U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB


         /X/ Annual report under Section 13 or 15(d) of the Securities  Exchange
         Act of 1934 For fiscal year ended December 31, 1997

         /_/  Transition  report  under  Section  13 or 15(d) of the  Securities
         Exchange Act of 1934 (No fee required) For the  transition  period from
         ____________ to _____________

                         Commission file number: 0-25440

                           M & M FINANCIAL  CORPORATION
                 (Name of Small Business Issuer in Its Charter)

           South Carolina                                57-0771433
 (State or Other Jurisdiction of                      (I.R.S. Employer
 Incorporation or Organization)                      Identification No.)

                307 N. Main Street
             Marion, South Carolina                           29571
   (Address of Principal Executive Offices)                 (Zip Code)

                                 (803) 431-1000
                (Issuer's Telephone Number, Including Area Code)

 Securities registered under Section 12(g) of the Exchange Act:
                         Common Shares (Title of Class)

          Check whether the issuer:  (1) filed all reports  required to be filed
by Section 13 or 15(d) of the Securities  Exchange Act 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 __

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B contained in this form,  and no disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. / /

         State issuer's revenues for its most recent fiscal year.  $13,476,950

         State the aggregate  market value of the voting and  non-voting  common
equity held by  non-affiliates  computed by  reference to the price at which the
stock was sold,  or the  average  bid and asked  prices of such  stock,  as of a
specified  date within the past 60 days.  (See  definition  of affiliate in Rule
12b-2 of the Exchange Act.) $14,363,184 as of March 1, 1998

         State the number of shares  outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.  1,006,116 common shares as
of March 30, 1998.


<PAGE>



                       DOCUMENTS INCORPORATED BY REFERENCE


The following  documents are incorporated by reference to the parts indicated of
this Form 10-KSB:

          1.   Portions of the Annual Report to Security  Holders for the fiscal
               year ended  December  31, 1997 are  incorporated  by reference in
               Part II; and

          2.   Portions of the Proxy Statement to be used in connection with the
               1998 Annual Meeting of Shareholders  ("1997 Proxy Statement") are
               incorporated herein by reference in Part III.




<PAGE>
                                     PART I

         This Annual Report on Form 10-KSB contains  forward-looking  statements
as  defined  by  the  Private   Securities   Litigation   Reform  Act  of  1995.
Forward-looking  statements  should be read with the  cautionary  statements and
important  factors  included in this Form  10-KSB.  (See Item 6. -  Management's
Discussion and Analysis of Financial  Condition and Results of Operations,  Safe
Harbor  for  Forward-Looking  Statements.)  Forward-looking  statements  include
statements concerning plans,  objectives,  goals,  strategies,  future events or
performance and underlying assumptions and other statements which are other than
statements  of  historical  facts.  Such   forward-looking   statements  may  be
identified,   without  limitation,  by  the  use  of  the  words  "anticipates,"
"estimates,"  "expects," "intends," "plans," "predicts," "projects," and similar
expressions.  The Company's expectations,  beliefs and projections are expressed
in good  faith and are  believed  by the  Company  to have a  reasonable  basis,
including without limitation,  management's  examination of historical operating
trends,  data  contained in the Company's  records and other data available from
third  parties,  but there can be no assurance that  management's  expectations,
beliefs or projections will result or be achieved or accomplished.

Item 1.           Description of Business.

General. M&M Financial Corporation (formerly "Marion National  Corporation"),  a
registered bank holding company,  was  incorporated  February 24, 1984 under the
laws of the  State of South  Carolina.  The  purpose  for  incorporation  was to
acquire Marion National Bank (now "First National South") and to invest in other
bank  related   businesses.   M&M  Financial   Corporation   (the  "Company"  or
"Registrant")   provides  its  customers  with  banking   services  through  its
subsidiary,  First National South (the "Bank").  The Company  provides no active
services  through its subsidiary, Marion National  Investment  Corporation.  The
Company  owns 100% of the  issued and  outstanding  stock of the Bank and Marion
National Investment Corporation.

Subsidiaries.  The Bank was organized in 1911 as a national bank and acquired by
the  Company  through a bank  holding  company  reorganization  in 1984.  As the
Company's  principal  subsidiary,   the  Bank  accounted  for  99.9%  of  total
consolidated  assets as of December  31,  1997,  and 87% of total net income for
1997.  The Bank conducts its business from its main bank building at 307 N. Main
Street,  Marion, South Carolina, and its other offices at 402 South Main Street,
Mullins,  South Carolina,  1207 East Godbold Street,  Marion, South Carolina and
offices in Nichols, Myrtle Beach and Florence, South Carolina.

The Bank  offers  a full  range  of  banking  services  to both  businesses  and
individuals  in its market areas.  These services  include  regular and interest
checking,  money market,  savings and time deposit  accounts as well as personal
and business  loans.  The Bank also provides  automated  24-hour banking for the
convenience of its customers.

