


PART II - OTHER INFORMATION

Item 1
   Legal Proceedings..........................................................16

Item 2
   Changes in Securities......................................................16

Item 3
   Defaults Upon Senior Securities............................................16

Item 4
   Submission of Matters to a Vote of Security Holders........................16

Item 5
   Other Information..........................................................16

Item 6
   Exhibits and Reports on Form 8-K...........................................16

   Signatures.................................................................16

<PAGE>

PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
                                       CENIT BANCORP, INC. AND SUBSIDIARIES
                                   CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
                                   (Dollars in thousands, except per share data)
<TABLE>
<CAPTION>

                                                      ASSETS
                                                                             (Unaudited)
                                                                           March 31, 1998       December 31, 1997
                                                                           --------------       -----------------
<S>                                                                           <C>                   <C>

Cash                                                                          $  19,564             $  16,993
Federal funds sold                                                               14,591                37,118
Securities available for sale at fair value (adjusted
   cost of $136,886 and $135,861, respectively)                                 137,992               137,188
Loans, net:
   Held for investment                                                          519,727               486,487
   Held for sale                                                                  4,001                 3,167
Interest receivable                                                               5,301                 4,888
Real estate owned, net                                                              725                 1,098
Federal Home Loan Bank and Federal Reserve Bank stock, at cost                   10,211                 8,711
Property and equipment, net                                                      14,301                14,230
Goodwill and other intangibles, net                                               3,919                 4,010
Other assets                                                                      4,095                 4,193
                                                                              ---------             ---------
                                                                              $ 734,427             $ 718,083
                                                                              =========             =========
                                       LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
   Deposits:
     Noninterest-bearing                                                      $  63,169             $  54,874
     Interest-bearing                                                           446,276               452,796
                                                                              ---------             ---------
        Total deposits                                                          509,445               507,670
   Advances from the Federal Home Loan Bank                                     158,000               145,000
   Other borrowings                                                               1,861                 2,575
   Securities sold under agreements to repurchase                                 9,778                 9,664
   Advance payments by borrowers for taxes and insurance                          1,366                   720
   Other liabilities                                                              3,479                 2,517
                                                                              ---------             ---------
        Total liabilities                                                       683,929               668,146
                                                                              ---------             ---------
Stockholders' equity:
   Preferred stock, $.01 par value; authorized 3,000,000
     shares; none outstanding                                                         -                     -
   Common stock, $.01 par value; authorized 7,000,000 shares;
     issued and outstanding 4,977,321 and 4,971,243 shares,
     respectively                                                                    50                    50
   Additional paid-in capital                                                    18,240                18,119
   Retained earnings - substantially restricted                                  35,927                35,416
   Common stock acquired by Employee Stock Ownership Plan (ESOP)                 (4,188)               (4,232)
   Common stock acquired by Management Recognition
     Plan (MRP)                                                                    (243)                 (271)
   Accumulated other comprehensive income,
     net of income taxes                                                            712                   855
                                                                              ---------             ---------
     Total stockholders' equity                                                  50,498                49,937
                                                                              ---------             ---------
                                                                              $ 734,427             $ 718,083
                                                                              =========             =========
<FN>
The notes to unaudited consolidated financial statements are an integral part of
this statement.
</FN>

</TABLE>

                                                         1
<PAGE>

                                       CENIT BANCORP, INC. AND SUBSIDIARIES

                                  UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
                                   (Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                               Three Months
                                                                                                   Ended
                                                                                                March 31,
                                                                                         1998             1997
                                                                                         ----             ----
<S>                                                                                   <C>                <C>

Interest and fees on loans                                                            $  10,050          $ 8,875
Interest on mortgage-backed certificates                                                  1,483            2,713
Interest on investment securities                                                           679              727
Dividends and other interest income                                                         352              236
                                                                                      ---------          -------
   Total interest income                                                                 12,564           12,551
                                                                                      ---------          -------
Interest on deposits                                                                      5,102            5,056
Interest on borrowings                                                                    2,075            2,165
                                                                                      ---------          -------
   Total interest expense                                                                 7,177            7,221
                                                                                      ---------          -------
   Net interest income                                                                    5,387            5,330
Provision for loan losses                                                                   204              150
                                                                                      ---------          -------
   Net interest income after provision for loan losses                                    5,183            5,180
                                                                                      ---------          -------
Other income:
   Deposit fees                                                                             603              483
   Merchant processing fees                                                                 393              227
   Commercial mortgage brokerage fees                                                       181                4
   Gains on sales of loans and securities, net                                              175              108
   Other                                                                                    213              149
                                                                                      ---------          -------
     Total other income                                                                   1,565              971
                                                                                      ---------          -------

