FORM 10-Q



                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549



                   QUARTERLY REPORT UNDER SECTION 13 or 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


   For the quarter ended June 30, 1999          Commission file number 0-13759
                         -------------                                 -------


                          ANCHOR FINANCIAL CORPORATION
             (Exact name of registrant as specified in its charter)



          South Carolina                              57-0778015
 (State or other jurisdiction of                   (I.R.S. Employer
  incorporation or organization)                 Identification number)



  2002 Oak St., Myrtle Beach, S. C.                      29577
(Address of principal executive offices)               (Zip Code)



Registrant's telephone number, including area code  (843) 448-1411


         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 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.


            Class                            Outstanding at July 31, 1999
  ----------------------------               ----------------------------
  (Common stock, no par value)                        8,056,936


<PAGE>


                  ANCHOR FINANCIAL CORPORATION AND SUBSIDIARIES



                                      INDEX



                                                                   PAGE NO.

Part I - Financial Information
------------------------------

Item 1 - Financial Statements (Unaudited)

          Consolidated Balance Sheet - June 30, 1999
          and December 31, 1998                                         1

          Consolidated Statement of Income - Three months and
          Six months ended June 30, 1999 and 1998                       2

          Consolidated Statement of Changes in Stockholders' Equity
          and Comprehensive Income - Six months ended
          June 30, 1999 and 1998                                        3

          Consolidated Statement of Cash Flows -
          Six months ended June 30, 1999 and 1998                       4

          Notes to Consolidated Financial Statements                    5-9

Item 2 - Management's Discussion and Analysis of
         Financial Condition and Results of Operations                  10-18

Item 3 - Quantitative and Qualitative Disclosures about Market Risk     18


Part II - Other Information
---------------------------

Item 1 - Legal Proceedings                                              19
Item 2 - Changes in Securities                                          19
Item 3 - Defaults Upon Senior Securities                                19
Item 4 - Submission of Matters to a Vote of Security-Holders            19
Item 5 - Other Information                                              19
Item 6 - Exhibits and Reports on Form 8-K                               19

<PAGE>


Anchor Financial Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>

                                                                                      June 30,               December 31,
----------------------------------------------------------------------------------------------------------------------------
                                                                                        1999                     1998
----------------------------------------------------------------------------------------------------------------------------

ASSETS
  <S>                                                                           <C>                      <C>
  Cash and due from banks                                                       $       46,437,823       $       49,347,029
  Interest-bearing balances due from banks                                               3,442,110                8,082,081
  Federal funds sold                                                                             0                5,650,000
  Investment securities:
    Held-to-maturity, at amortized cost (fair value of $12,190,176
      in 1999 and $30,317,309 in 1998)                                                  12,286,772               29,481,031
    Available-for-sale, at fair value                                                  264,270,643              238,808,061
----------------------------------------------------------------------------------------------------------------------------
  Total investment securities                                                          276,557,415              268,289,092
----------------------------------------------------------------------------------------------------------------------------

  Total Loans                                                                          843,634,573              810,890,670
    Less - allowance for loan losses                                                   (10,304,253)              (9,546,139)
 ----------------------------------------------------------------------------------------------------------------------------
  Net loans                                                                            833,330,320              801,344,531
----------------------------------------------------------------------------------------------------------------------------

  Premises and equipment                                                                26,553,408               27,562,951
  Other assets                                                                          26,154,532               23,399,144
----------------------------------------------------------------------------------------------------------------------------

Total assets                                                                    $    1,212,475,608       $    1,183,674,828
============================================================================================================================


LIABILITIES AND STOCKHOLDERS' EQUITY
  Liabilities:
    Deposits:
      Demand deposits                                                           $      184,050,051       $      169,219,775
      NOW and money market accounts                                                    446,631,550              407,438,748
      Time deposits $100,000 and over                                                   79,657,208               89,537,292
      Other time and savings deposits                                                  251,567,116              302,144,079
----------------------------------------------------------------------------------------------------------------------------
    Total deposits                                                                     961,905,925              968,339,894
    Federal funds purchased and securities
      sold under agreements to repurchase                                               65,550,947               62,424,543
    Other short-term borrowings                                                          7,158,812                1,396,927
    Long-term debt                                                                      70,387,080               42,187,000
    Subordinated notes                                                                  11,000,000               11,000,000
    Other liabilities                                                                    8,865,686                9,324,769
----------------------------------------------------------------------------------------------------------------------------
  Total liabilities                                                                  1,124,868,450            1,094,673,133
----------------------------------------------------------------------------------------------------------------------------

  Stockholders' Equity:
    Common stock, no par value; 50,000,000 shares
      authorized; shares issued and outstanding - 8,056,936
      in 1999 and 8,085,793 in 1998                                                     53,294,651               54,653,232
    Retained earnings                                                                   38,310,570               34,025,512
    Accumulated other comprehensive income (loss)                                       (2,953,063)               1,417,951
    Unearned ESOP shares                                                                (1,045,000)              (1,095,000)
----------------------------------------------------------------------------------------------------------------------------
  Total stockholders' equity                                                            87,607,158               89,001,695
----------------------------------------------------------------------------------------------------------------------------

Total liabilities and stockholders' equity                                      $    1,212,475,608       $    1,183,674,828
============================================================================================================================
</TABLE>


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


                                       1

<PAGE>

Anchor Financial Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>

                                                                Six months ended June 30,            Three months ended June 30,
                                                          -----------------------------------   ------------------------------------
                                                                1999                 1998             1999                1998
                                                          ------------------------------------  ------------------------------------
INTEREST INCOME:
  <S>                                                   <C>                  <C>              <C>                <C>
  Interest and fees on loans                            $     36,732,381     $     37,561,989 $     18,585,228   $       19,089,744
  Interest on investment securities:
    Taxable                                                    7,428,745            6,912,371        3,768,935            3,429,842
    Non-taxable                                                  630,063              470,814          301,618              345,815
  Other interest income                                          165,369              939,851           85,381              582,618
                                                          ------------------------------------  ------------------------------------
                Total interest income                         44,956,558           45,885,025       22,741,162           23,448,019
                                                          ------------------------------------  ------------------------------------

