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 September 30, 1997       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  (803) 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 October 31, 1997
  (Common stock, $6.00 par value)                          3,846,440


<PAGE>





                  ANCHOR FINANCIAL CORPORATION AND SUBSIDIARIES



                                      INDEX



                                                                   PAGE NO.


Part I - Financial Information

         Consolidated Balance Sheet - September 30, 1997
         and December 31, 1996                                        1

         Consolidated Statement of Income - Three months
         and Nine months ended September 30, 1997 and 1996            2

         Consolidated Statement of Cash Flows -
         Nine months ended September 30, 1997 and 1996                3

         Notes to Consolidated Financial Statements                   4-7

         Management's Discussion and Analysis of
         Financial Condition and Results of Operation                 8-11


Part II - Other Information

         Item 1 - Legal Proceedings                                   12
         Item 2 - Changes in Securities                               12
         Item 3 - Defaults Upon Senior Securities                     12
         Item 4 - Submission of Matters to a Vote
                  of Security-Holders                                 12
         Item 5 - Other Information                                   12
         Item 6 - Exhibits and Reports on Form 8-K                    12



<PAGE>



ANCHOR FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>


                                                                                          September 30,               December 31,
                                                                                              1997                        1996
                                                                                     -----------------------------------------------
<S>                                                                           <C>                          <C>    

                                                                                           (Unaudited)                      <F1>
ASSETS
  Cash and due from banks                                                     $               22,683,677   $             25,346,998
  Interest-bearing balances due from banks                                                       239,533                    316,654
  Federal funds sold                                                                           8,700,000                          0
  Investment securities:
    Held-to-maturity, at amortized cost (fair value of $11,974,179
      in 1997 and $18,225,853 in 1996)                                                        11,956,901                 18,187,108
    Available-for-sale, at fair value (amortized cost of $100,380,738
      in 1997 and $81,272,830 in 1996)                                                       101,622,832                 82,044,037
                                                                                     -----------------------------------------------
  Total investment securities                                                                113,579,733                100,231,145
                                                                                     -----------------------------------------------


  Loans                                                                                      401,182,379                345,429,534
    Less - unearned income                                                                       (44,932)                   (24,367)
         - allowance for loan losses                                                          (4,524,853)                (3,801,201)
                                                                                     -----------------------------------------------
  Net loans                                                                                  396,612,594                341,603,966
                                                                                     -----------------------------------------------

  Premises and equipment                                                                      16,689,991                 16,121,015
  Other assets                                                                                 9,436,600                  9,884,514
                                                                                     -----------------------------------------------

Total assets                                                                  $              567,942,128   $            493,504,292
                                                                                     ===============================================


LIABILITIES AND STOCKHOLDERS' EQUITY
  Liabilities:
    Deposits:
      Demand deposits                                                         $               91,063,708   $             79,958,880
      NOW and money market accounts                                                          244,954,189                199,879,530
      Time deposits $100,000 and over                                                         55,078,931                 45,099,776
      Other time and savings deposits                                                         96,654,578                 95,273,664
                                                                                     -----------------------------------------------
    Total deposits                                                                           487,751,406                420,211,850
    Federal funds purchased and securities
      sold under agreements to repurchase                                                      2,988,561                  6,337,197
    Other short-term borrowings                                                                2,107,132                  1,847,779
    Long-term debt                                                                            23,000,000                 18,000,000
    Subordinated notes                                                                        11,000,000                 11,000,000
    Other liabilities                                                                          4,569,872                  3,132,061
                                                                                     -----------------------------------------------
  Total liabilities                                                                          531,416,971                460,528,887
                                                                                     -----------------------------------------------

  Stockholders' Equity:
    Common stock, $6.00 par value;  7,000,000 shares  
      authorized;  shares issued and outstanding - 3,846,440
      in 1997 and 3,839,010 in 1996                                                           23,078,640                 23,034,060
    Surplus                                                                                    1,267,724                  1,070,326
    Retained earnings                                                                         12,046,930                  9,006,968
    Unrealized gains on investment securities
      available-for-sale, net of tax                                                             792,113                    497,301
    Unearned ESOP shares                                                                        (660,250)                  (633,250)
                                                                                     -----------------------------------------------
  Total stockholders' equity                                                                  36,525,157                 32,975,405
                                                                                     -----------------------------------------------

