U. S. SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D. C. 20549


                                 FORM 10-QSB


               [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

                 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998


                    [ ] Transition Report Under Section 13
                         or 15(d) of the Exchange Act

              For the transition period ended _____________________


                  COMMISSION FILE NUMBER    0-24245


                               BOC FINANCIAL CORP.
--------------------------------------------------------------------------------
      (Exact name of small business issuer as specified in its charter)


        North Carolina                                       56-6511744
        --------------                                       ----------
(State or other jurisdiction of                             (IRS Employer
 incorporation or organization)                         Identification Number)


                   107 SOUTH CENTRAL AVENUE, LANDIS, NC 28088
--------------------------------------------------------------------------------
                    (Address of principal executive office)


                                (704) 857-7277
--------------------------------------------------------------------------------
                         (Issuer's telephone number)


Check  whether  the  issuer  (1) filed  all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange Act of 1934 during the past 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
                ----------            ---------

As of August 7, 1998, 925,741 shares of the issuer's common stock, $1.00 par
value, were outstanding. The registrant has no other classes of securities
outstanding.

This report contains 11 pages.


                                      -1-
<PAGE>


                                                                        Page No.
                                                                        --------
PART 1.  FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED)

            Consolidated Statements of Financial Condition
            June 30, 1998 and December 31, 1997.....................      3

            Consolidated Statements of Operations
            Three Months and Six Months Ended June 30, 1998 and 1997      4


            Consolidated Statements of Cash Flows
            Six Months Ended June 30, 1998 and 1997.................      5

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

ITEM 2 - MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS........................      8

PART II. OTHER INFORMATION

            Item 2:  Use of Proceeds From Registered Securities.....     10

            Item 6.  Exhibits and Reports on Form 8-K...............     10


                                      -2-
<PAGE>


PART 1.  FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS

                       BOC FINANCIAL CORP. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S>     <C>   

                                                           
                                                             June 30,  
                                                               1998          December 31,
ASSETS                                                      (Unaudited)          1997*   
                                                            -----------      ------------
                                                                    (In Thousands)     
                                                                                         
Cash on hand and in banks                                   $     171          $    336  
Interest-bearing balances in other banks                           42                35  
Federal funds sold                                              8,850             1,750  
Investment securities available for sale, at fair value         3,482             2,909  
Loans receivable, net                                          17,937            18,826  
Accrued interest receivable                                        54                45  
Premises and equipment, net                                       276               287  
Stock in the Federal Home Loan Bank, at cost                      187               187  
Other assets                                                       90               222  
                                                            ---------          --------  
                                                                                         
                                           TOTAL ASSETS     $  31,089          $ 24,597  
                                                            =========          ========  
LIABILITIES AND NET RETAINED EARNINGS                                                    
                                                                                         
LIABILITIES                                                                              
Deposit accounts                                            $  18,555          $ 19,978  
Advance payments from borrowers for property taxes                                       
  and insurance                                                    17                17  
Accrued expenses and other liabilities                            189               178  
                                                            ---------          --------  
                                                                                         
                                      TOTAL LIABILITIES        18,761            20,173  
                                                            ---------          --------  
STOCKHOLDERS' EQUITY                                                                     
Preferred stock, no par value, 1,000,000 shares                                          
  authorized, no shares issued and outstanding                      -                 -  
Common stock, $1 par value, 9,000,000 shares                                             
  authorized, 925,741 shares issued and                                                  
  outstanding at June 30, 1998                                    926                 -  
Additional paid-in capital                                      7,891                 -  
ESOP note receivable                                           (1,043)                -  
Accumulated other comprehensive income:                                                  
  Unrealized holding gains                                          4                 6  
Retained earnings, substantially restricted                     4,550             4,418  
                                                            ---------          --------  
                                                                                         
                             TOTAL STOCKHOLDERS' EQUITY        12,328             4,424  
                                                            ---------          --------  
                                                            $  31,089          $ 24,597  
                                                            =========          ========  
                                                                             
</TABLE>


*Derived from audited financial statements.

See accompanying notes.

