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 March 31, 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 April 30, 1997
(Common stock, $6.00 par value)                           2,559,340


<PAGE>





                  ANCHOR FINANCIAL CORPORATION AND SUBSIDIARIES



                                      INDEX



                                                                    PAGE NO.


Part I - Financial Information

         Consolidated Balance Sheet - March 31, 1997
         and December 31, 1996                                         1

         Consolidated Statement of Income - Three months
         ended March 31, 1997 and 1996                                 2

         Consolidated Statement of Cash Flows -
         Three months ended March 31, 1997 and 1996                    3

         Notes to Consolidated Financial Statements                    4-7

         Management's Discussion and Analysis of
         Financial Condition and Results of Operation                  8-10


Part II - Other Information

         Item 1 - Legal Proceedings                                   11
         Item 2 - Changes in Securities                               11
         Item 3 - Defaults Upon Senior Securities                     11
         Item 4 - Submission of Matters to a Vote
                      of Security-Holders                             11
         Item 5 - Other Information                                   11
         Item 6 - Exhibits and Reports on Form 8-K                    11



<PAGE>





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


                                                                                         March 31,                December 31,
                                                                                     -------------------------------------------
                                                                                           1997                      1996      
                                                                                     -------------------------------------------
                                                                                       (Unaudited)                   <F1>

<S>                                                                               <C>                     <C>  
ASSETS
  Cash and due from banks                                                         $          22,204,071   $          25,346,998
  Interest-bearing balances due from banks                                                      808,319                 316,654
  Federal Funds Sold                                                                          1,610,000                       0
  Investment securities:
    Held-to-maturity, at amortized cost (fair value of $14,616,152
      in 1997 and $18,225,853 in 1996)                                                       14,652,883              18,187,108
    Available-for-sale, at fair value (amortized cost of $92,304,815
      in 1997 and  $81,272,830 in 1996)                                                      92,407,696              82,044,037
                                                                                     ------------------------------------------- 
  Total Investment Securities                                                               107,060,579             100,231,145   
                                                                                     -------------------------------------------

  Loans                                                                                     366,094,143             345,429,534
    Less - unearned income                                                                      (23,781)                (24,367)
         - allowance for loan losses                                                         (4,036,533)             (3,801,201)
                                                                                     -------------------------------------------
  Net loans                                                                                 362,033,829             341,603,966
                                                                                     -------------------------------------------

  Premises and equipment                                                                     16,163,596              16,121,015
  Other assets                                                                               10,675,879               9,884,514
                                                                                     -------------------------------------------

Total assets                                                                      $         520,556,273   $         493,504,292
                                                                                     ===========================================

LIABILITIES AND STOCKHOLDERS' EQUITY
  Liabilities:
    Deposits:
      Demand deposits                                                             $          79,635,555   $          79,958,880
      NOW and money market accounts                                                         215,250,736             199,879,530
      Time deposits $100,000 and over                                                        60,108,248              45,099,776
      Other time and savings deposits                                                        94,351,280              95,273,664
                                                                                       -----------------------------------------
    Total deposits                                                                          449,345,819             420,211,850
    Federal funds purchased and securities
      sold under agreements to repurchase                                                     1,895,431               6,337,197
    Other short-term borrowings                                                               2,228,848               1,847,779
    Long-term debt                                                                           18,000,000              18,000,000
    Subordinated notes                                                                       11,000,000              11,000,000
    Other liabilities                                                                         4,513,234               3,132,061
                                                                                     -------------------------------------------
  Total liabilities                                                                         486,983,332             460,528,887
                                                                                     -------------------------------------------

  Stockholders' Equity:
    Common stock, $6.00 par value;  7,000,000 shares
      authorized;  shares issued and outstanding - 2,559,340
      in 1997 and 1996                                                                       15,356,040              15,356,040
    Surplus                                                                                   1,100,523               1,070,326
    Retained earnings                                                                        17,667,717              16,684,988
    Unrealized gains on investment securities
      available-for-sale, net of tax                                                             54,911                 497,301
    Unearned ESOP shares                                                                       (606,250)               (633,250)
                                                                                     -------------------------------------------
  Total stockholders' equity                                                                 33,572,941              32,975,405
                                                                                     -------------------------------------------

