FORM 10-Q



                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D. C. 20549



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


For the quarter ended June 30, 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 August 8, 1997
-------------------------------                    -----------------------------
(Common stock, $6.00 par value)                               2,560,673


<PAGE>





                  ANCHOR FINANCIAL CORPORATION AND SUBSIDIARIES



                                     INDEX



                                                                   PAGE NO.


Part I - Financial Information

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

         Consolidated Statement of Income - Three Months
         and Six months ended June 30, 1997 and 1996                   2

         Consolidated Statement of Cash Flows -
         Six months ended June 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>


                                                                                           June 30,                 December 31,
                                                                                             1997                       1996       
                                                                                       ---------------------------------------------
                                                                                          (Unaudited)                    <F1>

<S>                                                                                 <C>                        <C>
ASSETS                                                                              
  Cash and due from banks                                                           $         27,202,308       $         25,346,998
  Interest-bearing balances due from banks                                                       105,556                    316,654
  Investment securities:
    Held-to-maturity, at amortized cost (fair value of $12,980,782
      in 1997 and $18,225,853 in 1996)                                                        12,983,341                 18,187,108
    Available-for-sale, at fair value (amortized cost of $98,178,516
      in 1997 and  $81,272,830 in 1996)                                                       98,984,006                 82,044,037
                                                                                       ---------------------------------------------
  Total investment securities                                                                111,967,347                100,231,145
                                                                                       ---------------------------------------------

  Loans                                                                                      383,046,799                345,429,534
    Less - unearned income                                                                       (22,166)                   (24,367)
         - allowance for loan losses                                                          (4,189,363)                (3,801,201)
                                                                                       ---------------------------------------------
  Net loans                                                                                  378,835,270                341,603,966
                                                                                       ---------------------------------------------

  Premises and equipment                                                                      16,207,682                 16,121,015
  Other assets                                                                                10,488,934                  9,884,514
                                                                                       ---------------------------------------------

Total assets                                                                        $        544,807,097       $        493,504,292
                                                                                       =============================================


LIABILITIES AND STOCKHOLDERS' EQUITY
  Liabilities:
    Deposits:
      Demand deposits                                                               $         90,884,833       $         79,958,880
      NOW and money market accounts                                                          241,404,602                199,879,530
      Time deposits $100,000 and over                                                         47,934,864                 45,099,776
      Other time and savings deposits                                                         86,435,231                 95,273,664
                                                                                       ---------------------------------------------
    Total deposits                                                                           466,659,530                420,211,850
    Federal funds purchased and securities
      sold under agreements to repurchase                                                      7,924,911                  6,337,197
    Other short-term borrowings                                                                2,127,543                  1,847,779
    Long-term debt                                                                            18,000,000                 18,000,000
    Subordinated notes                                                                        11,000,000                 11,000,000
    Other liabilities                                                                          3,929,861                  3,132,061
                                                                                       ---------------------------------------------
  Total liabilities                                                                          509,641,845                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                                                                                    1,124,708                  1,070,326
    Retained earnings                                                                         18,830,734                 16,684,988
    Unrealized gains on investment securities
      available-for-sale, net of tax                                                             510,645                    497,301
    Unearned ESOP shares                                                                        (656,875)                  (633,250)
                                                                                       ---------------------------------------------
 Total stockholders' equity                                                                   35,165,252                 32,975,405
                                                                                       ---------------------------------------------

Total liabilities and stockholders' equity                                          $        544,807,097       $        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>


                                                               Six months ended                          Three months ended
                                                                   June 30,                                   June 30,
                                                     --------------------------------------     ------------------------------------
                                                           1997                 1996                 1997                1996
                                                     --------------------------------------     ------------------------------------
<S>                                                <C>                  <C>                   <C>                 <C>    

INTEREST INCOME:
  Interest and fees on loans                       $       17,182,068   $       14,272,992    $       8,916,763   $       7,306,291
  Interest on investment securities:                                                                        
    Taxable                                                 3,164,637            2,702,373            1,621,307           1,485,184
    Non-taxable                                               129,780              101,523               64,390              50,133
  Other interest income                                        96,646              226,211               58,045              56,962
                                                     --------------------------------------     ------------------------------------
                Total interest income                      20,573,131           17,303,099           10,660,505           8,898,570
                                                     --------------------------------------     ------------------------------------