                                      -3-
<PAGE>


                       BOC FINANCIAL CORP. AND SUBSIDIARY
               CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------


                                    Three Months Ended      Six Months Ended
                                         June 30,               June 30,
                                    1998       1997         1998        1997
                                 ---------   ---------   ---------    ------
                                                 (In Thousands)

INTEREST INCOME
   Loans                         $     370   $     376   $     744   $     746
   Investments                          50          52          93          89
   Deposits in other banks and
     federal funds sold                127          12         196          28
                                 ---------   ---------   ---------   ---------

           TOTAL INTEREST INCOME       547         440       1,033         863
                                 ---------   ---------   ---------   ---------

INTEREST EXPENSE
  Deposits                             250         248         534         482
                                 ---------   ---------   ---------   ---------

             NET INTEREST INCOME       297         192         499         381

PROVISION FOR LOAN LOSSES                -           1           -           3
                                 ---------   ---------   ---------   ---------

       NET INTEREST INCOME AFTER
       PROVISION FOR LOAN LOSSES       297         191         499         378
                                 ---------   ---------   ---------   ---------

OTHER INCOME                             -           -           3           1
                                 ---------   ---------   ---------   ---------

OTHER EXPENSES
  Personnel costs                       82          78         174         158
  Occupancy                             13          11          25          22
  Data processing and outside
     service fees                        5           6          18          21
  Deposit insurance premiums             3           3           6           6
  Other                                 56          23          73          37
                                 ---------   ---------   ---------   ---------

            TOTAL OTHER EXPENSES       159         121         296         244
                                 ---------   ---------   ---------   ---------

     INCOME BEFORE INCOME TAXES        138          70         206         135

PROVISION FOR INCOME TAXES              53          21          74          40
                                 ---------   ---------   ---------   ---------

                      NET INCOME $      85   $      49   $     132   $      95
                                 =========   =========   =========   =========

See Note D for Net Income Per Share Information.


See accompanying notes.


                                      -4-
<PAGE>


                       BOC FINANCIAL CORP. AND SUBSIDIARY
               CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
--------------------------------------------------------------------------------


                                                            Six Months Ended
                                                                June 30,
                                                            ----------------
                                                             1998       1997
                                                             ----       ----
                                                             (In Thousands)

CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                              $     132   $     95
  Adjustments  to  reconcile  net  income to net
   cash provided by operating activities:
    Depreciation                                                 15         14
    Amortization, net                                             -         (1)
    Gain on sale of assets, net                                  (2)         -
    Provision for loan losses                                     -          3
    Deferred compensation                                        17          -
    Change in assets and liabilities:
     Increase in accrued interest receivable                     (9)       (16)
     (Increase) decrease in other assets                        (24)        47
     Increase (decrease) in accrued expenses and
       other liabilities                                         (6)        11
                                                           --------    -------

                                    NET CASH PROVIDED BY
                                    OPERATING ACTIVITIES        123        153
                                                           --------    -------

CASH FLOWS FROM INVESTING ACTIVITIES
  Net (increase) decrease in interest-bearing
    balances in other banks                                      (7)        10
  Net increase in federal funds sold                         (7,100)      (600)
  Purchases of available for sale investment securities      (2,225)    (1,249)
  Proceeds from maturities of available for sale
    securities                                                1,150          -
  Proceeds from sales of available for sale investment
    securities                                                  501        346
  Purchase of Federal Home Loan Bank Stock                        -        (17)
  Proceeds from sales of loans                                   11          -
  Net (increase) decrease in loans                              879        (10)
  Purchases of premises and equipment                            (4)        (3)
                                                          ---------   --------

                                           NET CASH USED
                                 BY INVESTING ACTIVITIES     (6,795)    (1,523)
                                                           --------    -------

CASH FLOWS FROM FINANCING ACTIVITIES
  Net increase in demand accounts                               119        953
  Net increase (decrease) in certificates of deposit         (1,542)       283
  Net increase in advance payments from borrowers
    for taxes and insurance                                       -          9
  Stock conversion proceeds, net of costs incurred            8,973          -
  Loan to ESOP for purchase of common stock                  (1,043)         -
                                                          ---------   --------


                                       NET CASH PROVIDED
                                 BY FINANCING ACTIVITIES      6,507      1,245
                                                           --------    -------

                                    NET DECREASE IN CASH
                                    ON HAND AND IN BANKS       (165)      (125)

                    CASH ON HAND AND IN BANKS, BEGINNING        336        307
                                                          ---------   --------

                       CASH ON HAND AND IN BANKS, ENDING  $     171   $    182
                                                          =========   ========

See accompanying notes.