Total liabilities and stockholders' equity                                        $         520,556,273   $         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>

                                                                           Three months ended
                                                                                 March 31,
                                                           -----------------------------------------------
                                                                   1997                      1996
                                                           -----------------------------------------------
<S>                                                      <C>                        <C>   

INTEREST INCOME:
  Interest and fees on loans                             $             8,265,305    $           6,966,701
  Interest on investment securities:
    Taxable                                                            1,543,330                1,217,189
    Non-taxable                                                           65,390                   51,390
  Other interest income                                                   38,601                  169,249
                                                           -----------------------------------------------
                Total interest income                                  9,912,626                8,404,529
                                                           -----------------------------------------------

INTEREST EXPENSE:
  Interest on deposits                                                 3,924,013                3,437,819
  Interest on short-term borrowings                                       58,676                   25,054
  Interest on long-term borrowings                                       274,784                  266,747
  Interest on subordinated notes                                         230,324                  109,353
                                                           -----------------------------------------------                
                Total interest expense                                 4,487,797                3,838,973
                                                           -----------------------------------------------

Net interest income                                                    5,424,829                4,565,556
Provision for loan losses                                                200,000                  160,000
                                                           -----------------------------------------------

Net interest income after provision
  for loan losses                                                      5,224,829                4,405,556
                                                           -----------------------------------------------

NONINTEREST INCOME:
  Service charges on deposit accounts                                    480,434                  447,367
  Commissions and fees                                                   266,588                  172,288
  Trust income                                                            53,861                   57,313
  Gains on sales of mortgage loans                                        76,700                   60,087
  Other operating income                                                 171,151                   43,575
                                                           -----------------------------------------------
                Total noninterest income                               1,048,734                  780,630
                                                           -----------------------------------------------

NONINTEREST EXPENSE:
  Salaries and employee benefits                                       2,301,851                1,975,859
  Net occupancy expense                                                  321,534                  315,417
  Equipment expense                                                      322,076                  288,578
  Other operating expense                                              1,234,534                1,150,829
                                                           -----------------------------------------------
                Total noninterest expense                              4,179,995                3,730,683
                                                           -----------------------------------------------

Income before income taxes                                             2,093,568                1,455,503
Provision for income taxes                                               758,909                  523,611
                                                           -----------------------------------------------

Net income                                               $             1,334,659    $             931,892
                                                           ===============================================


Net income per share                                     $                  0.50    $                0.36
Weighted average common shares outstanding                             2,684,868                2,605,565
</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>

                                                                                                  Three months ended March 31,
                                                                                             ---------------------------------------
                                                                                                     1997                1996
                                                                                             ---------------------------------------
<S>                                                                                        <C>                      <C>
Cash flows from operating activities:
  Net income                                                                               $            1,334,659   $       931,892
  Adjustments to reconcile net income to net cash provided
  by operating activities:
    Accretion and amortization of investment securities                                                   (15,566)          (12,037)
    Depreciation of premises and equipment                                                                305,122           287,273
    Amortization of intangible assets                                                                     100,891            99,500
    Provision for loan losses                                                                             200,000           160,000
    Gains on sales of mortgage loans                                                                      (76,700)          (60,087)
    Gains on sales of premises and equipment                                                              (13,873)            4,078
    Change in interest receivable                                                                        (673,481)       (1,005,494)
    Change in prepaid expenses                                                                             25,801            13,882
    Change in income taxes payable                                                                        771,739           546,815
    Change in deferred taxes                                                                             (253,765)         (198,303)
    Change in interest payable                                                                            524,953           293,691
    Change in accrued expenses                                                                            (65,429)          (43,962)
    Origination of mortgage loans held for sale                                                        (2,305,094)       (3,095,850)
    Proceeds from sales of mortgage loans held for sale                                                 3,248,144         3,243,587
    Net change in unearned ESOP shares                                                                     63,573            39,500
                                                                                             ---------------------------------------
Net cash provided by operating activities                                                               3,170,974         1,204,485
                                                                                             ---------------------------------------