Other expenses:
   Salaries and employee benefits                                                         2,088            2,080
   Equipment, data processing and supplies                                                  704              686
   Net occupancy expense of premises                                                        473              460
   Merchant processing                                                                      361              190
   Professional fees                                                                        194              113
   Expenses related to proxy contest and other matters                                        -              394
   Other                                                                                    678              604
                                                                                      ---------          -------
     Total other expenses                                                                 4,498            4,527
                                                                                      ---------          -------

Income before income taxes                                                                2,250            1,624
Provision for income taxes                                                                  793              570
                                                                                      ---------          -------
   Net income                                                                         $   1,457          $ 1,054
                                                                                      =========          =======

Earnings per  share:
   Basic                                                                              $     .31          $   .22
                                                                                      =========          =======
   Diluted                                                                            $     .30          $   .21
                                                                                      =========          =======
Dividends per common share                                                            $     .10          $   .08
                                                                                      =========          =======






<FN>

The notes to unaudited consolidated financial statements are an integral part of
this statement.
</FN>
</TABLE>

                                                         2
<PAGE>

                      CENIT BANCORP, INC. AND SUBSIDIARIES

            UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                             (Dollars in thousands)


<TABLE>
<CAPTION>

                                                                                               Three Months
                                                                                                   Ended
                                                                                                March 31,
                                                                                         1998             1997
                                                                                         ----             ----
<S>                                                                                    <C>               <C>


Net income                                                                             $  1,457          $ 1,054
                                                                                       --------          -------

Other comprehensive income (loss), before income taxes:
   Unrealized gains (losses) on securities available for sale
     Unrealized holding gains (losses) arising during the period                           (189)             (59)
     Less: reclassification adjustment for gains included in net income                     (31)               -
                                                                                       --------          -------

Other comprehensive income (loss), before income taxes                                     (220)             (59)

Income tax benefit related to items of other comprehensive income (loss)                     77               26
                                                                                       --------          -------

Other comprehensive income (loss), net of income taxes                                     (143)             (33)
                                                                                       --------          -------

Comprehensive income                                                                   $  1,314          $ 1,021
                                                                                       ========          =======























<FN>

The notes to unaudited consolidated financial statements are an integral part of
this statement.
</FN>
</TABLE>

                                        3
<PAGE>


                                       CENIT BANCORP, INC. AND SUBSIDIARIES

                                  UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
                                              (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                          Three months ended March 31,
                                                                             1998               1997
<S>                                                                       <C>                <C>

Cash flows from operating activities:
   Net income                                                             $  1,457           $  1,054
   Add (deduct) items not affecting cash in the period:
     Provision for loan losses                                                 204                150
     Provision for losses on real estate owned                                  14                 24
     Amortization of loan yield adjustments                                    100                 (5)
     Depreciation, amortization and accretion, net                             578                518
     Net (gains) losses on sales/disposals of:
        Securities                                                             (31)                 -
        Loans                                                                 (144)              (108)
        Real estate, property and equipment                                     46                  2
     Proceeds from sales of loans held for sale                             12,945              6,813
     Originations of loans held for sale                                   (13,636)            (7,232)
     Change in assets/liabilities:
        Decrease in interest receivable and other assets                      (251)            (1,037)
        Increase in other liabilities                                          651                516
                                                                           -------            -------
        Net cash provided by operating activities                            1,933                695
                                                                           -------            -------
Cash flows from investing activities:
   Purchases of securities available for sale                              (32,903)            (4,077)
   Proceeds from sales of securities available for sale                     17,768                  -
   Principal repayments on securities available for sale                     9,984             16,902
   Proceeds from maturities of securities available for sale                 4,000              5,000
   Net increase in loans held for investment                               (33,391)           (19,023)
   Net proceeds on sales of real estate owned                                  161                 49
   Additions to real estate owned                                                -                (77)
   Purchases of Federal Home Loan Bank stock                                (1,650)            (1,000)
   Redemption of Federal Home Loan Bank stock                                  150                  -
   Purchases of property and equipment                                        (392)              (601)
                                                                           -------            -------
     Net cash used for investing activities                                (36,273)            (2,827)
                                                                           -------            -------
Cash flows from financing activities:
   Proceeds from exercise of stock options and warrants                         36                 57
   Net increase (decrease) in deposits                                       1,775            (10,643)
   Proceeds from Federal Home Loan Bank advances                           267,000            316,000
   Repayment of Federal Home Loan Bank advances                           (254,000)          (308,000)
   Repayments of other borrowings                                             (714)                 -
   Net increase in securities sold under agreement
     to repurchase                                                             114                835
   Cash dividends paid                                                        (473)              (410)
   Other, net                                                                  646                533
                                                                           -------            -------
        Net cash provided by (used for) financing activities                14,384             (1,628)
                                                                           -------            -------
Decrease in cash and cash equivalents                                      (19,956)            (3,760)
Cash and cash equivalents, beginning of period                              54,111             23,478
                                                                           -------            -------
Cash and cash equivalents, end of period                                 $  34,155           $ 19,718
                                                                           =======            =======
Supplemental disclosures of cash flow  information:
     Cash paid during the period for interest                            $   2,704           $  2,941
     Cash paid during the period for income taxes                                -                  -
   Schedule of noncash investing and financing activities:
     Real estate acquired in settlement of loans                         $     105           $    383
     Loans to facilitate sale of real estate owned                             258                946