Dependence Upon Single Customer or Group of Customers.  Neither the  Company nor
the Bank is dependent upon a single customer or a group of a few customers.

Marion  National  Investment  Corporation  is a  wholly-owned  subsidiary of the
Company  that  operated  as a  non-banking  subsidiary  insurance  agency  until
September  1990.  At that time,  certain  assets of Marion  National  Investment
Corporation  were sold to four  individuals for a purchase price payable over 10
years.  Marion  National  Investment   Corporation   continues  to  exist  as  a
corporation to receive payments from the sale of its assets and to hold title to
and own its furniture, equipment and premises.

Employees.  At March 3, 1998,  the  Company and the Bank  employed 89  full-time
employees  and 12  part-time  employees.  Neither  the Company nor the Bank is a
party to a collective  bargaining  agreement,  and they consider their relations
with employees to be good.

Competition  and Market  Area.  The primary  market areas of the Company and the
Bank are the cities of Marion and Mullins, South Carolina.  Approximately 48% of
the  Bank's  total  deposits  come  from  branches  in the  City of  Marion  and
approximately  22% of its deposits  come from the branch in the City of Mullins.
The greater market area for the Bank includes Marion County, Florence County and
various areas within Horry  County,  South  Carolina,  with a large part of that
volume concentrated in the eastern and northwestern portions of Horry County.

                                       1

<PAGE>

On December  31, 1997,  the Bank had total  deposits of  $130,482,069  and total
assets  of  $156,270,694.  As such,  the Bank  ranked as the  largest  financial
institution  in  Marion  County,  South  Carolina.  In the City of  Marion,  the
competition  for the Bank includes  Wachovia Bank,  N.A.,  First Citizens Bank &
Trust Company of South Carolina and Pee Dee Federal Savings Bank. In the City of
Mullins,  the competition for the Bank includes Anderson Brothers Bank, Carolina
Bank & Trust Company, and a branch of Pee Dee Federal Savings Bank.

The Bank faces  competition  for deposits in its primary market areas from these
institutions  as well as from  other  companies  such  as  brokerage  firms  and
insurance companies. The larger financial institutions in the Bank's market area
have  certain  advantages  over the Bank,  including  their  ability  to finance
extensive  advertising campaigns and to allocate investment assets to regions of
highest yield and demand. In addition,  by virtue of these institutions' greater
total capitalization, they have higher lending limits than the Bank. The City of
Mullins is an agricultural  community whose livelihood is tied to farm products,
particularly  tobacco.  The City of Marion has an economy that is  manufacturing
based.

Supervision and Regulation.

General.  The Company is a bank holding  company  within the meaning of the Bank
Holding Company Act of 1956, as amended (the "Act"),  and is registered with the
Board of Governors of the Federal  Reserve System (the "Federal  Reserve Board")
and the  South  Carolina  State  Board of  Financial  Institutions  (the  "State
Board").  The Company is required to file  semi-annual  reports with the Federal
Reserve Board and such additional information as that Board may require pursuant
to the Act, and to file annual reports with the State Board.

The Company also is subject to examination by the Federal  Reserve Board and the
State  Board and is  required to obtain  Federal  Reserve  Board and State Board
approval prior to acquiring, directly or indirectly, ownership or control of any
voting  shares of a bank if,  after such  acquisition,  it would own or control,
directly or indirectly, more than 5% of the voting stock of such bank, unless it
already  owns a majority of the voting stock of such bank.  Furthermore,  a bank
holding company is, with limited exceptions, prohibited from acquiring direct or
indirect  ownership or control of any voting stock of any company which is not a
bank or a bank  holding  company and must engage only in the business of banking
or managing  and  controlling  banks or  furnishing  services  to or  performing
services for its subsidiary  banks. One of the exceptions to this prohibition is
the  ownership  of shares of a  company,  the  activities  of which the  Federal
Reserve Board has determined to be so closely  related to banking or managing or
controlling banks as to be a proper incident thereto.

Interstate  Act. On September 29, 1994,  President  Clinton  signed into law the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 ("Interstate
Act").  The  Interstate  Act  provides  for  nationwide  interstate  banking and
branching  with certain  limitations.  The  Interstate  Act permits bank holding
companies  to acquire  banks  without  regard to state  boundaries.  The Federal
Reserve  may  approve  an  interstate  acquisition  only if,  as a result of the
acquisition,  the bank holding  company would control less than 10% of the total
amount of insured  deposits in the United  States or 30% of the  deposits in the
home state of the bank being acquired. The home state can waive the 30% limit as
long as there is no discrimination against out-of-state institutions.