Cash flows from investing activities:
  Purchase of investment securities held-to-maturity                                                            0        (2,053,594)
  Proceeds from maturities of investment securities held-to maturity                                    3,526,948         7,694,851
  Purchase of investment securities available-for-sale                                                (17,378,466)      (19,852,882)
  Proceeds from sales of investment securities available-for-sale                                         984,600                 0
  Proceeds from maturities of investment securities available-for-sale                                  5,384,724         2,400,000
  Net change in loans                                                                                 (21,496,213)      (16,487,678)
  Capital expenditures                                                                                   (349,029)         (841,371)
  Proceeds from sale of premises and equipment                                                             15,200            56,590
  Other, net                                                                                              385,034        (1,467,187)
                                                                                             ---------------------------------------
Net cash used for investing activities                                                               (28,927,202)       (30,551,271)
                                                                                             ---------------------------------------

Cash flows from financing activities:
  Net change in deposits                                                                               29,133,969        38,100,537
  Net change in federal funds purchased and securities sold under agreements to repurchase             (4,441,765)       (1,172,445)
  Net change in other short-term borrowings                                                               381,069         1,136,159
  Proceeds from issuance of long-term debt                                                                      0         3,000,000
  Proceeds from issuance of stock in accordance with Stock Option Plan                                          0            62,010
  Cash dividends paid                                                                                    (358,307)         (267,865)
                                                                                             ---------------------------------------
Net cash provided by financing activities                                                              24,714,966        40,858,396
                                                                                             ---------------------------------------

Net change in cash and cash equivalents                                                                (1,041,262)       11,511,610
Cash and cash equivalents at January 1                                                                 25,663,652        20,615,188
                                                                                             ---------------------------------------
Cash and cash equivalents at March 31                                                       $          24,622,390   $    32,126,798
                                                                                             =======================================

</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 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 month period ended March
                31,  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.

  NOTE 2:       RESERVE FOR LOAN LOSSES

                Activity in the  reserve  for loan  losses for the three  months
                ended March 31, 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               200,000             160,000
                Recoveries of charged off loans                61,781               6,558
                Loans charged off                             (26,449)            (17,973)
                                                         -------------       -------------
                                                           $4,036,533          $3,194,241 
                                                         =============       =============
</TABLE>


NOTE 3:         NONPERFORMING ASSETS

                The following is a summary of nonperforming  assets at March 31,
                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.

                                       4

<PAGE>


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


<TABLE>
<CAPTION>

                                                              1997           1996
                                                           ---------       --------
               <S>                                         <C>             <C> 
               Nonaccrual loans                            $  78,890       $332,262
               Loans past due ninety days or more             48,449          7,841
                                                           ---------       --------
               Total nonperforming assets                  $ 127,339       $340,103
                                                           =========       ========
 
</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>

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

               Tax depreciation over book              ($  587,897)         ($  530,404)
               Net unrealized gain SFAS 115                (46,168)             (18,894)
               Other, net                                 (247,684)            (177,531)
                                                       ------------         -------------
               Total deferred tax liabilities             (881,749)            (726,829)
                                                       ------------         -------------

               Deferred tax assets:

               Allowance for loan losses                 1,061,908              779,463
               Deferred loan fees and costs                185,243              231,425
               Deferred compensation                       205,391              173,102
               Other, net                                  183,203              132,314
                                                      -------------         ------------
               Total deferred tax assets                 1,635,745            1,316,304
                                                      -------------         ------------

               Net deferred tax asset                 $    753,996          $   589,475
                                                      -------------         ------------

</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 March 31 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
               7.21% Federal Home Loan Bank advance due
                 in 2005                                              5,000,000       5,000,000
                                                                    -----------     -----------
                    Total                                            18,000,000      18,000,000
                                                                    -----------     -----------
               Total long-term debt and subordinated notes          $29,000,000     $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  March  31,  1997  is
               $5,000,000 in 1998,  $3,000,000 in 1999,  $5,000,000 in 2000, 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>


NOTE 7:        IMPAIRED LOANS

               Adoption of SFAS Nos. 114 and 118 as of January 1, 1996  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 March 31, all of which are held by the bank
               subsidiaries, are summarized in Note 3.