INTEREST EXPENSE:
  Interest on deposits                                        15,423,641           18,743,551        7,619,298            9,532,399
  Interest on short-term borrowings                            1,277,212              541,446          650,140              235,198
  Interest on long-term borrowings                             1,503,639            1,592,835          887,855              845,137
  Interest on subordinated notes                                 462,866              462,865          232,542              232,541
                                                          ------------------------------------  ------------------------------------
                Total interest expense                        18,667,358           21,340,697        9,389,835           10,845,275
                                                          ------------------------------------  ------------------------------------

Net interest income                                           26,289,200           24,544,328       13,351,327           12,602,744
Provision for loan losses                                        851,500            1,173,000          425,750              534,000
                                                          ------------------------------------  ------------------------------------

Net interest income after provision for loan losses           25,437,700           23,371,328       12,925,577           12,068,744
                                                          ------------------------------------  ------------------------------------

NONINTEREST INCOME:
  Service charges on deposit accounts                          2,192,568            2,258,975        1,091,773            1,117,557
  Commissions and fees                                         1,509,054            1,028,580          853,902              599,970
  Trust income                                                 1,019,278              831,360          510,136              447,229
  Gains on sales of mortgage loans                               724,711              734,191          342,596              387,257
  Gains on sales of securities                                    74,032              106,401           10,883               84,875
  Other operating income                                         469,226              619,818          197,753              313,716
                                                          ------------------------------------  ------------------------------------
                Total noninterest income                       5,988,869            5,579,325        3,007,043            2,950,604
                                                          ------------------------------------  ------------------------------------

NONINTEREST EXPENSE:
  Salaries and employee benefits                              11,493,022           10,618,679        5,990,602            5,357,142
  Net occupancy expense                                        1,640,082            1,554,810          783,218              699,601
  Equipment expense                                            1,204,167            1,227,682          624,140              702,955
  Other operating expense                                      6,913,755            5,489,253        4,027,682            2,896,899
                                                          ------------------------------------  ------------------------------------
                Total noninterest expense                     21,251,026           18,890,424       11,425,642            9,656,597
                                                          ------------------------------------  ------------------------------------

Income before income taxes                                    10,175,543           10,060,229        4,506,978            5,362,751
Provision for income taxes                                     3,774,987            3,484,329        1,772,210            1,894,300
                                                          ------------------------------------  ------------------------------------

Net income                                              $      6,400,556     $      6,575,900 $      2,734,768   $        3,468,451
                                                          ====================================  ====================================

Net income per share - basic                            $           0.80     $           0.83 $           0.34   $             0.44
                                                          ====================================  ====================================
Net income per share - diluted                          $           0.77     $           0.80 $           0.33   $             0.42
                                                          ====================================  ====================================

Weighted average common shares outstanding - basic             8,018,735            7,946,204        7,998,401            7,953,895
                                                          ====================================  ====================================
Weighted average common shares outstanding - diluted           8,297,107            8,248,996        8,274,948            8,257,600
                                                          ====================================  ====================================
</TABLE>


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


                                       2
<PAGE>



Anchor Financial Corporation and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
and Comprehensive Income
Six Months ended June 30, 1999 and June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------
                                                                                Accumulated
                                                                                   other        Unearned        Total
                                               Common Stock         Retained   comprehensive      ESOP      stockholders'
                                           Shares       Amount      earnings       income        shares         equity
                                           ----------------------------------------------------------------------------------
<S>                                        <C>        <C>          <C>               <C>         <C>           <C>
Balance at December 31, 1997               7,983,379  $53,655,224  $26,638,500       $918,405    ($526,625)    $80,685,504

Comprehensive Income
  Net income                                                         6,575,900                                   6,575,900
  Other comprehensive income, net of tax
    Unrealized gains on investment securities                                         150,715                      150,715
                                                                                                            ---------------
Total Comprehensive Income                                                                                       6,726,615
                                                                                                            ---------------
Common stock issued pursuant to:
  Dividend Reinvestment Plan                   7,483      295,067                                                  295,067
  Stock Option Plan                           31,400      225,143                                                  225,143
Change in unearned ESOP shares                            182,839       13,965                      64,500         261,304
Cash dividends ($0.24 per share)                                      (932,035)                                   (932,035)
Cash dividends from:
  Acquired entities                                                   (377,232)                                   (377,232)
                                         ==================================================================================
Balance at June 30, 1998                   8,022,262  $54,358,273  $31,919,098     $1,069,120    ($462,125)    $86,884,366
                                         ==================================================================================




Balance at December 31, 1998               8,085,793  $54,653,232  $34,025,512     $1,417,951  ($1,095,000)    $89,001,695

Comprehensive Income
  Net income                                                         6,400,556                                   6,400,556
  Other comprehensive income, net of tax
    Unrealized loss on investment securities                                       (4,371,014)                  (4,371,014)
                                                                                                            ---------------
Total Comprehensive Income                                                                                       2,029,542
                                                                                                            ---------------
Common stock issued pursuant to:
  Stock Option Plan                           34,479      223,733                                                  223,733
Tax benefit from exercised stock options                   30,250                                                   30,250
Dissenters from Bailey Merger                (63,322)  (1,726,469)                                              (1,726,469)
Fractional shares paid in acquisition            (14)                     (402)                                       (402)
Change in unearned ESOP shares                            113,905       18,938                      50,000         182,843
Cash dividends ($0.28 per share)                                    (2,041,748)                                 (2,041,748)
Cash dividends from:
  Acquired entities                                                    (92,286)                                    (92,286)
                                         ==================================================================================
Balance at June 30, 1999                   8,056,936  $53,294,651  $38,310,570    ($2,953,063) ($1,045,000)    $87,607,158
                                         ==================================================================================
</TABLE>

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



                                       3


<PAGE>



Anchor Financial Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>


---------------------------------------------------------------------------------------------------------------------------
                                                                                            Six Months ended June 30,
---------------------------------------------------------------------------------------------------------------------------
                                                                                            1999                1998
---------------------------------------------------------------------------------------------------------------------------