Pursuant to the  Interstate  Act,  interstate  branching  took effect on June 1,
1997, except under certain  circumstances.  Once a bank has established branches
in a host  state  (a  state  other  than  its  headquarters  state)  through  an
interstate  merger  transaction,  the bank may establish and acquire  additional
branches  at any  location  in the host  state  where any bank  involved  in the
interstate merger  transaction could have established or acquired branches under
applicable  federal or state law.  The  Interstate  Act  further  provides  that
individual states may opt out of interstate  branching.  If a state does not opt
out of interstate branching prior to May 31, 1997, then a bank in that state may
merge with a bank in another  state  provided  that  neither of the states  have
opted out.  States may either  enact  laws  opting out of  interstate  branching
before June 1, 1997 or permit interstate merger  transactions  earlier than June
1, 1997 by statute at their option.  South  Carolina law was amended,  effective
July 1, 1996, to permit such interstate branching,  but not de novo branching by
an out-of-state bank.

                                        2

<PAGE>

Transactions with Affiliates. There are various legal restrictions on the extent
to which the Company and any future nonbank subsidiaries can borrow or otherwise
obtain  credit from the Bank.  There also are legal  restrictions  on the Bank's
purchase of or investments in the securities of and purchases of assets from the
Company and any of its future nonbank subsidiaries, a bank's loans or extensions
of credit to third parties  collateralized  by the  securities or obligations of
the  Company  and  any of its  future  nonbank  subsidiaries,  the  issuance  of
guaranties,  acceptances  and letters of credit on behalf of the Company and any
of its future  nonbank  subsidiaries,  and certain  bank  transactions  with the
Company and any of its future nonbank subsidiaries, or with respect to which the
Company and nonbank subsidiaries,  act as agent, participate or have a financial
interest.  Subject to certain limited exceptions, the Bank may not extend credit
to the Company or to any other  affiliate in an amount which  exceeds 10% of the
Bank's  capital  stock and surplus and may not extend credit in the aggregate to
such affiliates in an amount which exceeds 20% of its capital stock and surplus.
Further,  there are legal  requirements  as to the type,  amount and  quality of
collateral which must secure such extensions of credit transactions  between the
Bank and the Company or such other affiliates,  and such transactions must be on
terms  and  under   circumstances,   including   credit   standards,   that  are
substantially  the same or at least as favorable to the Bank as those prevailing
at the time for comparable transactions with non-affiliated companies. Also, the
Company and its  subsidiaries  are  prohibited  from engaging in certain  tie-in
arrangements  in  connection  with any  extension  of  credit,  lease or sale of
property or furnishing of services.

Capital Adequacy.  The federal banking agencies have adopted  risk-based capital
guidelines for banks and bank holding  companies.  The minimum guideline for the
ratio of total capital  ("Total  Capital") to  risk-weighted  assets  (including
certain  off-balance-sheet  items, such as standby letters of credit) is 8%. The
minimum  ratio of Tier I Capital  must be  composed  of common  stock,  minority
interests in the equity  accounts of  consolidated  subsidiaries,  noncumulative
perpetual preferred stock and a limited amount of cumulative perpetual preferred
stock, less goodwill and certain other intangible assets ("Tier I Capital"). The
remainder may consist of subordinated  debt, other preferred stock and a limited
amount of loan loss reserves.

In addition,  the federal banking  agencies have  established  minimum  leverage
ratio guidelines for banks and bank holding companies.  Their guidelines provide
for a minimum  ratio of Tier I Capital  to average  assets,  less  goodwill  and
certain other  intangible  assets (the "Leverage  Ratio"),  of 3% for banks that
meet certain specific criteria,  including having the highest regulatory rating.
All other banks  generally are required to maintain a Leverage Ratio of at least
3%, plus an additional  cushion of 100 to 200 basis points.  The guidelines also
provide that banks experiencing  internal growth or making  acquisitions will be
expected to maintain a strong capital position  substantially  above the minimum
supervisory   levels  without   significant   reliance  on  intangible   assets.
Furthermore,  the Federal  Reserve Board has  indicated  that it will consider a
"Tangible Tier I Capital  Leverage Ratio"  (deducting all intangibles) and other
indicia of  capital  strength  in  evaluating  proposals  for  expansion  or new
activities.

Failure  to  meet  capital  guidelines  could  subject  a bank to a  variety  of
enforcement remedies,including the termination of deposit insurance by the FDIC,
and to  certain  restrictions  on its  business.  Bank  regulators  continue  to
indicate  their desire  generally to raise  capital  requirements  applicable to
banking organizations beyond their current levels.