               At  March  31,  1997,  impaired  loans  had  a  related  specific
               allowance for loan losses totaling $8,000. There were no material
               commitments  to lend  additional  funds to customers  whose loans
               were classified as impaired at March 31, 1997.


NOTE 8:  OTHER MATTERS

               At March 31, 1997,  outstanding standby letters of credit totaled
               $1,920,770.

               For  the  three  months  ended  March  31,  1997  and  1996,  the
               Corporation   paid   interest  of   $3,962,844   and   $3,545,281
               respectively. The Corporation paid income taxes of $15,000 during
               the three months ended March 31, 1997 and $37,500 during the same
               period in 1996.


                                       7


<PAGE>


                      Management's Discussion and Analysis


Net Income

      Net income for the first  quarter of 1997 was  $1,334,659  an  increase of
$402,767 or 43.2% from the $931,892 for the same period in 1996.  Net income per
share for the first quarter increased 39.0% from $0.36 in 1996 to $0.50 in 1997.

      The primary  factors  affecting this increase were an increase of $859,273
in net interest income and an increase in noninterest income of $268,104.  These
positive  factors were partially  offset by increases in noninterest  expense of
$449,312, the provision for income taxes of $235,298, and the provision for loan
losses of $40,000.

      Annualized  return on average  total assets for the first  quarter of 1997
was  1.08%   compared  with  0.88%  in  1996.   Annualized   return  on  average
stockholders'  equity for the first  quarter of 1997 was  16.08%  compared  with
12.67% in 1996.

Net Interest Income

      Net interest income,  the major component of the Corporation's net income,
was  $5,424,829  for the first quarter of 1997, an increase of $859,273 or 18.8%
from the  $4,565,556  reported  for the same period in 1996.  This  increase was
primarily attributed to the increased volume of earning assets during the period
and an increase in the tax  equivalent net yield on earning assets from 4.72% in
1996 to 4.80% in 1997. The increased  volume of earning assets was primarily the
result of quality loan demand during the period.

      Interest income  increased  $1,508,097 or 17.9% for the three months ended
March 31, 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 8.67% in 1996 to 8.75% in 1997.  Average loans  increased  $59.0
million or 20.0% and average  investment  securities  increased $19.8 million or
23.6% for the  first  quarter  of 1997  compared  with the same  period in 1996.
Average interest-earning assets represented 91.7% of average total assets during
the first  quarter of 1997  compared  with  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 75.3% in 1996 to 76.8%
in 1997.

      Interest  expense  increased  $648,824 or 16.9% for the three months ended
March 31, 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 4.63% for the three months ended March 31, 1996 to 4.66% for the
same  period  in 1997.  Average  interest-bearing  liabilities  increased  $57.1
million or 17.1% for the first  quarter of 1997 compared with the same period in
1996. Average interest-bearing  liabilities represented 84.9% of funding sources
during the first quarter of 1997 compared with 85.3% in 1996.


Provision for Loan Losses

      A $200,000  provision for loan losses was made during the first quarter of
1997  compared  with a provision  of $160,000 in 1996.  The  provision  for loan
losses  increased  during the first quarter of 1997 primarily due to loan growth
since credit quality measures remain favorable.

                                       8
<PAGE>


      At  March  31,  1997 and 1996 the  ratio  of  annualized  net  charge-offs
(recoveries) to average loans was (0.04%) and 0.02%, respectively.  The ratio of
nonperforming  assets to total  loans and other real  estate  owned was 0.03% at
March 31, 1997 compared with 0.11% at March 31, 1996.