<FN>

The notes to unaudited consolidated financial statements are an integral part of this statement.
</FN>
</TABLE>

                                                         4

<PAGE>

                      CENIT BANCORP, INC. AND SUBSIDIARIES

       UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                        Three Months Ended March 31, 1998
                             (Dollars in thousands)




<TABLE>
<CAPTION>

                                                                                         Common
                                                                                         Stock      Accumulated Other
                                     Common       Common      Additional                Acquired      Comprehensive
                                      Stock        Stock       Paid-In     Retained     by ESOP      Income, Net of
                                     Shares       Amount       Capital     Earnings      and MRP      Income Taxes        Total 

<S>                               <C>            <C>          <C>           <C>         <C>            <C>              <C>

Balance, December 31, 1997,
   as originally reported         1,657,081      $ 17         $18,152       $35,416     $(4,503)       $   855          $ 49,937


Common stock issued in
   1998 three-for-one stock split 3,314,162        33             (33)            -          -               -                 -
                                  ---------      ----         -------       -------     ------         -------          -------- 


Balance, December 31, 1997,
   as restated                    4,971,243      $ 50         $18,119       $35,416     $(4,503)     $   855            $ 49,937


Comprehensive income                      -         -               -         1,457          -          (143)              1,314


Cash dividends declared                   -         -               -          (946)         -             -                (946)


Exercise of stock options and
   related tax benefits               6,078         -              80             -          -             -                  80

 
Other                                     -         -              41             -         72             -                 113
                                    -------      ----         -------       -------     ------       -------            --------


Balance, March 31, 1998           4,977,321      $ 50         $18,240       $35,927     $(4,431)     $   712            $ 50,498
                                  =========      ====         =======       =======     =======      =======            ======== 

























<FN>

The notes to unaudited consolidated financial statements are an integral part of this statement.
</FN>

</TABLE>
                                                           5
<PAGE>

                      CENIT BANCORP, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------


Note 1 - Basis of Presentation

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include  all of  the  disclosures  and  notes  required  by  generally  accepted
accounting  principles.  In the  opinion  of  the  management,  all  adjustments
(consisting  of  normal  recurring  accruals)  considered  necessary  for a fair
presentation  have been included.  The results of operations for the three month
periods ended March 31, 1998 and 1997 are not necessarily  indicative of results
that  may be  expected  for the  entire  year or any  interim  periods.  Certain
previously  reported  amounts have been  reclassified  to agree with the current
presentation.  The interim  financial  statements  should be read in conjunction
with the December 31,  1997 consolidated  financial statements of CENIT Bancorp,
Inc. (the "Company").

Note 2 - Per Share Data

     On March 24, 1998, the Company  declared a three-for-one  stock split.  All
financial  data  included  in this Form 10-Q  reflects  the  effect of the stock
split.

     The Company adopted FAS 128,  Earnings per Share, on December 31, 1997. The
Company  changed the method used to compute  earnings per share and restated all
prior periods.

     Basic  earnings  per share is  calculated  using  weighted  average  shares
outstanding.  For the three month period ended March 31, 1998,  weighted average
shares used to compute basic  earnings per share were  4,729,096.  For the three
months  ended March 31,  1997,  weighted  average  shares used to compute  basic
earnings per share were 4,914,198.

     Diluted earnings per share is calculated by adding common stock equivalents
to the weighted  average  shares  outstanding.  For the three month period ended
March 31, 1998,  weighted  average shares used to compute  diluted  earnings per
share were  4,868,040.  For the three  months  ended  March 31,  1997,  weighted
average shares used to compute diluted earnings per share were 5,052,138.

     The  unallocated  common  shares  held  by  the  Company's  Employee  Stock
Ownership  Plan are excluded from the weighted  average shares used to calculate
basic and diluted earnings per share.

Note 3 - Comprehensive Income

     On January 1, 1998, the Company  adopted FAS 130,  Reporting  Comprehensive
Income. FAS 130 establishes standards for reporting and displaying comprehensive
income  and its  components.  The  adoption  of FAS 130 did not have a  material
impact on the Company.  All of the Company's other comprehensive  income relates
to net unrealized gains (losses) on available for sale securities.