                                        3

<PAGE>

The Federal Reserve,  the FDIC and the Office of the Comptroller of the Currency
(the "OCC") have issued a joint rule  amending the capital  standards to specify
that the banking agencies will include in their  evaluations of a bank's capital
adequacy an assessment of the exposure to declines in the economic  value of the
bank's capital due to changes in interest rates. The agencies have also issued a
joint policy  statement that provides  bankers  guidance on sound  practices for
managing interest rate risk. The policy statement identifies the key elements of
sound  interest  rate risk  management  and  describes  prudent  principles  and
practices for each element,  emphasizing the importance of adequate oversight by
a bank's board of directors and senior  management and of a  comprehensive  risk
management process. The policy statement also outlines the critical factors that
will affect the agencies'  evaluation of a bank's interest rate risk when making
a  determination  of capital  adequacy.  In adopting the policy  statement,  the
agencies have asserted their intention to continue to place significant emphasis
on the level of a bank's interest rate risk exposure and the quality of its risk
management process when evaluating a bank's capital adequacy.

The Federal Reserve, the FDIC, the OCC and the Office of Thrift Supervision (the
"OTS") have also issued joint rules amending the risk-based  capital  guidelines
to  take  into   account   concentration   of  credit   risk  and  the  risk  of
non-traditional  activities, and to incorporate a measure for exposure to market
risk.  The  rule  relating  to   concentration   of  credit  risk  and  risk  of
non-traditional activities amends each agency's risk- based capital standards by
explicitly  identifying  concentration  of credit risk and the risk arising from
activities that have not customarily  been part of the banking business but have
been  conducted as a result of  developing  technology  and changes in financial
markets, as well as an institution's ability to manage these risks, as important
factors to be taken into  account by the agency in  assessing  an  institution's
overall capital adequacy.  The rule relating to market risk amends each agency's
risk-based-  capital standards to incorporate  measures for market risk to cover
all  positions  located  in a banking  institution's  trading  account,  foreign
exchange and  commodity  positions.  The effect of the market risk rules is that
any bank or bank holding company  regulated by the Federal Reserve,  the FDIC or
the OCC or the OTS that has  significant  exposure to market  risk must  measure
that  risk  using  its  own  internal   value-at-risk  model  and  also  hold  a
commensurate  amount of capital.  "Market risk" means the risk of loss resulting
from  movements in market  prices.  "Value-at-risk"  is an estimate of potential
changes in portfolio value based on a statistical confidence interval of changes
in market prices that occur during some time  intervals.  The effective  date of
the market  risk rules is January  1, 1997,  and  compliance  with the rules was
mandatory January 1, 1998.

The  Company is still  assessing  the impact  these  rules and  proposed  policy
statement would have on the capital requirements of the Bank or The Company, but
does not expect the impact to be material.

Holding  Company  Structure and Support of the Bank.  Because the Company is the
parent  holding  company of the Bank,  its right to participate in the assets of
any subsidiary upon the latter's  liquidation or reorganization  will be subject
to the prior claims of the subsidiary's  creditors (including  depositors in the
case of bank  subsidiaries)  except to the extent  that the Bank may itself be a
creditor with recognized claims against the subsidiary.

Under the Federal Reserve policy,  the Company is expected to act as a source of
financial  strength to, and commit resources to support,  the Bank. This support
may be required at times when,  absent such Federal Reserve policy,  the Company
may not be  inclined  to provide it. In  addition,  any capital  loans by a bank
holding  company  to any of its  subsidiary  banks are  subordinate  in right of
payment to deposits and to certain other  indebtedness of such subsidiary  bank.
In the event of a bank holding company's bankruptcy, any

                                        4

<PAGE>



commitment by the bank holding  company to a federal bank  regulatory  agency to
maintain  the  capital of a  subsidiary  bank will be assumed by the  bankruptcy
trustee and entitled to a priority of payment.

Under the Federal Deposit Insurance Act (the "FDIA"),  a depository  institution
insured by the FDIC can be held liable for any loss  incurred by, or  reasonably
expected to be incurred by, the FDIC after August 9, 1989 in connection with (i)
the default of a commonly-  controlled  FDIC-insured  depository  institution or
(ii) any assistance provided by the FDIC to any commonly-controlled FDIC-insured
depository institution "in danger of default." "Default" is defined generally as
the  appointment  of a  conservator  or  receiver  and "in danger of default" is
defined  generally as the  existence  of certain  conditions  indicating  that a
default is likely to occur in the absence of regulatory  assistance.  The FDIC's
claim for damages is superior to claims of  depositors,  secured  creditors  and
holders of subordinated debt (other than affiliates) of the  commonly-controlled
insured  depository  institution.  The Bank is subject to these  cross-guarantee
provisions;  however,  the  Company  has no  present  plans  to  have  any  bank
subsidiaries other than the Bank.