Total liabilities and stockholders' equity                                    $              567,942,128   $            493,504,292
                                                                                     ===============================================


<F1> Obtained from audited financial statements.
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these financial statements
                                                             1
<PAGE>


ANCHOR FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>

                                                                        Nine months ended                    Three months ended
                                                                          September 30,                         September 30,
                                                                ------------------------------------   -----------------------------
                                                                       1997               1996              1997            1996
                                                                ------------------------------------   -----------------------------
<S>                                                            <C>                 <C>                <C>             <C>

INTEREST INCOME:
  Interest and fees on loans                                   $       26,481,092  $      21,826,929  $     9,299,024 $   7,553,937
  Interest on investment securities:
    Taxable                                                             4,836,315          4,309,942        1,671,678     1,607,569
    Non-taxable                                                           198,037            151,273           68,257        49,750
  Other interest income                                                   120,413            267,962           23,767        41,751
                                                                ------------------------------------   -----------------------------
                Total interest income                                  31,635,857         26,556,106       11,062,726     9,253,007
                                                                ------------------------------------   -----------------------------

INTEREST EXPENSE:
  Interest on deposits                                                 12,528,037         10,637,068        4,356,242     3,614,580
  Interest on short-term borrowings                                       202,619            130,341           88,972        58,736
  Interest on long-term borrowings                                        838,226            823,947          285,606       280,123
  Interest on subordinated notes                                          696,906            329,284          234,041       110,578
                                                                ------------------------------------   -----------------------------
                Total interest expense                                 14,265,788         11,920,640        4,964,861     4,064,017
                                                                ------------------------------------   -----------------------------

Net interest income                                                    17,370,069         14,635,466        6,097,865     5,188,990
Provision for loan losses                                                 680,000            590,000          240,000       200,000
                                                                ------------------------------------   -----------------------------

Net interest income after provision
  for loan losses                                                      16,690,069         14,045,466        5,857,865     4,988,990
                                                                ------------------------------------   -----------------------------

NONINTEREST INCOME:
  Service charges on deposit accounts                                   1,448,436          1,447,640          480,625       483,444
  Commissions and fees                                                    979,296            707,379          376,579       301,562
  Trust income                                                            208,520            183,891           63,172        57,446
  Gains on sales of mortgage loans                                        181,698            145,467           62,626        47,247
  Gains (losses) on sales of investment securities, net                     4,013            (14,523)           4,013        (3,860)
  Other operating income                                                  388,693            284,002          120,658        70,377
                                                                ------------------------------------   -----------------------------
                Total noninterest income                                3,210,656          2,753,856        1,107,673       956,216
                                                                ------------------------------------   -----------------------------

NONINTEREST EXPENSE:
  Salaries and employee benefits                                        7,134,459          6,155,825        2,458,504     2,122,853
  Net occupancy expense                                                 1,001,624            983,405          349,100       343,718
  Equipment expense                                                       988,616            955,282          339,528       316,170
  Other operating expense                                               3,829,744          3,397,331        1,284,829     1,071,834
                                                                ------------------------------------   -----------------------------
                Total noninterest expense                              12,954,443         11,491,843        4,431,961     3,854,575
                                                                ------------------------------------   -----------------------------

Income before income taxes                                              6,946,282          5,307,479        2,533,577     2,090,631
Provision for income taxes                                              2,470,508          1,868,229          906,919       765,579
                                                                ------------------------------------   -----------------------------

Net income                                                     $        4,475,774  $       3,439,250  $     1,626,658 $   1,325,052
                                                                ====================================   =============================


Net income per share                                           $             1.11  $            0.88  $          0.40 $        0.34
Weighted average common shares outstanding                              4,035,762          3,924,021        4,053,954     3,946,061
</TABLE>

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

                                                            2
<PAGE>



ANCHOR FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>

                                                                                                 Nine months ended September 30,
                                                                                                    1997                 1996
                                                                                               -------------------------------------
<S>                                                                                        <C>                  <C>
                                                                                           