                                        6
<PAGE>

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

General

     The Company's  business  currently  consists of the business of CENIT Bank,
FSB and CENIT  Bank  (formerly  Princess  Anne Bank)  (the  "Banks").  Effective
February 6, 1998,  Princess  Anne Bank changed its name to CENIT Bank.  On March
24, 25, and 26, 1998, the Boards of Directors of the Banks, as well as the Board
of Directors  of the Company,  as the sole  shareholder  of the Banks,  voted to
merge CENIT Bank into CENIT Bank, FSB.  Following the merger,  which is expected
to be completed  during the second quarter of 1998, the Company will cease to be
regulated  by the Federal  Reserve,  and will be a  registered  savings and loan
holding company regulated  pursuant to the Homeowner's Loan Act, as amended (the
"HOLA").  As such, the Company will be subject to the  regulation,  examination,
supervision  and  reporting  requirements  of the  Office of Thrift  Supervision
("OTS").

     The principal  business of the Banks consists of attracting retail deposits
from the  general  public in their  market  areas  through a variety  of deposit
products  and  investing  these funds in  commercial,  real estate and  consumer
loans. The Banks also invest in mortgage-backed certificates,  securities issued
by the  U.S.  Treasury  and  U.S.  Government  agencies  and  other  investments
permitted by applicable laws and regulations.

Financial Condition Of The Company

Total Assets

     At March 31, 1998, the Company had total assets of $734.4 million  compared
to $718.1 million at December 31, 1997.

Securities Available for Sale

     Securities  available for sale totaled $138.0 million at March 31, 1998 and
are  comprised  of U. S.  Treasury  securities,  other U. S.  Government  agency
securities, and mortgage-backed certificates.  The net decrease of $804,000 from
December 31, 1997  resulted  primarily  from $10.0 million of  repayments,  $4.0
million of proceeds from maturities, $17.8 million of proceeds from the sales of
securities,  and $32.9 million in purchases of securities available for sale. It
has been the Company's experience that most mortgage-backed  certificates prepay
substantially  in  advance  of  their  scheduled  amortizations.  Excluding  the
mortgage-backed  certificates purchased or sold during the first three months of
1998,   the   Company   experienced   amortizations   or   prepayments   on  its
mortgage-backed certificate portfolio at an annualized rate of approximately 40%
during the first quarter of 1998.

Loans

     The balance of net loans held for investment  increased from $486.5 million
at December 31, 1997 to $519.7 million at March 31, 1998. This increase resulted
primarily  from an increase in  adjustable-rate  residential  mortgage  loans of
$31.1 million.  For the three months ended  March 31,  1998,  loan  originations
totaled $53.5 million, loan purchases totaled $48.8 million, and total principal
reductions  totaled $66.8 million.  Loan purchases  include the bulk purchase of
$46.1 million of  adjustable-rate  residential  mortgage  loans during the first
quarter of 1998 with an initial yield of 6.70%.  The  collateral  for these bulk
purchased loans is located  primarily outside the Company's primary market area.
During the first quarter of 1998,  amortizations  or prepayments of conventional
1-  to  4-family  residential  mortgage  loans  were  approximately  40%  on  an
annualized basis.


                                        7

<PAGE>

     The following  table sets forth the  composition of the Company's  loans in
dollar  amounts and as a percentage of the Company's  total gross loans held for
investment at the dates indicated.

<TABLE>
<CAPTION>

                                                            March 31, 1998                 December 31, 1997
                                                            --------------                 -----------------
                                                                        (Dollars in Thousands)
                                                       Amount        Percent              Amount        Percent
                                                       ------        -------              ------        -------
<S>                                                   <C>              <C>              <C>               <C>

Real estate loans:
   Residential permanent 1- to 4-family:
     Adjustable rate                                  $ 244,738        43.23%           $  213,682        40.20%
     Fixed rate
       Conventional                                      83,248        14.70                89,356        16.81
       Guaranteed by VA or insured by FHA                 5,104          .90                 5,487         1.03
                                                      ---------       ------            ----------       ------
     Total permanent 1- to 4-family                     333,090        58.83               308,525        58.04
   Residential permanent 5 or more family                 6,260         1.11                 6,374         1.20
                                                      ---------                         ----------         
     Total permanent residential loans                  339,350        59.94               314,899        59.24
                                                      ---------       ------            ----------       ------
   Commercial real estate loans:
     Hotels                                              10,120         1.78                10,240         1.93
     Office and warehouse facilities                     28,348         5.01                26,710         5.02
     Retail facilities                                   16,881         2.98                18,249         3.43
     Other                                                3,322          .59                 2,714          .51
                                                      ---------       ------            ----------       ------
     Total commercial real estate loans                  58,671        10.36                57,913        10.89
                                                      ---------       ------            ----------       ------
   Construction loans:
     Residential 1- to 4-family                          45,001         7.94                44,208         8.32
     Residential 5 or more family                        16,185         2.86                12,784         2.40
     Nonresidential                                       3,281          .58                 1,420          .27
                                                      ---------       ------            ----------       ------
     Total construction loans                            64,467        11.38                58,412        10.99
                                                      ---------       ------            ----------       ------