                                      -5-
<PAGE>

                       BOC FINANCIAL CORP. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE A - BASIS OF PRESENTATION

In management's opinion, the financial information, which is unaudited, reflects
all adjustments (consisting solely of normal recurring adjustments) necessary
for a fair presentation of the financial information as of and for the three and
six month periods ended June 30, 1998 and 1997, in conformity with generally
accepted accounting principles. The financial statements include the accounts of
BOC Financial Corp. (the "Company") and its wholly-owned subsidiary, Bank of the
Carolinas (the "Bank"), formerly Landis Savings Bank, SSB. Operating results for
the three and six month periods ended June 30, 1998 are not necessarily
indicative of the results that may be expected for the fiscal year ending
December 31, 1998.

The organization and business of the Company, accounting policies followed by
the Company and other information are contained in the notes to the financial
statements filed as part of BOC Financial Corp.'s registration statement on Form
SB-2. This quarterly report should be read in conjunction with such registration
statement.


NOTE B - PLAN OF CONVERSION

On September 29, 1997, the Board of Directors of the Bank adopted a Plan of
Conversion whereby Landis Savings Bank, SSB converted from a North
Carolina-charted mutual savings bank to a North Carolina-chartered stock
commercial bank, changed its name to Bank of the Carolinas, and became a
wholly-owned subsidiary of BOC Financial Corp. (the "Company" or "Holding
Company"), a holding company formed in connection with the conversion. The
Holding Company issued common stock in the conversion and used a portion of the
net proceeds thereof to purchase the capital stock of the Bank.

At the time of conversion, the Bank established a liquidation account in an
amount equal to its net worth as reflected in its latest statement of financial
condition used in its final conversion prospectus. The liquidation account will
be maintained for the benefit of eligible deposit account holders who continue
to maintain their deposit accounts in the Bank after conversion. Only in the
event of a complete liquidation will each eligible deposit account holder be
entitled to receive a subaccount balance for deposit accounts then held before
any liquidation distribution may be made with respect to common stock. Dividends
paid by the Bank subsequent to the conversion cannot be paid from this
liquidation account.

The Bank may not declare or pay a cash dividend on or repurchase any of its
common stock if its net worth would thereby be reduced below either the
aggregate amount then required for the liquidation account or the minimum
regulatory capital requirements imposed by federal and state regulations.


                                      -6-
<PAGE>


                       BOC FINANCIAL CORP. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE B - PLAN OF CONVERSION (CONTINUED)

On April 28, 1998, the Bank completed its conversion from a North
Carolina-chartered mutual savings bank to a North Carolina-chartered stock
commercial bank. The conversion occurred through the sale of 925,741 shares of
common stock ($1.00 par value) of BOC Financial Corp. Total proceeds of
$9,257,000 were reduced by conversion expenses of approximately $440,000. BOC
Financial Corp. purchased 100% of the common stock of Bank of the Carolinas
issued in the conversion, and retained the balance of the net conversion
proceeds. The transaction was recorded as an "as-if" pooling with assets and
liabilities recorded at historical cost.


NOTE C - EMPLOYEE STOCK OWNERSHIP PLAN

Subsequent to the mutual to stock conversion, the Bank of the Carolinas Employee
Stock Ownership Plan ("ESOP") purchased 74,059 shares of the common stock of the
Holding Company in the open market at a total cost of $1,043,000. Funding for
the purchase of shares by the ESOP was provided by the Holding Company. The ESOP
executed a note payable to the Holding Company for the full price of the shares
purchased.


NOTE D - NET INCOME PER SHARE

Basic net income per share for the period from the closing of the Company's
stock offering (April 28, 1998) through June 30, 1998 was $.07 per share and was
computed based on consolidated net income during that period divided by the
weighted average number of common shares outstanding during that period (861,824
shares). There were no dilutive common equivalent shares outstanding during the
period.


                                      -7-
<PAGE>


ITEM 2 -  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND
          RESULTS OF OPERATIONS


COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1998 AND DECEMBER 31, 1997

Total assets increased by $6.5 million during the six months ended June 30,
1998, from $24.6 million at December 31, 1997 to $31.1 million at period end.
The growth in assets was attributable to the sale, on April 28, 1998, of 925,741
shares of the Company's common stock, generating net cash proceeds of $8.8
million. Of this amount, $1.0 million was used to fund a loan to the Bank's
Employee Stock Ownership Plan ("ESOP"), while approximately $1.4 million was
used to fund a net reduction in customer deposits from $20.0 million at December
31, 1997 to $18.6 million at June 30, 1997. The reduction in deposits resulted
from the conversion of customer deposit accounts which were used to purchase
shares of the Company's common stock. The remaining net proceeds, combined with
a decrease in loans of $889,000, were used to fund increases of $7.1 million and
$573,000, respectively, in federal funds sold and investment securities
available for sale.