FDICIA.  The  Federal  Deposit  Insurance  Corporation  Improvement  Act of 1991
("FDICIA")  which was enacted on December  19, 1991,  substantially  revised the
depository  institution  regulatory and funding  provisions of the FDIA and made
revisions to several other federal banking statutes.  Among other things, FDICIA
requires the federal banking  regulators to take "prompt  corrective  action" in
respect of FDIC-insured depository institutions that do not meet minimum capital
requirements.   FDICIA  established  five  capital  tiers:  "well  capitalized,"
"adequately capitalized,"  "undercapitalized,"  "significantly undercapitalized"
and "critically undercapitalized." Under applicable regulations, a FDIC- insured
depository  institution  is defined to be well  capitalized  if it  maintains  a
Leverage  Ratio of at least 5%, a risk adjusted Tier I Capital Ratio of at least
6% and a Total  Capital Ratio of at least 10% and is not subject to a directive,
order or written  agreement to meet and maintain  specific  capital  levels.  An
insured  depository  institution  is defined to be adequately  capitalized if it
meets all of its minimum capital  requirements as described  above. In addition,
an insured  depository  institution  will be considered  undercapitalized  if it
fails to meet any minimum required measure, significantly undercapitalized if it
is significantly below any such measure,  and critically  undercapitalized if it
fails to maintain a level of tangible  equity equal to not less than 2% of total
assets.   An  insured   depository   institution  may  be  deemed  to  be  in  a
capitalization  category  that is lower than is indicated by its actual  capital
position if it receives an unsatisfactory examination rating.

The  capital-based  prompt  corrective  action  provisions  of FDICIA  and their
implementing  regulations apply to FDIC-insured  depository institutions and are
not directly  applicable to holding  companies  which control such  institution.
However,  the Federal  Reserve has indicated  that,  in regulating  bank holding
companies, it will take appropriate action at the holding company level based on
an  assessment  of  the  effectiveness  of  supervisory   actions  imposed  upon
subsidiary depository institutions pursuant to such provisions and regulations.


                                        5

<PAGE>



FDICIA generally  prohibits an FDIC-insured  depository  institution from making
any  capital  distribution  (including  payment  of  dividends)  or  paying  any
management  fee to its  holding  company  if the  depository  institution  would
thereafter be  undercapitalized.  Undercapitalized  depository  institutions are
subject to  restrictions  on borrowing  from the Federal  Reserve.  In addition,
undercapitalized  depository  institutions are subject to growth limitations and
are required to submit capital  restoration  plans.  A depository  institution's
holding  company must  guarantee  the capital plan, up to an amount equal to the
lesser  of 5% of the  depository  institution's  assets  at the time it  becomes
undercapitalized  or the amount of the capital  deficiency  when the institution
fails to comply with the plan.  The federal  banking  agencies  may not accept a
capital plan without determining,  among other things, that the plan is based on
realistic  assumptions  and is likely to succeed  in  restoring  the  depository
institution's capital. If a depository institution fails to submit an acceptable
plan, it is treated as if it is significantly undercapitalized.

Significantly  undercapitalized  depository  institutions  may be  subject  to a
number of requirements  and  restrictions,  including  orders to sell sufficient
voting  stock to become  adequately  capitalized,  requirements  to reduce total
assets and cessation of receipt of deposits from correspondent banks. Critically
undercapitalized  depository  institutions  are  subject  to  appointment  of  a
receiver or conservator.

FDICIA contains numerous other provisions,  including new accounting,  audit and
reporting requirements,  termination of the "too big to fail" doctrine except in
special  cases,  limitations  on the  FDIC's  payment  of  deposits  at  foreign
branches, new regulatory standards in such areas as asset quality,  earnings and
compensation and revised regulatory standards for, among other things, powers of
state banks, real estate lending and capital adequacy. FDICIA also requires that
a  depository  institution  provide 90 days prior  notice of the  closing of any
branches.

Various other  legislation,  including  proposals to revise the bank  regulatory
system and to limit the investments that a depository  institution may make with
insured funds, is from time to time introduced in Congress.

FDIC  Insurance  Premiums.  Because the Bank's  deposits are insured by the Bank
Insurance  Fund of the FDIC  (the  "BIF"),  the  Bank is  subject  to  insurance
assessments imposed by the FDIC. Under current law, the insurance  assessment to
be paid by BIF-insured  institutions is as specified in a schedule issued by the
FDIC that specifies, at semiannual intervals,  target reserve ratios designed to
maintain the FDIC insurance funds' reserve ratios at 1.25% of estimated  insured
deposits (or such higher ratio as the FDIC may determine in accordance  with the
statute).  Further,  the  FDIC is  authorized  to  impose  one or  more  special
assessments  in any  amount  deemed  necessary  to enable  repayment  of amounts
borrowed by the FDIC from the United States Department of the Treasury. The FDIC
has implemented a risk-based  assessment schedule,  imposing assessments ranging
from 0.00% to 0.27% of an  institution's  average  assessment  base.  The actual
assessment  to be  paid  by  each  BIF  member  is  based  on the  institution's
assessment  risk  classification,  which  is  determined  based on  whether  the
institution  is  considered  "well  capitalized,"  "adequately  capitalized"  or
"undercapitalized,"  as such  terms  have been  defined  in  applicable  federal
regulations  adopted to implement  the prompt  corrective  action  provisions of
FDICIA,  and whether such institution is considered by its supervisory agency to
be financially sound or to have supervisory concerns.