   Land acquisition and development loans:
     Consumer lots                                        4,415          .78                 4,573         0.86
     Acquisition and development                         14,809         2.62                13,327         2.51
                                                      ---------       ------            ----------       ------
     Total land acquisition and development
       loans                                             19,224         3.40                17,900         3.37
                                                      ---------       ------            ----------       ------
     Total real estate loans                            481,712        85.08               449,124        84.49
                                                      ---------       ------            ----------       ------
Consumer loans:
   Boats                                                  5,289          .93                 5,685         1.07
   Home equity and second mortgage                       46,288         8.18                45,194         8.50
   Mobile homes                                              86          .02                    95          .02
   Other                                                  7,659         1.35                 7,250         1.36
                                                      ---------       ------            ----------       ------
     Total consumer loans                                59,322        10.48                58,224        10.95
                                                      ---------       ------            ----------       ------
Commercial business loans                                25,139         4.44                24,222         4.56
                                                      ---------       ------            ----------       ------
     Total loans                                        566,173       100.00%              531,570       100.00%
                                                      ---------       ======            ----------       ======
Less:
   Allowance for loan losses                              3,798                              3,783
   Loans in process                                      43,831                             42,067
   Unearned discounts, premiums, and loan fees, net      (1,183)                              (767)
                                                      ---------                         ----------
                                                         46,446                             45,083
                                                      ---------                         ----------
Total loans, net                                      $ 519,727                         $  486,487
                                                      =========                         ==========

</TABLE>


                                        8
<PAGE>

     The following table sets forth information about  originations,  purchases,
sales,  and  principal  reductions  for  the  Company's  loans  for  the  period
indicated.

                                                            Three Months Ended
                                                              March 31, 1998
                                                          (Dollars in Thousands)
Loans originated:
   Real estate:
      Permanent:
         Residential 1- to 4-family                             $ 19,653
         Residential 5 or more family                                  -
                                                                -------- 
            Total                                                 19,653
                                                                --------

      Commercial real estate                                       1,403
                                                                --------
       Construction:
         Residential 1- to 4-family                                6,107
         Residential 5 or more family                              3,472
         Nonresidential                                            2,300
                                                                --------
            Total                                                 11,879
                                                                --------
      Land acquisition:
         Consumer lots                                               214
         Acquisition and development                               2,223
                                                                --------
            Total                                                  2,437
                                                                --------
            Total real estate loans originated                    35,372
                                                                --------
   Consumer:
      Home equity and second mortgage                              7,537
      Other                                                        1,651
                                                                --------
            Total                                                  9,188
                                                                --------
   Commercial business                                             8,968
                                                                --------
            Total loans originated                                53,528
                                                                --------
   Loans purchased                                                48,756
                                                                --------
            Total loans originated and purchased                 102,284
                                                                --------
Principal reductions:
   Repayments and other principal reductions                      54,078
   Real estate loans sold                                         12,769
                                                                --------
            Total principal reductions                            66,847
                                                                --------
Net increase in total loans                                     $ 35,437
                                                                ========
Net increase in loans held for sale                             $    834
Net increase in gross loans held for investment                   34,603
                                                                --------
                                                                $ 35,437
                                                                ========



                                        9
<PAGE>

Deposits

     The balance of deposits  increased from $507.7 million at December 31, 1997
to $509.4 million at March 31, 1998. During this period, certificates of deposit
decreased  from  $328.2  million  at  December 31,  1997 to  $306.2  million  at
March 31,  1998, while all other  interest-bearing  deposits  increased by 12.4%
from $124.6  million at  December 31,  1997 to $140.0 million at March 31, 1998.
Noninterest-bearing  deposits increased 15.1% from $54.9 million at December 31,
1997 to $63.2 million at March 31, 1998.

Capital

     The Company's and the Banks' capital ratios exceeded applicable  regulatory
requirements at March 31, 1998.

Asset Quality

     Nonperforming Assets.  Nonperforming assets consist of nonperforming loans,
real estate  acquired in  settlement  of loans  ("REO"),  and other  repossessed
assets. Generally the Company does not accrue interest on loans that are 90 days
or more past due,  with the  exception of certain  VA-guaranteed  or FHA insured
one- to four-family  permanent  mortgage loans,  certain credit card loans,  and
matured loans for which the borrowers are still making required monthly payments
of interest, or principal and interest,  and with respect to which the Banks are
negotiating extensions or refinancings with the borrowers.


                                       10
<PAGE>

     The   following   table  sets  forth   information   about  the   Company's
nonperforming loans, REO, and other repossessed assets at the dates indicated.