Cash flows from operating activities:
  Net income                                                                               $        4,475,774   $         3,439,250
  Adjustments to reconcile net income to net cash provided by operating activities:
    Accretion and amortization of investment securities                                               (45,153)              (39,058)
    Depreciation of premises and equipment                                                            941,033               928,133
    Amortization of intangible assets                                                                 264,293               297,748
    Provision for loan losses                                                                         680,000               590,000
    Losses (gains) on sales of investment securities                                                   (4,013)               14,523
    Gains on sales of mortgage loans                                                                 (181,698)             (145,467)
    Losses (gains) on sales of premises and equipment                                                 (13,873)                3,833
    Change in interest receivable                                                                     209,818               151,921
    Change in prepaid expenses                                                                         73,346                54,462
    Change in income taxes payable                                                                    275,164                 2,206
    Change in deferred taxes                                                                           30,193              (260,434)
    Change in interest payable                                                                         36,383               127,685
    Change in accrued expenses                                                                        229,151               265,370
    Origination of mortgage loans held for sale                                                    (7,829,894)           (8,172,600)
    Proceeds from sales of mortgage loans held for sale                                             9,102,292             8,097,817
    Net change in unearned ESOP shares                                                                 77,499               153,000
                                                                                             ---------------------------------------
Net cash provided by operating activities                                                           8,320,315             5,508,389
                                                                                             ---------------------------------------

Cash flows from investing activities:
  Purchase of investment securities held-to-maturity                                                        0            (2,053,654)
  Proceeds from maturities of investment securities held-to-maturity                                6,225,721            12,296,120
  Purchase of investment securities available-for-sale                                            (33,121,520)          (52,074,966)
  Proceeds from sales of investment securities available-for-sale                                   3,984,612            10,458,539
  Proceeds from maturities of investment securities available-for-sale                             10,082,651            10,007,056
  Net change in loans                                                                             (56,779,328)          (36,893,953)
  Capital expenditures                                                                             (1,511,335)           (2,894,742)
  Proceeds from sale of premises and equipment                                                         15,200                41,542
  Other, net                                                                                          591,300            (1,000,595)
                                                                                             ---------------------------------------
Net cash used for investing activities                                                            (70,512,699)          (62,114,653)
                                                                                             ---------------------------------------

Cash flows from financing activities:
  Net change in deposits                                                                           67,539,557            44,700,369
  Net change in federal funds purchased and securities sold under agreements to                    (3,348,636)            5,745,843
     repurchase
  Net change in other short-term borrowings                                                           259,353             6,514,189
  Proceeds from issuance of long-term debt                                                          5,000,000             3,000,000
  Proceeds from issuance of stock in accordance with:
    Dividend Reinvesment Plan                                                                         123,331                30,405
    Stock Option Plan                                                                                  19,329                74,412
  Payment for fractional shares issued in stock split                                                    (567)                    0
  Cash dividends paid                                                                              (1,440,425)             (803,848)
                                                                                             ---------------------------------------
Net cash provided by financing activities                                                          68,151,942            59,261,370
                                                                                             ---------------------------------------

Net change in cash and cash equivalents                                                             5,959,558             2,655,106
Cash and cash equivalents at January 1                                                             25,663,652            20,615,188
                                                                                             ---------------------------------------
Cash and cash equivalents at September 30                                                  $       31,623,210   $        23,270,294
                                                                                             =======================================
</TABLE>

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

                                                            3
<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 1996.

                The results of  operations  for the three and nine month periods
                ended September 30, 1997 are not  necessarily  indicative of the
                results to be expected for the full year.

                For  purposes of the  Consolidated  Statement of Cash Flows,
                the Corporation has defined cash and cash equivalents as cash on
                hand, amounts due from banks, and federal funds sold. Generally,
                federal funds are purchased and sold for one-day periods.

                On August 11, 1997,  the Board of  Directors of the  Corporation
                declared a three-for-two stock split in the form of a 50% common
                stock  dividend paid on September 26, 1997, to  shareholders  of
                record of the  Corporation  on August 29,  1997.  All  financial
                statement information presented in this report has been restated
                to reflect the three-for-two stock split.