The FDIC may increase or decrease the new assessment rates  semiannually up to a
maximum increase or decrease of 5 basis points,  as deemed necessary to maintain
the BIF reserve ratio at $1.25 per $100 of insured deposits.

The Deposit Insurance Funds Act of 1996 (the "Funds Act") authorized the FICO to
levy assessments on BIF- and SAIF-assessable  deposits,  and stipulated that the
BIF rate must equal one-fifth the SAIF rate through  year-end 1999, or until the
insurance funds are merged,  whichever  occurs first.  Thereafter,  BIF and SAIF
payers will be assessed  pro rata for FICO.  The  assessment  rates are based on
deposit balances as of specified dates,  taken from insured  institutions'  Call
Reports and Thrift  Financial  Reports,  and are  adjusted  quarterly to reflect
changes in the assessment  bases of the respective funds based on quarterly Call
Report and Thrift Financial Report submissions.


                                        6

<PAGE>

Other  Regulation.  The Bank is also subject to various  other state and federal
laws and regulations,  including state usury laws, laws relating to fiduciaries,
consumer credit and laws relating to branch banking.  The Bank's operations also
are subject to certain federal consumer credit laws and regulations  promulgated
thereunder,  including,  but not limited to: the federal  Truth-In-Lending  Act,
governing  disclosures of credit terms to consumer borrowers;  the Home Mortgage
Disclosure Act, requiring financial  institutions to provide certain information
concerning their mortgage lending; the Equal Credit Opportunity Act and the Fair
Housing  Act,  prohibiting  discrimination  on the basis of  certain  prohibited
factors in extending  credit;  the Fair Credit Reporting Act,  governing the use
and provision of information to credit reporting agencies; the Bank Secrecy Act,
dealing   with,   among  other  things,   the  reporting  of  certain   currency
transactions;  and the Fair Debt Collection  Act,  governing the manner in which
consumer debts may be collected by collection  agencies.  The deposit operations
of the Bank also are  subject to the Truth in  Savings  Act,  requiring  certain
disclosures  about  rates  paid  on  savings   accounts;   the  Expedited  Funds
Availability  Act,  which deals with  disclosure  of the  availability  of funds
deposited  in accounts  and the  collection  and return of checks by banks;  the
Right to  Financial  Privacy  Act,  which  imposes  a duty to  maintain  certain
confidentiality  of consumer financial records and the Electronic Funds Transfer
Act and regulations promulgated  thereunder,  which govern automatic deposits to
and  withdrawals  from deposit  accounts and customers'  rights and  liabilities
arising from the use of automated teller machines and other  electronic  banking
services.

The Bank is also subject to the  requirements of the Community  Reinvestment Act
(the  "CRA").  The CRA imposes on  financial  institutions  an  affirmative  and
ongoing  obligation  to meet  the  credit  needs  of  their  local  communities,
including low- and moderate-income  neighborhoods,  consistent with the safe and
sound  operation of those  institutions.  Each  financial  institution's  actual
performance  in  meeting  community  credit  needs is  evaluated  as part of the
examination process, and also is considered in evaluating mergers,  acquisitions
and applications to open a branch or facility.

Payment of Dividends.  The Company is a legal entity  separate and distinct from
the Bank. The principal source of cash flow of the Company,  including cash flow
to pay  dividends  on its stock or principal  and  interest on debt,  if any, is
dividends from the Bank.  There are statutory and regulatory  limitations on the
payment of dividends  by the Bank to the  Company,  as well as by the Company to
its  shareholders.  Stockholders  of the Company's  common stock are entitled to
receive  dividends as and when declared by the Company's  Board of Directors out
of funds  legally  available  therefore  under  the  laws of the  State of South
Carolina.  The Company's  ability to pay dividends is dependent on the amount of
dividends paid by the Bank and any other subsidiary to the Company.

The Company cannot predict what other legislation might be enacted or what other
regulations  might be adopted,  or if enacted or adopted,  the affect thereof on
the Company and/or the Bank.

Sources and  Availability of Funds.  The resources  essential to the business of
the Company and its  subsidiary,  the Bank,  consist  primarily of funds derived
from deposits.  The Company's banking  subsidiary uses these funds to make loans
and to  fund  its  investment  portfolio.  The  availability  of such  funds  is
primarily dependent upon the economic policies of the government, the economy in
general and the general credit market for loans.