                                                      March 31,     December 31,
                                                        1998            1997
                                                       (Dollars in Thousands)
Nonperforming loans:
   Real estate loans:
     Permanent residential 1- to 4-family
       Nonaccrual                                      $  386           $  528
       Accruing loans 90 days or more past due            316               53
                                                       ------           ------
         Total                                            702              581
                                                       ------           ------

     Commercial real estate:
       Accruing loans 90 days or more past due            535                -
                                                       ------           ------
                                                          535                -
                                                       ------           ------
     Land acquisition and development:
       Nonaccrual                                         100              200
       Accruing loans 90 days or more past due              -                -
                                                       ------           ------
          Total                                           100              200
                                                       ------           ------
   Consumer loans:
     Mobile homes (nonaccrual)                             39               48
     Credit cards (accruing loans 90 days or
       more past due)                                       -                5
     Other (nonaccrual)                                    24               24
                                                       ------           ------
       Total                                               63               77
                                                       ------           ------
   Commercial business loans:
     Nonaccrual                                           343              240
     Accruing loans 90 days or more past due                -                5
                                                       ------           ------
       Total                                              343              245
                                                       ------           ------

Total nonperforming loans:
   Nonaccrual                                             892            1,040
   Accruing loans 90 or more days past due                851               63
                                                       ------           ------
       Total                                            1,743            1,103
Real estate owned, net                                    725            1,098
Other repossessed assets, net                             148              228
                                                       ------           ------
   Total nonperforming assets, net                     $2,616           $2,429
                                                       ======           ======
   Total nonperforming assets, net, to total assets       .36%             .34%
                                                       ======           ======

     At March 31, 1998,  nonperforming  commercial real estate loans of $535,000
consists of one loan  collateralized by a hotel property.  The hotel property is
under  contract for sale and the Company  expects this loan to be repaid in full
during the second quarter of 1998.



                                       11
<PAGE>

     Allowance for Loan Losses.  The following  table sets forth activity of the
allowance for loan losses for the periods indicated.
                                                   Three months ended March 31,
                                                  1998                     1997
                                                      (Dollars in Thousands)

Balance at beginning of period                  $ 3,783                 $ 3,806
Provision for loan losses                           204                     150
Losses charged to allowance                        (233)                    (92)
Recovery of prior losses                             44                      35
                                                -------                 -------
Balance at end of period                        $ 3,798                 $ 3,899
                                                =======                 =======

     The Company's provision for loan losses increased to $204,000 for the three
months ended March 31,  1998 as compared to $150,000 in the same period in 1997.
At March 31, 1998,  the  Company's  coverage  ratio of  nonperforming  loans was
217.9% compared to a coverage ratio of 343.0% at December 31, 1997.

Average Balance Sheets

     The  following  tables set forth,  for the periods  indicated,  information
regarding: (i) the total dollar amounts of interest income from interest-earning
assets  and the  resulting  average  yields;  (ii) the total  dollar  amounts of
interest  expense from  interest-bearing  liabilities and the resulting  average
costs;  (iii) net interest income;  (iv) interest rate spread;  (v) net interest
position;  (vi) the net yield earned on  interest-earning  assets; and (vii) the
ratio of total interest-earning  assets to total  interest-bearing  liabilities.
Average  balances shown in the following tables have been calculated using daily
average balances.



                                       12
<PAGE>
<TABLE>
<CAPTION>

                                                        For the Three Months              For the Three Months
                                                                Ended                            Ended
                                                           March 31, 1998                       March 31, 1997
                                                    ------------------------------     ----------------------------
                                                    Average                 Yield/     Average               Yield/
                                                    Balance    Interest      Cost      Balance   Interest     Cost
                                                    -------    --------      ----      -------   --------     ----
                                                                        (Dollars in thousands)
<S>                                                <C>         <C>           <C>    <C>         <C>           <C>

Interest-earning assets:
    Loans (1)                                      $  504,791  $ 10,050      7.96%  $  435,115  $  8,875      8.16%
    Mortgage-backed certificates                       87,980     1,483      6.74      161,218     2,713      6.73
    U.S. Treasury and other U.S.
       Government agency securities                    45,001       679      6.04       46,319       727      6.28
    Federal funds sold                                 13,171       180      5.47        6,089        84      5.52
    Federal Home Loan Bank and
       Federal Reserve Bank stock                       9,400       172      7.32        8,525       152      7.13
                                                   ----------  --------             ----------  --------
       Total interest-earning assets                  660,343    12,564      7.61      657,266    12,551      7.64
                                                   ----------  --------             ----------  --------

Noninterest-earning assets:
    REO                                                 1,023                            2,376
    Other                                              42,263                           40,632
                                                   ----------                       ----------
       Total noninterest-earning assets                43,286                           43,008
                                                   ----------                       ----------
         Total assets                              $  703,629                       $  700,274
                                                   ==========                       ==========