Cash flows from operating activities:
  <S>                                                                                <C>                <C>
  Net income                                                                         $      6,400,556   $        6,575,900
  Adjustments to reconcile net income to net cash provided by operating activities:
    Accretion and amortization of investment securities                                       106,705             (171,798)
    Depreciation and amortization                                                           1,307,353            1,308,758
    Provision for loan losses                                                                 851,500            1,173,000
    Gains on sales of investment securities, net                                              (74,032)            (106,401)
    Gains on sales of mortgage loans                                                         (724,711)            (734,191)
    Gains on sales of premises and equipment                                                      (63)             (12,570)
    Change in interest receivable                                                             (62,620)            (731,540)
    Change in other assets                                                                    (28,531)           1,160,029
    Change in deferred taxes                                                               (2,951,402)            (493,088)
    Change in interest payable                                                             (1,043,888)            (388,432)
    Change in other liabilities                                                               584,805            1,416,730
    Origination of mortgage loans held for sale                                           (47,428,216)         (55,092,396)
    Proceeds from sales of mortgage loans held for sale                                    48,642,409           55,826,587
    Net change in unearned ESOP shares                                                        182,843              261,304
---------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities                                                   5,762,708            9,991,892
---------------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
  Proceeds from maturities of investment securities held-to maturity                       17,196,230           10,160,107
  Purchase of investment securities available-for-sale                                    (90,841,719)         (95,290,140)
  Proceeds from sales of investment securities available-for-sale                          48,794,246           25,689,846
  Proceeds from maturities of investment securities available-for-sale                     12,179,233           28,588,838
  Net change in loans                                                                     (33,326,771)         (36,082,399)
  Capital expenditures                                                                        (10,582)          (1,787,054)
---------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities                                                    (46,009,363)         (68,720,802)
---------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
  Net change in deposits                                                                   (6,433,969)          80,462,308
  Net change in federal funds purchased and securities sold under
    agreements to repurchase                                                                3,126,404            3,232,702
  Net change in other short-term borrowings                                                 5,761,885           (1,917,023)
  Net change in long-term debt                                                             28,200,080            5,970,833
  Proceeds from issuance of stock in accordance with:
    Stock Option Plan                                                                         223,733              225,143
    Dividend Reinvestment Plan                                                                      0              295,067
  Cash dividends paid                                                                      (2,134,034)          (1,309,268)
  Other, net                                                                               (1,696,621)                   0
---------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities                                                  27,047,478           86,959,762
---------------------------------------------------------------------------------------------------------------------------

Net change in cash and cash equivalents                                                   (13,199,177)          28,230,852
Cash and cash equivalents at January 1                                                     63,079,110           61,140,628
---------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at June 30                                                 $     49,879,933   $       89,371,480
===========================================================================================================================

</TABLE>



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

                                       4

<PAGE>




                  ANCHOR FINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


NOTE 1:         BASIS OF PRESENTATION

                The   accompanying   consolidated   financial   statements   are
                unaudited;  however,  such information  reflects all adjustments
                (consisting  solely of normal recurring  adjustments) which are,
                in the opinion of management,  necessary for a fair statement of
                the financial position and operating results of Anchor Financial
                Corporation  (the  "Corporation")  and its  subsidiaries for the
                periods  presented.  A summary of the Corporation's  significant
                accounting  policies is set forth in Note 1 to the  Consolidated
                Financial  Statements in the Corporation's Annual Report on Form
                10-K for 1998.

                The results of  operations  for the three and six month  periods
                ended  June  30,  1999  are not  necessarily  indicative  of the
                results to be expected for the full year.


NOTE 2:         ACQUISITIONS

                On  August  31,  1998,  the  Corporation  merged  with  ComSouth
                Bankshares  Inc. and M&M  Financial  Corporation.  The surviving
                entity was Anchor Financial  Corporation.  The transactions were
                accounted  for  as  poolings  of  interests.   The  consolidated
                financial  statements  have been  restated  to present  combined
                financial  information  of the  Corporation as if the merger had
                been in effect for all periods presented.

                On April 9, 1999, the Corporation  merged with Bailey  Financial
                Corporation  ("Bailey  Financial").  The  surviving  entity  was
                Anchor Financial Corporation.  The transaction was accounted for
                as a pooling of interests  and provided for a tax-free  exchange
                of 16.32  shares  of  Anchor  Financial  common  stock  for each
                outstanding   share  of  Bailey   Financial  common  stock.  The
                consolidated  financial statements have been restated to present
                combined  financial  information  of the  Corporation  as if the
                merger had been in effect for all periods presented.




                                       5

<PAGE>



                  ANCHOR FINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


NOTE 3:         RESERVE FOR LOAN LOSSES

                Activity in the reserve for loan losses for the six months ended
                June 30, 1999 and 1998 is summarized as follows:
                <TABLE>
                <CAPTION>

                                                                                1999              1998
                                                                       -------------------------------------
                <S>                                                           <C>                <C>
                Balance, beginning of year                                     $9,546,139        $8,366,714
                Provision charged to operations                                   851,500         1,173,000
                Recoveries of charged off loans                                   328,804           439,972
                Loans charged off                                                (422,190)         (666,893)
                                                                       -------------------------------------
                Balance, end of period                                        $10,304,253        $9,312,793
                                                                       =====================================
                </TABLE>


NOTE 4:        NONPERFORMING ASSETS

               The  following  is a  summary  of  nonperforming  assets  at June
               30,1999 and  December  31,  1998.  The income  effect of interest
               foregone on these assets is not material. The Corporation did not
               have any loans with reduced  interest  rates  because of troubled
               debt restructuring,  foreign loans, or loans for highly leveraged
               transactions.  Management  is not aware of any  situation,  other
               than those included in the summary below, where known information
               about a borrower would require  disclosure as a potential problem
               loan.
               <TABLE>
               <CAPTION>

                                                                              6/30/99           12/31/98
                                                                      -------------------------------------
               <S>                                                            <C>               <C>
               Nonaccrual loans                                               $1,888,880        $2,987,753
               Loans past due ninety days or more                                 10,149            34,000
               Other real estate owned                                         1,017,823           212,912
                                                                      -------------------------------------
               Total nonperforming assets                                     $2,916,852        $3,234,665
                                                                      =====================================
               </TABLE>

               Impaired  loans  are  loans  for  which it is  probable  that all
               amounts,  including principal and interest, will not be collected
               in accordance with the  contractual  terms of the loan agreement.
               At June 30, 1999, impaired loans had a related specific allowance
               for  loan  losses  totaling  $434,121.  There  were  no  material
               commitments  to lend  additional  funds to customers  whose loans
               were classified as impaired at June 30, 1999.