  NOTE 2:       RESERVE FOR LOAN LOSSES

                Activity  in the  reserve  for loan  losses for the nine  months
                ended September 30, 1997 and 1996 are summarized as follows:
<TABLE>
<CAPTION>

                                                                  1997                      1996

                <S>                                           <C>                       <C>
                 
                Balance, beginning of year                    $3,801,201                $3,045,656
                Provision charged to operations                  680,000                   590,000
                Recoveries of charged off loans                  209,495                   235,792
                Loans charged off                               (165,843)                 (262,267)
                                                              $4,524,853                $3,609,181
 
</TABLE>

                                       4
<PAGE>


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


NOTE 3:         NONPERFORMING ASSETS

                The following is a summary of nonperforming  assets at September
                30, 1997 and 1996.  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>


                                                                   1997                    1996
               <S>                                            <C>                       <C>  
               
               Nonaccrual loans                               $  401,212                $ 166,683
               Loans past due ninety days or more                 31,060                    8,164
               Other real estate owned                           106,675                        0
               Total nonperforming assets                     $  538,947                $ 174,847
</TABLE>


NOTE 4:        INCOME TAXES

               The  significant  components  of the  Corporation's  deferred tax
               assets  and  (liabilities)  recorded  pursuant  to  Statement  of
               Financial  Accounting  Standards No. 109,  "Accounting for Income
               Taxes," and included in other assets in the consolidated  balance
               sheet, are as follows:
<TABLE>
<CAPTION>

                                                                 1997                      1996
               <S>                                          <C>                      <C>  
               
               Deferred tax liabilities:

               Tax depreciation over book                      ($587,918)               ($554,331)
               Net unrealized gain SFAS 115                     (452,485)                       0
               Other, net                                       (339,735)                (220,486)
               Total deferred tax liabilities                 (1,380,138)                (774,817)
              
               Deferred tax assets:

               Allowance for loan losses                       1,229,232                  911,717
               Deferred loan fees and costs                      160,544                  238,467
               Deferred compensation                             209,049                  197,983
               Net unrealized loss SFAS 115                            0                   96,323
               Other, net                                        235,281                  163,925
               Total deferred tax assets                       1,834,106                1,608,415

                  Net deferred tax asset                      $  453,968               $  833,598
</TABLE>

                                       5
<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 at September 30 are 
               summarized as follows:
<TABLE>
<CAPTION>

                                                                                    1997               1996
               <S>                                                               <C>               <C>   

               Parent Company:

               8.60% subordinated notes due in 2003 <F2>                         $ 5,000,000       $5,000,000
               7.89% subordinated notes due in 2006 <F2>                           6,000,000                0
                    Total                                                         11,000,000        5,000,000

               Subsidiaries:

               5.71% Federal Home Loan Bank advance due
                  in 1998                                                          5,000,000        5,000,000
               5.48% Federal Home Loan Bank advance due
                  in 1999                                                          3,000,000        3,000,000
               6.08% Federal Home Loan Bank advance due
                  in 2000                                                          5,000,000        5,000,000
               5.66% Federal Home Loan Bank advance due
                  in 2002                                                          5,000,000                0
               7.21% Federal Home Loan Bank advance due
                  in 2006                                                          5,000,000        5,000,000
                    Total                                                         23,000,000       18,000,000
 
               Total long-term debt and subordinated notes                       $34,000,000      $23,000,000


               <F2>  Debt qualifies for inclusion in the  determination of total
                     capital under the Risk-Based Capital Guidelines.
</TABLE>

               The principal  maturity of  long-term debt and subordinated notes
               for the next five years subsequent   to  September   30,  1997 is
               $5,000,000  in  1998,  $3,000,000  in 1999,  $5,000,000  in 2000,
               $5,000,000 in 2002, and $16,000,000 there after.


NOTE 6: PER SHARE DATA

               Net income per share is computed  by  dividing  net income by the
               weighted average number of shares outstanding and dilutive common
               share equivalents  using the treasury stock method.  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 number of common shares outstanding.


                                       6
<PAGE>


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


NOTE 7:  IMPAIRED LOANS

               Adoption of SFAS Nos. 114 and 118 as of January 1, 1995  resulted
               in the  identification  of certain  loans  which were  considered
               impaired under the provisions of SFAS No. 114. 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.  Impaired (including
               cash basis) loans at  September  30, all of which are held by the
               bank subsidiary, are summarized in Note 3.

               At September  30,  1997,  impaired  loans had a related  specific
               allowance  for  loan  losses  totaling  $40,000.  There  were  no
               material  commitments to lend additional funds to customers whose
               loans were classified as impaired at September 30, 1997.


NOTE 8: OTHER MATTERS

               At September  30,  1997,  outstanding  standby  letters of credit
               totaled $1,353,191.