COMPARISON  OF RESULTS OF  OPERATIONS  FOR THE THREE  MONTHS ENDED JUNE 30, 1998
AND 1997

Net income for the three months ended June 30, 1998 was $85,000 as compared with
net income of $49,000 for the three months ended June 30, 1997, an increase of
$36,000. The increase in net income was principally attributable to an increase
of $105,000 in net interest income as a result of the infusion of capital and
increased interest-earning liquid assets arising from the sale of the Company's
common stock during the current period. Personnel costs increased $4,000 during
the current period, primarily as a result of costs provided for the deferred
compensation plan which was adopted in 1997, but for which no costs were
provided during the three months ended June 30, 1997. Other expenses increased
by $33,000 principally as a result of additional costs associated with the
Company's operation as a publicly held entity. Income taxes increased $32,000
because of the increased level of income before income taxes.


COMPARISON OF RESULTS OF  OPERATIONS  FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
1997

Net income for the six months ended June 30, 1998 was $132,000 as compared with
net income of $95,000 for the six months ended June 30, 1997, an increase of
$37,000. The increase in net income was principally attributable to an increase
of $118,000 in net interest income as a result of the infusion of capital and
increased interest-earning liquid assets arising from the sale of the Company's
common stock during the current period. Personnel costs increased $16,000 during
the current period, primarily as a result of costs provided for the deferred
compensation plan which was adopted in 1997, but for which no costs were
provided during the six months ended June 30, 1997. Other expenses increased by
$36,000 principally as a result of additional costs associated with the
Company's operation as a publicly held entity. Income taxes increased $34,000
because of the increased level of income before income taxes.

                                      -8-
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The objective of the Company's liquidity management is to ensure the
availability of sufficient cash flows to meet all financial commitments and to
capitalize on opportunities for expansion. Liquidity management addresses the
Bank's ability to meet deposit withdrawals on demand or at contractual maturity,
to repay borrowings as they mature, and to fund new loans and investments as
opportunities arise.

The primary sources of internally generated funds are principal and interest
payments on loans receivable and cash flows generated from operations. External
sources of funds include increases in deposits and advances from the FHLB of
Atlanta.

At June 30, 1998, liquid assets comprise 40% of total assets. Management
believes that it will have sufficient funds available to meet its anticipated
future loan commitments as well as other liquidity needs.

At June 30, 1998, both the Company and the Bank substantially exceed all
applicable regulatory capital requirements.


THE YEAR 2000

At the turn of the century, computer-based information systems will be faced
with the problems potentially affecting hardware, software, networks, processing
platforms, as well as customer and vendor interdependencies. The Bank has
developed a plan for identifying, renovating, testing and implementing its
systems for Year 2000 processing and internal control requirements. Based upon
progress to date in carrying out that plan, management believes that the Bank
will be Year 2000 compliant on a timely basis. The cost for becoming Year 2000
compliant has not been fully determined; however, management believes it will
not be material to the Bank's financial statements.

                                      -9-
<PAGE>


PART II.    OTHER INFORMATION

ITEM 2.  USE OF PROCEEDS FROM REGISTERED SECURITIES

The Company's initial registration statement on Form SB-2 was declared effective
on February 18, 1998. The offering commenced on February 18, 1998 and expired on
April 28, 1998. The sale in the offering of 925,741 shares of $1 par value
common shares closed on April 28, 1998 for gross proceeds of $9.3 million. Net
of offering costs and expenses of $440,000, the offering generated net proceeds
of $8.8 million. The use of those proceeds is discussed herein in Part 1, Item
2, under the caption "Comparison of Financial Condition at June 30, 1998 and
December 31, 1997.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a) Exhibits.

            (27)  Financial data schedule

        (b) Reports on Form 8-K.

            No reports on Form 8-K were filed during the quarter ended June 30,
            1998.

                                      -10-
<PAGE>


                                   SIGNATURES


In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



                                    BOC FINANCIAL CORP.


Date:   August 10, 1998             By: /s/ Stephen R. Talbert
                                        ----------------------
                                        Stephen R. Talbert
                                        Chief Executive Officer



Date:   August 10, 1998             By: /s/ Lisa B. Ashley
                                        ------------------
                                        Lisa B. Ashley
                                        Chief Financial Officer


                                      -11-