                                       6

<PAGE>


                  ANCHOR FINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)



NOTE 5:        LONG-TERM DEBT AND SUBORDINATED NOTES

               Long-term debt and subordinated notes are summarized as follows:
             <TABLE>
             <CAPTION>

                                                                                  6/30/99         12/31/98
                                                                              ---------------------------------
             Parent Company:
               <S>                                                                 <C>             <C>
               6.50% floating rate note due in 2000                                 $1,700,000              $0
               8.60% subordinated notes due in 2003 (a)                              5,000,000       5,000,000
               7.89% subordinated notes due in 2006 (a)                              6,000,000       6,000,000
                                                                              ---------------------------------
                  Total                                                            $12,700,000     $11,000,000
                                                                              ---------------------------------

             Subsidiaries:
               5.48% Federal Home Loan Bank advance due in 1999                              0       3,000,000
               6.04% Federal Home Loan Bank advance due in 1999                              0         484,701
               6.17% Federal Home Loan Bank advance due in 1999                              0       1,502,299
               5.00% Federal Home Loan Bank advance due in 2000                      1,987,080               0
               4.77% Federal Home Loan Bank advance due in 2001                      1,000,000       1,000,000
               5.01% Federal Home Loan Bank advance due in 2002                      2,200,000       2,200,000
               5.14% Federal Home Loan Bank advance due in 2002                      5,000,000               0
               5.66% Federal Home Loan Bank advance due in 2002                      5,000,000       5,000,000
               6.19% Federal Home Loan Bank advance due in 2002                      3,500,000       4,000,000
               4.89% Federal Home Loan Bank advance due in 2003                     10,000,000      10,000,000
               5.16% Federal Home Loan Bank advance due in 2003                      1,000,000       1,000,000
               7.21% Federal Home Loan Bank advance due in 2005                      5,000,000       5,000,000
               4.97% Federal Home Loan Bank advance due in 2008                      1,000,000       1,000,000
               5.51% Federal Home Loan Bank advance due in 2008                      5,000,000       5,000,000
               5.53% Federal Home Loan Bank advance due in 2008                      3,000,000       3,000,000
               4.25% Federal Home Loan Bank advance due in 2009                     25,000,000               0
                                                                              ---------------------------------
                  Total                                                             68,687,080      42,187,000
                                                                              ---------------------------------
               Total long-term debt and subordinated notes                         $81,387,080     $53,187,000
                                                                              =================================
               <FN>

               (a)   Debt qualifies for inclusion in the  determination of total
                     capital under the Risk- Based Capital Guidelines.
               </FN>
               </TABLE>

               The principal  maturity of long-term debt and subordinated  notes
               for  the  next  five  years   subsequent  to  June  30,  1999  is
               $3,687,080 in 2000,  $1,000,000 in 2001, $15,700,000 in 2002,
               $16,000,000 in 2003, and $45,000,000 there after.


                                       7

<PAGE>


                  ANCHOR FINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)



NOTE 6:        EARNINGS PER SHARE DATA

               Earnings  per share - basic is computed by dividing net income by
               the weighted average number of shares  outstanding.  Earnings per
               share -  diluted  is  computed  by  dividing  net  income  by the
               weighted average number of common shares outstanding and dilutive
               common  share   equivalents  using  the  treasury  stock  method.
               Dilutive common share equivalents  include common shares issuable
               upon exercise of outstanding  stock options.  Unallocated  common
               shares held by the  Employee  Stock  Ownership  Plan are excluded
               from the weighted average shares outstanding.

               In  accordance  with SFAS No.  128,  "Earnings  Per  Share,"  the
               calculation  of net  income  per share - basic and net income per
               share - diluted,  including the effect of  nonrecurring  charges,
               for the six months ended June 30 is presented below:

               <TABLE>
               <CAPTION>

                                                                                    Six months ended June 30,
                                                                           --------------------------------------------
                                                                                    1999                  1998
                                                                           --------------------------------------------
                <S>                                                                    <C>                  <C>
                Net income per share - basic computation
                    Net income                                                         $6,400,556           $6,575,900
                    Income available to common shareholders                            $6,400,556           $6,575,900
                                                                           ============================================
                    Average common shares outstanding                                   8,078,452            7,997,539
                      Unallocated ESOP Shares                                             (59,717)             (51,335)
                                                                           --------------------------------------------
                    Average common shares outstanding - basic                           8,018,735            7,946,204
                                                                           --------------------------------------------

                    Net income per share - basic                                            $0.80                $0.83
                                                                           ============================================


                Net income per share - diluted computation
                    Income available to common shareholders                            $6,400,556           $6,575,900
                                                                           ============================================
                    Average common shares outstanding - basic                           8,018,735            7,946,204
                    Incremental shares from assumed conversions:
                      Stock Options                                                       278,372              302,792
                                                                           --------------------------------------------
                    Average common shares outstanding - diluted                         8,297,107            8,248,996
                                                                           --------------------------------------------
                    Net income per share - diluted                                          $0.77                $0.80
                                                                           ============================================
                </TABLE>


                                       8

<PAGE>



                  ANCHOR FINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)



NOTE 7:        OTHER MATTERS

               At June 30, 1999,  outstanding  standby letters of credit totaled
               $4,139,465.

               For the six months ended June 30, 1999 and 1998, the  Corporation
               paid interest of $19,711,246  and $21,602,971  respectively.  The
               Corporation paid $2,991,300 in income taxes during the six months
               ended June 30,  1999 and  $3,038,811  during  the same  period in
               1998.