Interest-bearing liabilities:
    Passbook and statement savings                 $   43,152  $    353      3.27   $   46,991  $    392      3.34
    Checking accounts                                  31,891       147      1.84       28,963       154      2.12
    Money market deposit accounts                      55,676       500      3.59       45,797       374      3.27
    Certificates of deposit                           315,145     4,102      5.21      324,876     4,136      5.09
                                                   ----------  --------             ----------  --------
       Total interest-bearing deposits                445,864     5,102      4.58      446,627     5,056      4.53
                                                   ----------  --------             ----------  --------
    Advances from the Federal Home
       Loan Bank                                      141,700     1,925      5.43      156,789     2,095      5.34
    Securities sold under agreements
       to repurchase                                    9,228       104      4.51        6,488        70      4.32
    Other borrowings                                    2,424        46      7.59            -         -         -
                                                   ----------  --------             ----------  --------
       Total borrowings                               153,352     2,075      5.41      163,277     2,165      5.30
                                                   ----------  --------             ----------  --------
       Total interest-bearing liabilities             599,216     7,177      4.79      609,904     7,221      4.74
                                                   ----------  --------             ----------  --------

Noninterest-bearing liabilities:
    Deposits                                           47,923                           37,658
    Other liabilities                                   6,222                            2,854
                                                   ----------                       ----------
       Total noninterest-bearing liabilities           54,145                           40,512
                                                   ----------                       ----------
         Total liabilities                                                             650,416

Stockholders' equity                                   50,268                           49,858
                                                   ----------                       ----------
Total liabilities and stockholders' equity         $  703,629                       $  700,274
                                                   ==========                       ==========

Net interest income/interest rate spread                       $  5,387      2.82%              $  5,330      2.90%
                                                               ========                         ========

Net interest position/net interest margin          $   61,127                3.26%  $   47,362                3.24%
                                                   ==========                       ==========

Ratio of average interest-earning assets to
    average interest-bearing liabilities               110.20%                      107.77%
                                                       ======                       ======

<FN>

(1) Includes nonaccrual loans and loans held for sale.
</FN>
</TABLE>

                                       13
<PAGE>

Comparison  of  Operating  Results for the Three Months Ended March 31, 1998 and
March 31, 1997.

General

     The Company's  pre-tax income for the three months ended March 31, 1998 was
$2.3 million  compared to $1.6 million during the same period in the prior year.
This increase is primarily  attributable to a $594,000 increase in other income,
a $3,000 increase in net interest income after provision for loan losses,  and a
$29,000  decrease in other  expenses.  Included in other  expenses for the three
months ended March 31, 1997 are $394,000 of expenses  relating to the  Company's
1997 proxy contest and other matters.

Net Interest Income

     The  Company's  net  interest  income  before  provision  for  loan  losses
increased by $57,000 for the quarter ended March 31, 1998 as compared to that of
the previous year.  This increase  resulted from a $13,000  increase in interest
income, and a $44,000 decrease in interest expense.

     Interest  on  the  Company's  portfolio  of  mortgage-backed   certificates
decreased by $1.2 million from $2.7 million for the quarter ended March 31, 1997
to $1.5 million for the comparable 1998 period. This decrease resulted primarily
from a $73.2  million  decrease in the  average  balance of the  portfolio.  The
decrease  in the  average  balance  of  mortgage-  backed  certificates  was due
primarily to prepayments and sales of mortgage-backed certificates.

     Interest on loans  increased by $1.2 million in the quarter ended March 31,
1998  compared to the  comparable  1997  period.  This  increase  was  primarily
attributable to a $69.7 million  increase in the average  balance of loans.  The
yield on the Bank's loan  portfolio  decreased  from 8.16% in the quarter  ended
March 31, 1997 to 7.96% in the  comparable  1998 period as purchased  loans with
lower initial yields were added to the loan portfolio.

     Interest on  investment  securities  for the  quarter  ended March 31, 1998
decreased by $48,000 compared to the same period in 1997 primarily due to both a
$1.3 million  decrease in the average  balance of  investment  securities  and a
decrease  in the yield from  6.28% in the first  quarter of 1997 to 6.04% in the
same period in 1998.

     Dividends and other interest income  increased by $116,000 during the first
quarter of 1998  compared  to the same period in 1997.  Most of the  increase is
from interest on federal funds sold which  increased by $96,000 due primarily to
an increase of $7.1 million in the average balance  outstanding during the first
quarter of 1998 compared to the same period in 1997.

     Interest on deposits  increased  by $46,000 in the quarter  ended March 31,
1998  compared  to  the  comparable   1997  period.   The  average   balance  of
interest-bearing  deposits  decreased  by $763,000 in the first  quarter of 1998
when  compared  to the same  period  in 1997  while  the  average  cost of these
deposits for this period increased from 4.53% in 1997 to 4.58% in 1998.

     The Company's  interest on  borrowings  decreased by $90,000 in the quarter
ended March 31, 1998 compared to the comparable  1997 period.  This decrease was
attributable  to a $9.9 million  decrease in the average  balance of  borrowings
offset by an increase of 11 basis points in the cost of these borrowings.