               For the nine  months  ended  September  30,  1997 and  1996,  the
               Corporation   paid  interest  of  $14,229,405   and   $11,792,955
               respectively.  The  Corporation  paid income taxes of  $2,360,098
               during the nine months ended  September  30, 1997 and  $2,018,630
               during the same period in 1996.




                                       7
<PAGE>


                      Management's Discussion and Analysis


Net Income

      Net income for the third  quarter of 1997 was  $1,626,658,  an increase of
$301,606 or 22.8% from the  $1,325,052  for the same period in 1996.  Net income
per share for the third quarter  increased  19.5% from $0.34 in 1996 to $0.40 in
1997.

      The primary  factors  affecting this increase were an increase of $908,875
in net interest income and an increase in noninterest income of $151,457.  These
positive  factors were partially  offset by increases in noninterest  expense of
$577,386, the provision for income taxes of $141,340, and the provision for loan
losses of $40,000.

      Net income for the nine months ended September 30, 1997 was $4,475,774, an
increase of $1,036,524 or 30.1% from the $3,439,250 for the same period in 1996.
Net income per share for this period increased 26.5% from $0.88 in 1996 to $1.11
in 1997.

      The primary factors affecting this increase were an increase of $2,734,603
in net interest income and an increase in noninterest income of $456,800.  These
positive  factors were partially  offset by increases in noninterest  expense of
$1,462,600,  the provision  for income taxes of $602,279,  and the provision for
loan losses of $90,000.

      Annualized  return on average  total assets for the third  quarter of 1997
was 1.18% compared with 1.12% in 1996.  For the nine months ended  September 30,
1997, annualized return on average total assets was 1.14% compared with 1.02% in
1996. Annualized return on average stockholders' equity for the third quarter of
1997 was  17.87%  compared  with  16.79%  in 1996.  For the  nine  months  ended
September 30, 1997, annualized return on average stockholders' equity was 17.17%
compared with 15.10% for the same period in 1996.

Net Interest Income

      Net interest income,  the major component of the Corporation's net income,
was  $6,097,865  for the third quarter of 1997, an increase of $908,875 or 17.5%
from the  $5,188,990  reported  for the same period in 1996.  This  increase was
attributed  to the increased  volume of earning  assets during the period and an
increase in the tax equivalent net yield on earning assets from 4.82% in 1996 to
4.83% in 1997.  The increased  volume of earning assets was primarily the result
of quality loan demand and strong deposit growth during the period.

      Interest income  increased  $1,809,719 or 19.6% for the three months ended
September 30, 1997  compared with the same period in 1996.  The increase was due
to an increase in the volume of earning  assets and the yield on earning  assets
which  increased  from 8.58% in 1996 to 8.73% in 1997.  Average loans  increased
$71.9 million or 22.4% and average investment  securities increased $4.1 million
or 3.9% for the third  quarter of 1997  compared  with the same  period in 1996.
Average interest earning assets represented 92.1% of average total assets during
the third  quarter of 1997  compared  with  91.6% in 1996.  The  composition  of
average  interest-earning  assets changed  slightly as the percentage of average
loans to average  interest-earning  assets increased from 74.5% in 1996 to 77.7%
in 1997.

                                       8
<PAGE>


      Interest  expense  increased  $900,844 or 22.2% for the three months ended
September  30,  1997  compared  with the same  period in 1996.  The  increase in
interest   expense   was  due  to  an   increase   in  the   volume  of  average
interest-bearing  liabilities  and the  rate  paid on  average  interest-bearing
liabilities  which increased from 4.52% for the three months ended September 30,
1996 to 4.74% for the same period in 1997. Average interest-bearing  liabilities
increased $57.6 million or 16.1% for the third quarter of 1997 compared with the
same period in 1996. Average  interest-bearing  liabilities represented 82.4% of
funding sources during the third quarter of 1997 compared with 83.2% in 1996.

      For the  nine  months  ended  September  30,  1997,  net  interest  income
increased  $2,734,603 or 18.7% from the same period in 1996. The primary reasons
for this increase were the increased  volume of earning assets during the period
and tax equivalent  net yield on earning  assets which  increased from 4.75% for
the  first  nine  months  of 1996 to 4.83%  for the  same  period  in 1997.  The
increased  volume of earning  assets was  primarily  the result of quality  loan
demand during the period.