                                       9
<PAGE>



ITEM 2.   Management's Discussion and Analysis


         Certain    information    included   in   this   discussion    contains
forward-looking  statements with respect to the financial condition,  results of
operations and business of the  Corporation,  based on  management's  belief and
information currently available to management.  Such forward-looking  statements
are subject to risks,  uncertainties  and  assumptions.  Actual results may vary
materially from those anticipated,  estimated, projected, or expected. Among the
factors  that may cause  variations  from such  forward-looking  statements  are
fluctuations  in the economy,  especially  in the  Corporation's  market  areas;
changes in the interest rate environment;  the Corporation's  ability to realize
anticipated cost savings  relating to pending  acquisitions;  the  Corporation's
success  in  assimilating  acquired  operations  in the  Corporation's  culture,
including its ability to instill the Corporation's  credit culture into acquired
operations;  the  continued  growth  of the  markets  in which  the  Corporation
operates; and the enactment of legislation impacting the Corporation.


Net Income

         Net income for the second quarter of 1999 totaled $3,883,459,  or $0.47
per diluted share, before pretax charges of $1,523,733  ($1,148,692 after taxes)
associated   with  the   acquisition  of  Bailey   Financial.   Excluding  these
nonrecurring  charges, net income and earnings per diluted share for the quarter
ended  June 30,  1999,  increased  4.2% and 3.7%  respectively,  from the second
quarter  of 1998.  Including  the  effect of the  charges,  net  income  totaled
$2,734,768,  or $0.33 per diluted  share,  for the quarter  ended June 30, 1999,
compared to net income of  $3,468,451,  or $0.42 per diluted share earned in the
same period of 1998.

         The primary factors affecting net income,  before nonrecurring charges,
for the second quarter of 1999 were increases of $748,584 in net interest income
and $56,439 in  noninterest  income,  and a decrease in the  provision  for loan
losses of $108,250. These positive factors were partially offset by increases in
noninterest expense of $506,018, and the provision for income taxes of $249,352.

         For the  quarter  ended June 30,  1999,  return on  average  assets and
return on average equity, excluding nonrecurring charges, were 1.30% and 17.03%,
respectively, compared to prior year ratios of 1.27% and 17.66%.

         During the three months ended June 30, 1999, the  Corporation  incurred
$1,041,781,  before tax effect,  in  restructuring  fees,  $417,284,  before tax
effect,  in investment  banking fees, and $64,027,  before tax effect, in legal,
accounting,  and printed  material  expenses arising from the merger with Bailey
Financial  (See  Note  2  to  the  unaudited  interim   consolidated   financial
statements).

                                       10
<PAGE>

         Net income for the six months ended June 30, 1999  totaled  $7,670,806,
or $0.92 per diluted  share,  before pretax  charges of  $1,645,989  ($1,270,588
after taxes)  associated  with the  acquisition of Bailey  Financial.  Excluding
these  nonrecurring  charges,  net income and earnings per diluted share for the
six months ended June 30, 1999, increased 12.3% and 10.9% respectively, from the
same period in 1998.  Including  the effect of the charges,  net income  totaled
$6,400,556,  or $0.77 per diluted share, for the six months ended June 30, 1999,
compared to net income of  $6,575,900,  or $0.80 per diluted share earned in the
same period of 1998.

         The primary factors affecting net income,  before nonrecurring charges,
for the six months  ended June 30,  1999 were  increases  of  $1,744,873  in net
interest  income and  $409,544  in  noninterest  income,  and a decrease  in the
provision for loan losses of $321,500.  These  positive  factors were  partially
offset by increases in  noninterest  expense of $975,319,  and the provision for
income taxes of $662,459.

         For the six months  ended June 30, 1999,  return on average  assets and
return on average equity, excluding nonrecurring charges, were 1.31% and 17.13%,
respectively, compared to prior year ratios of 1.19% and 16.58%.

         During the six months ended June 30,  1999,  the  Corporation  incurred
$1,042,779,  before tax effect, in restructuring charges,  $417,284,  before tax
effect,  in investment  banking fees and $162,197,  before tax effect, in legal,
accounting,  and printed  material  expenses arising from the merger with Bailey
Financial  (See  Note  2  to  the  unaudited  interim   consolidated   financial
statements).


Net Interest Income

         Net  interest  income,  the major  component of the  Corporation's  net
income,  was $13,351,327 for the second quarter of 1999, an increase of $748,583
or 5.9% from the $12,602,744 reported for the same period in 1998. This increase
was attributed to the increased  volume of earning assets,  increased  volume of
noninterest  bearing  sources,  and the  increased tax  equivalent  net yield on
earning assets during the period. The tax equivalent net yield on earning assets
increased from 4.67% in 1998 to 4.86% in 1999.  The net interest  margin widened
from 1998 primarily because of a lower cost of funding earning assets.

         Interest  income was down  $706,857 or 3.01% for the quarter ended June
30, 1999  compared  with the same period in 1998.  The  decrease  was due to the
decline in the yield on earning  assets  since the  volume of  interest  earning
assets grew from the same period in 1998. The yield on earning assets  decreased
from 8.61% in 1998 to 8.18% in 1999.  Average  interest  earning  assets for the
second quarter of 1999  increased  $27.5 million or 2.5% from the same period in
1998.  Average  loans  increased  $32.9  million or 4.0% and average  investment
securities  increased  $32.0  million  or 13.2% for the  second  quarter of 1999
compared  with  the  same  period  in  1998.  Average  interest  earning  assets
represented  93.7% of average  total


                                       11
<PAGE>


assets  during the second  quarter of 1999 compared with 92.8% in 1998.  The
yield on earning  assets  decreased  primarily  because the yield on loans
decreased  from 9.23% in 1998 to 8.63% in 1999.  The composition  of average
interest-earning  assets  changed as the  percentage of average loans to average
interest-earning assets increased from 74.0% in 1998 to 75.1% in 1999.