Monetary Policy and Economic Controls.  The earnings of the Company's subsidiary
bank, and therefore, to a large extent the earnings of the Company, are affected
by the policies of regulatory authorities, including the Federal Reserve System.
An important  function of the Federal Reserve System is to regulate the national
supply of bank credit in order to combat recession and curb inflation. Among the
instruments used to attain these objectives are open market  operations in U. S.
Government  securities  and changes in the reserve  requirements  applicable  to
member bank deposits.  These  instruments  are used in varying  combinations  to
influence  overall  growth  and  distribution  of bank  loans,  investments  and
deposits,  and their use also may affect interest rates charged on loans or paid
for deposits.




                                        7

<PAGE>



Item 2.           Description of Property

The main office of the Bank,  which also serves as the  principal  office of the
Company,  is located at 307 N. Main Street,  Marion,  South  Carolina.  The main
office is an approximately  15,000 square foot, two-story brick building that is
owned by the Bank.

The Bank also operates a major office at 402 South Main Street,  Mullins,  South
Carolina  in a  building  owned by the  Bank.  This  two-story,  brick  building
contains approximately 7,840 square feet and was constructed in 1971.

The Bank has five  other  branches,  including  a branch  located  at 1207  East
Godbold  Street in Marion  and  branches  in  Nichols,  Myrtle  Beach and two in
Florence,  South Carolina.  Four of these branch buildings are owned by the Bank
and are located in one-story,  brick buildings.  Currently,  one of the Florence
branches is operating in a temporary modular  facility.  The Bank plans to start
construction of a permanent one-story facility later this year.

The Bank also owns a building  in Marion  which is utilized  for the  operations
center of the Bank.


Item 3.           Legal Proceedings.

The nature of the  Company's  business and that of the Bank  generates a certain
amount  of  litigation  involving  matters  arising  in the  ordinary  course of
business.  In the  opinion  of  management  of the  Company,  none of the  legal
proceedings  currently  pending  or  threatened  to  which  the  Company  or its
subsidiary  Bank is a party or of which any of their  properties is subject,  is
reasonably  likely  to have any  material  adverse  effect  on the  business  or
financial condition of the Company or the Bank.


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

No matters were submitted to a vote of security holders in the fourth quarter of
1997.


                                     PART II

Item 5.           Market for Common Equity and Related Stockholder Matters.

As of December 31, 1997,  there were 708 holders of the Company's  Common Stock.
Currently,  there is no  established  trading  market for the  Company's  Common
Stock.  Based on  information  known to  management  of the Company,  during the
period from March 1, 1997 until March 1, 1998,  the Common  Stock of the Company
has  traded in a range of $13.33 to $16.00  per share.  (Sale  prices  have been
retroactively  adjusted to give effect to the three-for-one stock split effected
in 1997.) However,  management has not ascertained  that these  transactions are
the result of arm's length negotiations  between the parties, and because of the
limited  number of shares  involved,  these prices may not be  indicative of the
market value of the Common Stock.


                                        8

<PAGE>



Holders of the Company's  Common Stock are entitled to such  dividends as may be
declared  from  time to time by the  Board of  Directors  out of  funds  legally
available therefor.  The Company paid cash dividends of $0.37 and $.33 per share
during  1997 and 1996,  respectively.  These  amounts  have  been  retroactively
restated to give effect to the  three-for-one  stock split effected in 1997. Any
cash dividends paid by the Bank are paid to the Company as the sole  shareholder
of the Bank.

No representations can be made as to if or when the Bank will pay cash dividends
in the  future.  The  Company's  ability to pay  dividends  to its  shareholders
depends on the amount of dividends paid by the Bank to the Company. Although the
Company expects to pay cash dividends in the future  comparable to the dividends
paid in the prior two  years,  as a result of the  Company's  dependence  on the
Bank, and the present  requirement that the Bank seek prior regulatory  approval
for the payment of any dividend to the Company, management cannot represent with
certainty  that the Company  will pay  dividends  in the future or the amount of
such dividends, if any.

Item 6.           Management's Discussion and Analysis or Plan of Operation.

         The information  appearing under the caption  "Management's  Discussion
and Analysis of Financial  Condition and Results of Operations" in Exhibit 13 as
excerpts from the Company's 1997 Annual Report to  Shareholders  is incorporated
herein by reference.

Item 7.           Financial Statements.

         The Company's Consolidated Financial Statements set forth in Exhibit 13
as  excerpts  from  the  Company's  1997  Annual  Report  to   Shareholders  are
incorporated herein by reference.

Item 8.           Changes in and Disagreements with Accountants on Accounting
                  and Financial Disclosures.

Not applicable.


         PART II

Item 9.           Directors, Executive Officers, Promoters and Control Persons;
                  Compliance with Section 16(a) of the Exchange Act.