     The  Company's  net interest  margin  increased  from 3.24% for the quarter
ended  March 31,  1997 to 3.26% for the quarter ended March 31, 1998,  while the
Bank's interest rate spread  decreased from 2.90% in the quarter ended March 31,
1997 to 2.82% in the comparable 1998 period.  The Company's  calculations of net
interest   margin  and  interest  rate  spread  include   nonaccrual   loans  as
interest-earning assets.

Provision for Loan Losses

     The Company's  provision  for loan losses  increased by $54,000 to $204,000
for the three months ended March 31,  1998, compared to the same period in 1997.
Net loans  charged  off during the quarter  ended  March 31, 1998 were  $189,000
compared to $57,000 in the comparable 1997 period.


                                       14
<PAGE>

Other Income

     Total other income  increased  from $971,000 in the quarter ended March 31,
1997 to $1.6 million in the comparable 1998 period.

     Deposit fees increased by $120,000, primarily as the result of increases in
usage fees from the Company's automated teller network and increases in checking
account fees.  Merchant  processing  fees increased by $166,000 from $227,000 in
the  first  quarter  of 1997 to  $393,000  in the first  quarter  of 1998 as the
Company continued to experience  substantial  growth in its merchant  portfolio.
Brokerage fees recognized by CENIT Bank,  FSB's  commercial  mortgage  brokerage
subsidiary,  increased by $177,000 to $181,000  during the first quarter of 1998
compared to $4,000 during the same period in 1997.

Other Expenses

     Total other  expenses  decreased by $29,000 for the quarter ended March 31,
1998 compared to the  comparable  1997 period.  The quarter ended March 31, 1997
includes  $394,000 of expenses  relating to the Company's 1997 proxy contest and
other matters. These expenses resulted from proxy solicitation expenses and from
legal and other expenses  related to  investigations  of possible  violations of
banking and securities laws by entities outside the Company. Merchant processing
expenses  increased,  due to  increased  volume,  by $171,000 to $361,000 in the
first  quarter of 1998  compared  to  $190,000  in 1997's  first  quarter  while
professional  fees increased by $81,000 to $194,000  during the first quarter of
1998 compared to $113,000 during the same period in 1997.

Liquidity

     The  principal  sources of funds for the Company for the three months ended
March 31, 1998 included  $267.0 million in proceeds from FHLB advances and $31.8
million in proceeds from principal repayment, sales and maturities of securities
available for sale.  Funds were used  primarily to repay FHLB advances  totaling
$254.0  million,  to fund  purchases of  securities  available for sale totaling
$32.9  million and to fund net  increases in loans held for  investment of $33.4
million.

     The Company's  liquidity could be impacted by a decrease in the renewals of
deposits  or general  deposit  runoff.  However,  the Company has the ability to
raise  deposits  by  conducting  deposit  promotions.  In the event the  Company
requires funds beyond its ability to generate them internally, the Company could
obtain  additional  advances from the FHLB.  The Company could also obtain funds
through the sale of investment securities from its available for sale portfolio.

     All savings  institutions,  including  CENIT  Bank,  FSB,  are  required to
maintain an average daily balance of liquid assets equal to a certain percentage
of the sum of its average daily balance of net withdrawable deposit accounts and
borrowings payable in one year or less. The liquidity  requirement may vary from
time to time (between 4% and 10%) depending upon economic conditions and savings
flows of all savings  institutions.  At the present  time,  the required  liquid
asset ratio is 4.0%.  CENIT Bank,  FSB's liquid asset ratio was 9.3% and 8.8% at
March 31, 1998 and December 31, 1997, respectively.





                                       15
<PAGE>

PART II - OTHER INFORMATION


Item 1 - Legal Proceedings - Inapplicable


Item 2 - Changes in Securities - Inapplicable


Item 3 - Defaults Upon Senior Securities - Inapplicable


Item 4 - Submission of Matters to a Vote of Security Holders - None


Item 5 - Other Information - None


Item 6 - Exhibits and Reports on Form 8-K

6.a      Exhibit 10.12 - Consulting Agreement with J. Morgan Davis
         Exhibit 10.13 - Non-Competition and Non-Disclosure Agreement with 
                         J. Morgan Davis

6.b      Reports on Form 8-K during the first quarter of 1998

         On March 26, 1998, the Company filed Form 8-K, Item 5 and Item 7.  
         Item 5 reported that on March 24, 1998, the Company issued a news 
         release announcing a three-for-one stock split, quarterly dividend 
         payment and other information.  Item 7 included, as an exhibit, the 
         news release.

                                   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.



 
 
                                           CENIT BANCORP, INC.




DATE: May 5, 1998                          /S/ Michael S. Ives         
                                           Michael S. Ives
                                           President and Chief Executive Officer



DATE: May 5, 1998                          /S/ John O. Guthrie         
                                           John O. Guthrie
                                           Senior Vice President and
                                           Chief Financial Officer



                                       16