         Interest  expense  decreased  $1,455,440 or 13.4% for the quarter ended
June 30, 1999  compared  with the same period in 1998.  The decrease in interest
expense was due to a decreased rate paid on average interest-bearing liabilities
since  interest-bearing  liabilities  grew slightly  from the second  quarter of
1998. The rate paid on average interest-bearing liabilities decreased from 4.73%
for the quarter  ended June 30, 1998 to 4.09% for the same period in 1999 due to
the lower  interest  rate  environment  and a more  favorable  mix of  deposits.
Traditionally  lower-yielding  interest  checking,  savings,  and  money  market
deposit  accounts  as a group  increased  as a  percentage  of  interest-bearing
liabilities  from 52.8% for the  second  quarter of 1998 to 55.1% for the second
quarter of 1999.  Average  certificates of deposit  decreased as a percentage of
interest-bearing  liabilities  from 38.0% for the quarter ended June 30, 1998 to
29.7% for the  second  quarter  of 1999.  Average  interest-bearing  liabilities
increased  slightly for the second quarter of 1999 compared with the same period
in 1998.  Average  noninterest  bearing sources increased $25.6 million or 14.4%
for the second  quarter of 1999 compared  with the same period in 1998.  Average
interest-bearing  liabilities  represented  81.9% of funding  sources during the
second quarter of 1999 compared with 83.8% in 1998.

         Net interest  income was  $26,289,200 for the six months ended June 30,
1999, an increase of $1,744,872  or 7.1% from the  $24,544,328  reported for the
same period in 1998.  This increase was  attributed  to the increased  volume of
earning  assets,  increased  volume  of  noninterest  bearing  sources,  and the
increased tax equivalent net yield on earning assets during the period.  The tax
equivalent net yield on earning assets  increased from 4.66% in 1998 to 4.85% in
1999.  The net  interest  margin  widened  from the  first  six  months  of 1998
primarily because of a lower cost of funding earning assets.

         Interest income was down $928,467 or 2.0% for the six months ended June
30, 1999  compared  with the same period in 1998.  The  decrease  was due to the
decline in the yield on earning  assets  since the  volume of  interest  earning
assets grew from the same period in 1998. The yield on earning assets  decreased
from 8.66% in 1998 to 8.24% in 1999. Average interest earning assets for the six
months ended June 30, 1999 increased  $34.0 million or 3.2% from the same period
in 1998.  Average loans increased  $30.9 million or 3.8% and average  investment
securities  increased  $30.2  million or 12.7% for the six months ended June 30,
1999  compared with the same period in 1998.  Average  interest  earning  assets
represented  93.5% of average  total assets during the six months ended June 30,
1999  compared  with  92.8%  in 1998.  The  yield on  earning  assets  decreased
primarily  because the yield on loans  decreased  from 9.24% in 1998 to 8.66% in
1999.  The  composition  of  average  interest-earning  assets  changed  as  the
percentage of average loans to average  interest-earning  assets  increased from
74.9% in 1998 to 75.3% in 1999.

                                       12
<PAGE>

         Interest expense decreased $2,673,339 or 12.5% for the six months ended
June 30, 1999  compared  with the same period in 1998.  The decrease in interest
expense was due to a decreased rate paid on average interest-bearing liabilities
since  interest-bearing  liabilities  remained  relatively  the same for the six
months  ended  June  30,  1999  and June 30,  1998.  The  rate  paid on  average
interest-bearing  liabilities decreased from 4.74% for the six months ended June
30,  1998 to 4.15% for the same  period in 1999 due to the lower  interest  rate
environment and a more favorable mix of deposits.  Traditionally  lower-yielding
interest  checking,  savings,  and  money  market  deposit  accounts  as a group
increased as a percentage of interest-bearing liabilities from 51.8% for the six
months  ended  June 30,  1998 to  54.7%  for the same  period  in 1999.  Average
certificates   of  deposit   decreased  as  a  percentage  of   interest-bearing
liabilities  from  38.7% for the  first six  months of 1998 to 31.4% for the six
months ended June 30, 1999.  Average  long-term debt and subordinated  notes for
the  first  six  months  of  1999   increased   slightly   from  1998.   Average
interest-bearing  liabilities  remained  relatively  the same for the six months
ended June 30,  1999 and June 30,  1998.  Average  noninterest  bearing  sources
increased $34.3 million or 20.7% for the six months ended June 30, 1999 compared
with the same period in 1998. Average  interest-bearing  liabilities represented
82.0% of funding sources during the six months ended June 30, 1999 compared with
84.6% in 1998.

Provision for Loan Losses

         A $425,750 provision for loan losses was made during the second quarter
of 1999 compared with a provision of $534,000 in 1998. An $851,500 provision for
loan losses was made during the six months ended June 30, 1999  compared  with a
provision of $1,173,000  in 1998.  The decrease in the provision for loan losses
in 1999 was  primarily  due to  slowing of loan  growth  and a  decrease  in net
charge-offs.  At June 30, 1999 and 1998 the ratio of annualized net  charge-offs
to average loans was 0.02% and 0.05% respectively.

         Nonperforming  assets at June 30, 1999 totaled $2,916,852 compared with
$3,217,854 reported at the same time last year. The Corporation's  nonperforming
assets have historically  remained  relatively low as the result of conservative
underwriting   policies  and   favorable   market   conditions.   The  ratio  of
nonperforming  assets to total  loans and other real  estate  owned was 0.35% at
June 30, 1999 compared with 0.40% at June 30, 1998.

         The  reserve  for  loan  losses  at June 30,  1999  and  June 30,  1998
represented 1.22% and 1.14%  respectively of total loans  outstanding.  Based on
the current evaluation of the loan portfolio, management believes the reserve at
June 30, 1999 is adequate to cover potential losses in the portfolio.


                                       13

<PAGE>


Noninterest Income

         Noninterest  income  for the  second  quarter of 1999 was up $56,439 or
1.9% from the same period in 1998.  The  primary  factors  contributing  to this
increase were increases in  commissions  and fees of $253,932 or 42.3% and trust
income of $62,907 or 14.1%.  These positive  factors were offset by decreases in
other operating income of $115,963 or 37.0%,  mortgage banking income of $44,661
or 11.5%, and service charges on deposit accounts of $25,784 or 2.3%.

         Noninterest  income  for the six  months  ended  June  30,  1999 was up
$409,544 or 7.3% from the same period in 1998. The primary factors  contributing
to this increase were increases in commissions and fees of $480,474 or 46.7% and
trust  income of  $187,918 or 22.6%.  These  positive  factors  were offset by a
decrease in other operating income of $150,592 or 24.3%, and slight decreases in
service charges on deposit accounts and mortgage banking income.