      Interest  income  increased  $5,079,751 or 19.1% for the nine months ended
September 30, 1997  compared with the same period in 1996.  The increase was due
to an increase in the volume of average interest-earning assets and the yield of
earning  assets  which  increased  from 8.59% in 1996 to 8.77% in 1997.  Average
loans  increased  $63.9  million  or 20.7%  and  average  investment  securities
increased  $9.9  million or 10.1% for the nine months ended  September  30, 1997
compared  with  the  same  period  in  1996.  Average   interest-earning  assets
represented 91.8% of average total assets during the nine months ended September
30, 1997  versus  91.5% in 1996.  The  composition  of average  interest-earning
assets  changed   slightly  as  the  percentage  of  average  loans  to  average
interest-earning assets increased from 74.8% in 1996 to 77.8% in 1997.

      Interest expense  increased  $2,345,148 or 19.7% for the nine months ended
September  30,  1997  compared  with the same  period in 1996.  The  increase in
interest   expense   was  due  to  an   increase   in  the   volume  of  average
interest-bearing liabilities and the rate paid on these funds during the period.
Average  interest-bearing  liabilities  increased $55.7 million or 16.0% for the
nine months ended  September 30, 1997 compared with the same period in 1996. The
rate paid on average  interest-bearing  liabilities increased from 4.57% for the
nine months ended September 30, 1996 to 4.72% in 1997. Average  interest-bearing
liabilities  represented  83.6% of funding  sources during the nine months ended
September 30, 1997 compared with 84.3% in 1996.

Provision for Loan Losses

      A $240,000  provision for loan losses was made during the third quarter of
1997  compared  with a provision  of $200,000 in 1996.  The  provision  for loan
losses  increased  during the third quarter of 1997 primarily due to loan growth
since the Corporation  had net loan recoveries for the  quarter ended  September
30, 1997. The provision for loan losses for the nine months ended  September 30,
1997 was $680,000  versus  $590,000 for the same period in 1996. The increase in
the provision  for loan losses for the nine months ended  September 30, 1997 was
primarily  due to loan  growth  since the  Corporation  had net loan  recoveries
during  this  period.  Nonperforming  assets at  September  30,  1997  increased
compared  with the balance at the same time last year,  however,  the balance is
nominal relative to the size of the Corporation and its portfolio.

      At September  30, 1997 and 1996 the ratio of  annualized  net  charge-offs
(recoveries) to average loans was (0.02)% and 0.01%  respectively.  The ratio of
nonperforming  assets to total  loans and other real  estate  owned was 0.13% at
September 30, 1997 compared with 0.05% at September 30, 1996.

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<PAGE>


      The reserve for loan losses at  September  30, 1997 and  December 31, 1996
represented 1.13% and 1.10%  respectively of total loans  outstanding.  Based on
the current evaluation of the loan portfolio, management believes the reserve at
September 30, 1997 is adequate to cover potential losses in the portfolio.

Noninterest Income

      Noninterest  income for the third  quarter of 1997  increased  $151,457 or
15.8% from the same period in 1996.  The  primary  factors  attributing  to this
increase  were  increases  in  commissions  and fees of $75,017 or 24.9%,  other
operating  income of $50,281  or 71.4%,  mortgage  banking  income of $15,379 or
32.6%, and a 10.0% increase in trust income.  These positive changes were offset
by a slight decrease in service charges on deposit accounts.

      The increase in  commissions  and fees resulted  primarily  from increased
revenue  generated by credit card merchant  services and ATM terminal  fees. The
increase in other operating income was primarily due to non-recurring recoveries
of previously charged-off assets.

      Noninterest  income for the nine months ended September 30, 1997 increased
$456,800 or 16.6% from the same period in 1996. The primary factors  attributing
to this increase were  increases in  commissions  and fees of $271,917 or 38.4%,
other operating income of $104,691 or 36.9%,  mortgage banking income of $36,231
or 24.9%,  trust  income of $24,629 or 13.4%,  and a slight  increase in service
charges on deposit accounts.

      The increase in  commissions  and fees resulted  primarily  from increased
revenue  generated by credit card merchant  services and ATM terminal  fees. The
increase in other  operating  income was  generated  by normal  banking and bank
related  activities.  Mortgage  banking income (which includes normal  servicing
fees and profits from the origination  and sale of loans)  increased as a result
of the  Corporation  concentrating  more  resources on growing its mortgage loan
operation.