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

Noninterest Income

      Noninterest  income for the first  quarter of 1997  increased  $268,104 or
34.3% from the same period in 1996.  The  primary  factors  attributing  to this
increase  were  increases in service  charges on deposit  accounts of $33,067 or
7.4%,  commissions  and fees of $94,300  or 54.7%,  mortgage  banking  income of
$16,613 or 27.7%,  and other  operating  income of  $127,576  or  292.8%.  These
positive changes were offset by a slight decrease in trust income.

      The  increase  in  service  charges  on  deposit  accounts  was due to the
significant  growth  in  deposits  and  competitive   prices.  The  increase  in
commissions  and fees resulted  primarily  from increased  revenue  generated by
credit card merchant  services and ATM terminal  fees.  Mortgage  banking income
(which includes normal  servicing fees and profits from the origination and sale
of loans)  increased  due to the  Corporation  concentrating  more  resources on
growing its mortgage loan portfolio.  The increase in other operating income was
generated by normal banking and bank-related activities.


Noninterest Expense

      Noninterest  expense for the first quarter of 1997  increased  $449,312 or
12.0 % from the same period in 1996.  This  increase was the result of increases
in salaries and employee benefits,  net occupancy expense, and equipment expense
caused by the Corporation's continued strong growth.

      Salaries and employee  benefits  for the first  quarter of 1997  increased
$325,992 or 16.5% 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.

      Equipment  expense  increased  $33,498 or 11.6% and net occupancy  expense
increased  slightly for the first  quarter of 1997 compared with the same period
in 1996.  These increases were primarily due to the addition of a second banking
location in Wilmington,  North Carolina.  Other operating  expense for the three
months ended March 31, 1997  increased  $83,705 or 7.3%  compared  with the same
period in 1996.


Income Taxes

      The  provision  for income taxes for the first  quarter of 1997  increased
$235,298 or 44.9% from the same period in 1996.  The  provision for income taxes
increased in 1997  primarily due to higher income before taxes because tax rates
remained approximately the same as 1996.


                                       9

<PAGE>


Financial Position

      For the first quarter of 1997,  average total assets increased 17.5% while
average deposits increased 16.1% from the first quarter of 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 $18,000,000 at March 31, 1997
and 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 three months of 1997 being 6.7% versus 6.9% for the same period in
1996. At March 31, 1997, the total  risk-based  capital ratio was 12.7% compared
with 13.3% at December 31, 1996.  The leverage  ratio at March 31, 1997 was 6.6%
compared with 6.8% at December 31, 1996.


                                       10

<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

          On April 24,  1997,  the  Corporation  held its 1997 Annual  Meeting
          of Shareholders.  At the 1997 Annual Meeting, the following  
          individuals were elected as Directors with the votes indicated.
<TABLE>
<CAPTION>

          Director                                            For             Withheld           Abstain
          <S>                                              <C>                 <C>               <C>
          Howell V. Bellamy, Jr.                           1,748,027                0            15,585
          W. Cecil Brandon, Jr.                            1,745,310            2,717            15,585
          C. Donald Cameron                                1,747,581              446            15,585
          J. Roddy Swaim                                   1,746,005            2,022            15,585
          Harry A. Thomas                                  1,737,320           10,707            15,585

</TABLE>

          C. Jason Ammons, Jr., James E. Burroughs,  Stephen L. Chryst, J. Bryan
          Floyd, Admah Lanier,  Jr., Tommy E. Looper, W. Gairy Nichols, III, 
          Ruppert L. Piver, Albert A. Springs, III, and Zeb M. Thomas, Sr. 
          continued in their terms of office as directors of the Corporation.

          The  following is a brief  description  of other matters voted upon at
          the 1997 Annual Meeting and the number of votes cast for and withheld,
          as well as, the number of abstentions.

          Proposal to ratify the selection of Price  Waterhouse  LLP as 
          independent public accountants for the Corporation for the year ending
          December 31, 1997.

          For - 1,744,872           Withheld - 1,690           Abstain - 17,050

ITEM 5.  OTHER INFORMATION

         None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a) 27 Financial Data Schedule (for SEC purposes only)

         (b) No reports on Form 8-K have been filed during the quarter ended
             March 31, 1997.

                                       11
<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:  April 30, 1997

                                       12

<PAGE>