         The growth in  commissions  and fees for the second quarter and the six
months ended June 30, 1999 resulted  primarily  from increases in investment fee
income, ATM network revenue,  and credit card-related  service fees.  Investment
fee income benefited from increased  market  penetration in existing markets and
expansion  into new markets.  Trust revenue  continues to benefit from increased
sales efforts and favorable  conditions in the Corporation's  expanding markets.
Mortgage banking income was down due to the Corporation's markets experiencing a
less favorable interest rate environment.  Although average deposits  increased,
service charges on deposit account  revenues for the three months and six months
ended June 30, 1999 decreased.  During the quarter and the six months ended June
30, 1999,  management  continued to focus on increasing  noninterest income with
revenue from the sales of new products rather than increased pricing of existing
services.


Noninterest Expense

         Noninterest   expense,   excluding  pretax   nonrecurring   charges  of
$1,523,733,  for the second quarter of 1999 increased  $506,018 or 5.4% from the
same period in 1998.  The primary  factors  contributing  to this  increase were
increases in salaries and employee  benefits of $399,651 or 7.5%,  net occupancy
expense of $83,617 or 12.0%,  and other  operating  expense of $101,565 or 3.9%.
These increases were offset by an 11.2% decrease in equipment expense.

         The  increase in salaries and employee  benefits  resulted  from normal
merit  increases.  Net occupancy  expense  increased  largely due to higher rent
expense and building maintenance costs.

         Noninterest   expense,   excluding  pretax   nonrecurring   charges  of
$1,645,989,  for the six months ended June 30, 1999  increased  $975,319 or 5.2%
from the same period in 1998. The primary factors  contributing to this increase
were  increases  in salaries  and  employee  benefits  of

                                       14
<PAGE>


$640,534 or 6.0%,  net occupancy expense of $85,272 or 5.5%, and other operating
expense of $273,028 or 5.2%. These increases were offset by a slight decrease in
equipment expense.

         The Corporation's overhead efficiency ratio was 60.2% for the first six
months of 1999,  an  improvement  from 61.6% for the same period in 1998.  These
ratios exclude  nonrecurring  charges.  The more favorable  overhead  efficiency
ratio resulted from management's  focus on controlling costs and the Corporation
beginning to realize efficiencies from its acquisitions in 1998.


Income Taxes

         The provision  for income taxes,  excluding the tax benefit of $375,042
associated with tax deductible  nonrecurring  charges, for the second quarter of
1999 increased $249,352 or 13.1% from the same period in 1998. The provision for
income  taxes,  excluding  the tax  benefit  of  $375,401  associated  with  tax
deductible  nonrecurring  charges,  for the  six  months  ended  June  30,  1999
increased  $662,459 or 19.0% from the same  period in 1998.  The  provision  for
income taxes  increased in 1999  primarily due to higher income before taxes and
increased tax rates due to the higher taxable income of the combined entity.


Financial Position

         For the six months ended June 30, 1999,  average total assets increased
1.5% while average loans increased 4.0% and average deposits decreased 3.9% from
the same period in 1998. Loan growth slowed  considerably during the second half
of 1998 and the first half of 1999 in the  Corporation's  market areas.  Some of
this slow down was the result of integrating  three  different  credit  cultures
into one. At June 30, 1999, the Corporation's loan strategies are integrated and
better focused for future loan production.  Core deposits  continue to grow at a
strong pace as previously  mentioned.  The Corporation decreased its reliance on
higher priced certificates of deposit as loan growth slowed.

         Because  the  economy of the  Corporation's  coastal  market  areas are
seasonal in nature,  deposit  growth is strong during the summer months and loan
demand usually  reaches its peak during the winter months.  This  seasonality is
caused by the  economic  impact of a large number of tourists  visiting  coastal
South  Carolina  and  North  Carolina  during  the  summer  months.   Thus,  the
Corporation  historically  has a more favorable  liquidity  position  during the
summer.  To meet loan demand and liquidity  needs during the winter months,  the
Corporation  typically  invests sizable amounts of its deposit growth during the
summer months in temporary investments and short-term securities maturing in the
winter months. Additionally, the Corporation has access to other funding sources
including federal funds purchased from correspondent banks, and a line of credit
with the Federal Home Loan Bank ("FHLB") to meet its liquidity needs.

                                       15
<PAGE>

         The Corporation  utilizes  long-term  advances from the FHLB as part of
its funding strategy.  FHLB long-term  advances totaled  $68,687,080 at June 30,
1999 compared with $37,500,000 at June 30, 1998.

         The Corporation continues to have a strong capital position by industry
standards with the ratio of average stockholders' equity to average total assets
at June 30, 1999 of 7.63% and June 30, 1998 of 7.19%.  At June 30, 1999 and June
30,  1998,   the  total   risk-based   capital  ratio  was  12.39%  and  11.95%,
respectively, and the leverage ratio was 7.52% and 7.24%, respectively.


Year 2000

         The Year 2000 has posed a unique set of challenges to those  industries
reliant on information  technology.  As a result of methods  employed by earlier
programmers,  many software  applications and operational programs may be unable
to distinguish the Year 2000 from the Year 1900. If not  effectively  addressed,
this problem could result in the production of inaccurate data, or, in the worst
cases,  the  inability  of the  systems  to  continue  to  function  altogether.
Financial  institutions  are  particularly  vulnerable  due  to  the  industry's
dependence on electronic data processing systems.

         In February 1997, the Corporation developed its Year 2000 Project Plan,
following the guidelines  established by the FFIEC. An integral part of the plan
was to establish a Year 2000  Committee  comprised of  representatives  from key
areas throughout the organization. The Committee's mission is to identify issues
related to the Year 2000 and to initiate remedial measures designed to eliminate
any adverse effects on the Corporation's operations. The Committee has developed
a comprehensive,  prioritized inventory of all hardware,  software, and material
third  party  providers  that may be  adversely  affected  by the Year 2000 date
change,  and has contacted vendors  requesting their status as it relates to the
Year  2000.   This   inventory   includes  both   information   technology   and
non-information  technology systems, such as alarms, building access,  elevators
and heating and cooling systems,  which typically  contain  embedded  technology
such as micro controllers.  This inventory is periodically reevaluated to ensure
that previously  assigned  priorities  remain accurate and to track the progress
each vendor is making in resolving the problems  associated with the issue.  The
Corporation  relies on software  purchased from third-party  vendors rather than
internally-generated software.