Noninterest Expense

      Noninterest  expense for the third quarter of 1997  increased  $577,386 or
15.0% from the same period in 1996.  The  primary  factors  attributing  to this
increase  were  increases  in salaries and employee  benefits,  other  operating
expense, and a slight increase in net occupancy and equipment expense due to the
Corporation's continued strong growth.

      Salaries and employee  benefits  for the third  quarter of 1997  increased
$335,651 or 15.8% from the same period in 1996.  This increase was primarily due
to the  increased  number of  employees  from  expansion  into new  markets  and
investments  in new  personnel  to further  develop  the  infrastructure  of the
Corporation.  Other operating expense increased  $212,995 or 19.9% from the same
period in 1996. The increase in other operating  expense was primarily due to an
increase in legal fees. The increased legal fees primarily resulted from closing
costs  that  the  Corporation  incurred  in  association  with  an  equity  line
promotion.

      For  the  nine  months  ended  September  30,  1997,  noninterest  expense
increased  $1,462,600 or 12.7% from the same period in 1996. The primary factors
attributing  to this increase were  increases in salaries and employee  benefits
and other operating expenses.

                                       10
<PAGE>


      Salaries and employee  benefits  for the nine months ended  September  30,
1997 increased $978,634 or 15.9% from the same period in 1996. This increase was
primarily  due to the  increased  number of employees  from  expansion  into new
markets and investments in new personnel to further  develop the  infrastructure
of the  Corporation.  Net occupancy  expense and equipment  expense  experienced
slight increases from the first nine months of 1996. Other operating expense for
the nine months ended  September 30, 1997  increased  $432,413 or 12.7% compared
with the same  period in 1996.  The  increase  in other  operating  expense  was
primarily  due to increases in marketing  related  expenses and legal fees.  The
increased legal fees primarily  resulted from closing costs that the Corporation
incurred in association with an equity line promotion.

Income Taxes

      The  provision  for income taxes for the third  quarter of 1997  increased
$141,340  or 18.5%  from the same  period  in 1996.  For the nine  months  ended
September  30, 1997,  the  provision  increased  $602,279 or 32.2% from the same
period in 1996.  The provision for income taxes  increased in 1997 primarily due
to higher income before taxes since tax rates remained approximately the same as
1996.

Financial Position

      For the third quarter of 1997,  average total assets increased 16.8% while
average loans  increased  22.4% and average  deposits  increased  15.6% from the
third quarter of 1996.  For the nine months ended  September  30, 1997,  average
total assets  increased  16.6% while average loans  increased  20.7% and average
deposits increased 15.4% from the same period in 1996.

      Due to the  seasonal  nature of the Myrtle  Beach and Hilton  Head  Island
market areas,  deposit growth is strong during the summer months and loan demand
usually  reaches  its peak  during  the winter  months.  Thus,  the  Corporation
historically has a more favorable  liquidity  position during the summer months.
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").

      The Corporation  utilizes  long-term advances from the FHLB as part of its
funding strategy.  FHLB long-term advances totaled  $23,000,000 at September 30,
1997 compared with $18,000,000 at September 30, 1996.

      The  Corporation  continues to have a strong capital  position by industry
standards with the ratio of average stockholders' equity to average total assets
for the first nine  months of 1997 being 6.6% versus 6.7% for the same period in
1996.  At  September  30, 1997,  the total  risk-based  capital  ratio was 12.4%
compared  with 12.2% at December 31, 1996.  The leverage  ratio at September 30,
1997 was 6.5% compared with 6.8% at December 31, 1996.




                                       11
<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)  27     Financial Data Schedule (for SEC purposes only)

      (b)         A report on Form 8-K dated  August 11, 1997 was filed with the
                  Securities  and Exchange  Commission  on August 15,  1997.  On
                  August 11, 1997,  the Board of  Directors of Anchor  Financial
                  Corporation (the "Corporation") approved a three-for-two stock
                  split in the form of a 50% common  stock  dividend  payable on
                  September  26,  1997,  to   shareholders   of  record  of  the
                  Corporation on August 29, 1997.

                                       12
<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, 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:  October 31, 1997

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