         The information set forth under the caption  "Management"  and "Section
16(a) Beneficial  Ownership  Reporting  Compliance" in the Company's  definitive
Proxy  Statement  relating  to  the  1998  Annual  Meeting  of  Stockholders  is
incorporated herein by reference.





                                        9

<PAGE>

Item 10.          Executive Compensation

         The information set forth under the caption  "Management  Compensation"
in the Company's  definitive Proxy Statement relating to the 1998 Annual Meeting
of Stockholders is incorporated herein by reference.


Item 11.     Security Ownership of Certain Beneficial Owners and Management.

         The  information  set forth under the caption  "Security  Ownership  of
Certain  Beneficial  Owners and  Management" in the Company's  definitive  Proxy
Statement  relating to the 1998 Annual Meeting of  Stockholders  is incorporated
herein by reference.


Item 12.          Certain Relationships and Related Transactions.

         The information set forth under the caption "Certain  Relationships and
Related  Transactions" in the Company's  definitive Proxy Statement  relating to
the 1998 Annual Meeting of Stockholders is incorporated herein by reference.


Item 13.            Exhibits and Report on Form 8-K.

   (a)
           3.1      Articles of Incorporation, as amended
           3.2      Bylaws, as amended*
          10.1      Marion National Bank 401(k) Plan Summary*
          10.2      Executive Employment Agreement with George H. Hardwick*
          10.3      Employment Agreement with Chester A. Duke
          10.4      M&M Financial Corporation and First National South Incentive
                    Stock  Option Plan of 1997  (incorporated  by  reference  to
                    Appendix to  Registrant's  Schedule 14A filed in  connection
                    with Registrant's 1997 Annual Meeting of Shareholders)
          10.5      Form of First National South Salary  Continuation  Agreement
                    with each of Chester A. Duke, George H. Hardwick and Curtis
                    A. Tyner
          10.6      Form of First  National  South Phantom Stock  Agreement with
                    each of Chester A. Duke,  George H.  Hardwick, Richard C.
                    Mathis, and Curtis A. Tyner
          13        Portions of 1997 Annual Report to Stockholders for year
                    ended December 31, 1997
          21        Subsidiaries of the Registrant
          27        Financial Data Schedule
   (b)              No reports were filed on Form 8-K
- ------------
* Incorporated herein by reference to exhibits filed with Form S-4 Registration
  Statement under the Securities Act of 1933, Registration No. 33-75344.



                                       10

<PAGE>





                                   SIGNATURES

In  accordance  with  Section 13 or 15(d) of the Exchange  Act,  the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                    M & M FINANCIAL CORPORATION

Date: 3/30/98                       By:  /s/Chester A. Duke
                                             Chester A. Duke
                                             Chairman, President and
                                             Chief Executive Officer

Date: 3/30/98                       By:  /s/Richard C. Mathis
                                             Richard C. Mathis
                                             Executive Vice President
                                             and Chief Financial Officer

In  accordance  with the  Exchange  Act,  this  report  has been  signed  by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.

<TABLE>
<CAPTION>
Name                          Position                                     Date
<S>                          <C>                                           <C>

/s/Chester A. Duke
Chester A. Duke              Chairman, President, Director                 3/30/98
                            (Chief Executive Officer)

/s/Charles B. McElveen
Charles B. McElveen          Director                                      3/30/98


/s/J.M. McLendon
J.M. McLendon                Director                                      3/30/98



Bruce Seigal                 Director                                      3/__/98



Nancy B. Williams             Director                                     3/__/98
</TABLE>
                                       11

<PAGE>



                                  EXHIBIT INDEX


Exhibit                    Exhibit Title

           3.1      Articles of Incorporation, as amended
           3.2      Bylaws, as amended*
          10.1      Marion National Bank 401(k) Plan Summary*
          10.2      Executive Employment Agreement with George H. Hardwick*
          10.3      Employment Agreement with Chester A. Duke
          10.4      M&M Financial Corporation and First National South Incentive
                    Stock  Option Plan of 1997  (incorporated  by  reference  to
                    Appendix to  Registrant's  Schedule 14A filed in  connection
                    with Registrant's 1997 Annual Meeting of Shareholders)
          10.5      Form of First National South Salary  Continuation  Agreement
                    with each of Chester A. Duke, George H. Hardwick and Curtis
                    A. Tyner
          10.6      Form of First  National  South Phantom Stock  Agreement with
                    each of Chester A. Duke,  George H.  Hardwick, Richard C.
                    Mathis, and Curtis A. Tyner
          13        Portions of 1997 Annual Report to Stockholders for year
                    ended December 31, 1997
          21        Subsidiaries of the Registrant
          27        Financial Data Schedule

--------------
* Incorporated herein by reference to exhibits filed with Form S-4 Registration
  Statement under the Securities Act of 1933, Registration No. 33-75344.

<PAGE>


                                       12