         The  Corporation  is currently in the process of upgrading  systems and
testing to  validate  Year 2000  compliance.  As of June 30,  1999,  testing was
completed and the  Corporation  had  renovated  and tested all mission  critical
systems.  The  Corporation  is currently  operating  on the Year 2000  compliant
release for core systems supported by its third party software provider.

         The Year 2000  Committee has also developed a  communication  plan that
updates the Board of Directors,  management,  and employees on the Corporation's
Year 2000 status, and has developed a customer awareness program.  The Committee
has  developed  a separate  plan in

                                       16
<PAGE>


order to manage the Year 2000 risks posed by commercial  borrowing   customers.
This  plan  has  identified  material  loan customers,  assessed  their
preparedness,  evaluated  their  credit risk to the Corporation, and implemented
appropriate controls to mitigate the risk.

         In accordance with regulatory guidelines, the Corporation has developed
a comprehensive  contingency  plan in the event that Year 2000 related  failures
are experienced.  The plan lists the various strategies and resources  available
to restore core business  processes.  The contingency plan was completed by June
30, 1999.  Testing and  validation  of the  contingency  plan is  scheduled  for
August, 1999.

         As of June  30,  1999,  the  Corporation  incurred  Year  2000  related
expenses  of  approximately  $165,000.  Management  anticipates  that the  total
additional  out-of-pocket  expenditures  required  for bringing the systems into
compliance for the Year 2000 will not exceed $250,000.  Management believes that
these  required  expenditures  will  not  have  a  material  adverse  impact  on
operations,   cashflow,  or  financial  condition.   Although  management  feels
confident  that the  Corporation  has  identified  all necessary  upgrades,  and
budgeted accordingly,  no assurance can be made that Year 2000 compliance can be
achieved without additional  unanticipated  expenditures.  It is not possible at
this time to  quantify  the  estimated  future  costs due to  possible  business
disruption caused by vendors, suppliers,  customers or even the possible loss of
electric power or phone service; however, such costs could be substantial.  As a
result of the Year 2000 project,  the Corporation has not had any material delay
regarding its information systems projects.


Accounting and Regulatory Matters

         In June 1997 the FASB issued SFAS No. 131,  "Disclosures about Segments
of an Enterprise and Related  Information,"  ("SFAS No. 131"), which establishes
new  standards  for business  segment  reporting.  Requirements  of SFAS No. 131
include reporting of (a) financial and descriptive  information about reportable
operating  segments,  (b) a measure of segment profit or loss,  certain specific
revenue  and  expense  items and segment  assets  with  reconciliations  of such
amounts to the Corporation's financial statements, and (c) information regarding
revenues derived from the Corporation's products and services, information about
major customers and  information  related to geographic  areas.  SFAS No. 131 is
effective for fiscal years  beginning after December 15, 1997 and was adopted by
the Corporation on January 1, 1998.

         On June  15,  1998,  the FASB  issued  SFAS No.  133,  "Accounting  for
Derivative  Instruments and Hedging  Activities," ("SFAS No. 133"). SFAS No. 133
is effective for all fiscal  quarters of all fiscal years  beginning  after June
15, 2000 (January 1, 2001 for the  Corporation).  SFAS No. 133 requires that all
derivative  instruments  be recorded  on the balance  sheet at their fair value.
Changes in the fair value of  derivatives  are  recorded  each period in current
earnings or other  comprehensive  income,  depending on whether a derivative  is
designated  as part of a hedge  transaction  and,  if it is,  the  type of hedge
transaction.  Management of the Corporation anticipates that, due to its limited
use of  derivative  instruments,  the  adoption  of

                                       17
<PAGE>


SFAS No. 133 will not have a significant  effect on the Corporation's  results
of operations or its financial position.

         In  October  1998,  the FASB  issued  SFAS  No.  134,  "Accounting  for
Mortgage-Backed  Securities  Retained after the Securitization of Mortgages Held
for Sale by a  Mortgage  Banking  Enterprise,"  ("SFAS No.  134").  SFAS No. 134
requires that after an entity that is engaged in mortgage banking activities has
securitized  mortgage  loans  that are  held  for  sale,  it must  classify  the
mortgage-backed  securities or other retained interests based on its ability and
intent to sell or hold those  investments.  SFAS No. 134 is effective for fiscal
years  beginning  after December 15, 1998, and was adopted by the Corporation on
January 1, 1999. The effects of adoption were not material  during the first six
months of 1999.

         Management is not aware of any known trends, events, uncertainties,  or
current  recommendations  by regulatory  authorities  that will have or that are
reasonably  likely to have a  material  effect on the  Corporation's  liquidity,
capital resources, or other operations.


ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk


         There have been no  material  changes  in market  risk  exposures  that
affect the quantitative or qualitative disclosures presented as of the preceding
fiscal year end in the Corporation's Annual Report on Form 10-K.

                                       18
<PAGE>


         PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

         There are no material legal proceedings.

ITEM 2.  CHANGES IN SECURITIES

         None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.

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

         A report on Form 8-K dated July 20, 1999 was filed with the Securities
         and Exchange Commission on July 20, 1999. The financial  statements for
         Anchor Financial  Corporation  for the quarter ended March 31, 1999
         were restated to reflect the merger with Bailey Financial Corporation,
         which was completed on April 9, 1999.  The restated  financial
         information  for the first  quarter  of 1999 was filed as Exhibit 99
         to this report and was provided for informational purposes only.

                                       19
<PAGE>



                                   SIGNATURES



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.




                                        /s/ Stephen L. Chryst
                                        Stephen L. Chryst, Chairman,
                                        President and Chief Executive
                                          Officer



                                        /s/ Tommy E. Looper
                                        Tommy E. Looper, Executive Vice
                                        President and Chief Financial
                                          Officer



                                        /s/ John J. Moran
                                        John J. Moran, Senior Vice President
                                          and Comptroller




Date:  July 31, 1999