INTEREST EXPENSE:
  Interest on deposits                                      8,171,795            7,022,488            4,247,782           3,584,669
  Interest on short-term borrowings                           113,647               71,605               54,971              46,551
  Interest on long-term borrowings                            552,620              543,824              277,836             277,077
  Interest on subordinated notes                              462,865              218,706              232,541             109,353
                                                     --------------------------------------     ------------------------------------
                                                                          
                Total interest expense                      9,300,927            7,856,623            4,813,130           4,017,650
                                                     --------------------------------------     ------------------------------------

Net interest income                                        11,272,204            9,446,476            5,847,375           4,880,920
Provision for loan losses                                     440,000              390,000              240,000             230,000
                                                     --------------------------------------     ------------------------------------

Net interest income after provision
  for loan losses                                          10,832,204            9,056,476            5,607,375           4,650,920
                                                     --------------------------------------     ------------------------------------

NONINTEREST INCOME:
  Service charges on deposit accounts                         967,811              964,196              487,377             516,829
  Commissions and fees                                        602,717              405,817              336,129             233,529
  Trust income                                                145,348              126,445               91,487              69,132
  Gains on sales of mortgage loans                            119,072               98,220               42,372              38,133
  Gains (losses) on sales of investment securities, net             0              (10,663)                   0             (10,663)
  Other operating income                                      268,035              213,625               96,884             170,050
                                                     --------------------------------------     ------------------------------------
                Total noninterest income                    2,102,983            1,797,640            1,054,249           1,017,010
                                                     --------------------------------------     ------------------------------------

NONINTEREST EXPENSE:
  Salaries and employee benefits                            4,675,955            4,032,972            2,374,104           2,057,113
  Net occupancy expense                                       652,524              639,687              330,990             324,270
  Equipment expense                                           649,088              639,112              327,012             350,534
  Other operating expense                                   2,544,915            2,325,497            1,310,381           1,174,668
                                                     --------------------------------------     ------------------------------------
                Total noninterest expense                   8,522,482            7,637,268            4,342,487           3,906,585
                                                     --------------------------------------     ------------------------------------

Income before income taxes                                  4,412,705            3,216,848            2,319,137           1,761,345
Provision for income taxes                                  1,563,589            1,102,650              804,680             579,039
                                                     --------------------------------------     ------------------------------------

Net income                                         $        2,849,116   $        2,114,198    $       1,514,457   $       1,182,306
                                                     ======================================     ====================================


Net income per share                               $             1.06   $             0.81    $            0.56   $            0.45
Weighted average common shares outstanding                  2,683,629            2,607,391            2,684,868           2,609,180
</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>

                                                                                                   Six months ended June 30,
                                                                                            ----------------------------------------
                                                                                                  1997                 1996
                                                                                            ----------------------------------------
<S>                                                                                       <C>                 <C>

Cash flows from operating activities:
  Net income                                                                              $        2,849,116  $          $2,114,198
  Adjustments to reconcile net income to net cash provided by operating activities:
    Accretion and amortization of investment securities                                              (27,382)               (15,399)
    Depreciation of premises and equipment                                                           621,706                635,667
    Amortization of intangible assets                                                                205,437                198,580
    Provision for loan losses                                                                        440,000                390,000
    Losses on sales of investment securities                                                               0                 10,663
    Gains on sales of mortgage loans                                                                (119,072)               (98,220)
    Losses (gains) on sales of premises and equipment                                                (13,873)                 3,833
    Change in interest receivable                                                                   (833,289)            (1,412,845)
    Change in prepaid expenses                                                                        94,081                 65,675
    Change in income taxes payable                                                                   163,352                 16,380
    Change in deferred taxes                                                                         (35,164)              (502,004)
    Change in interest payable                                                                       285,362                (11,192)
    Change in accrued expenses                                                                        45,032                 54,122
    Origination of mortgage loans held for sale                                                   (5,216,644)            (6,189,750)
    Proceeds from sales of mortgage loans held for sale                                            5,712,000              6,210,420
    Net change in unearned ESOP shares                                                                44,000                 80,500
                                                                                            ----------------------------------------
Net cash provided by operating activities                                                          4,214,662              1,550,628
                                                                                            ----------------------------------------

Cash flows from investing activities:
  Purchase of investment securities held-to-maturity                                                       0             (2,053,593)
  Proceeds from maturities of investment securities held-to maturity                               5,197,828             11,420,442
  Purchase of investment securities available-for-sale                                           (26,976,320)           (43,386,672)
  Proceeds from sales of investment securities available-for-sale                                    984,600              5,513,594
  Proceeds from maturities of investment securities available-for-sale                             9,119,355              4,900,000
  Net change in loans                                                                            (38,047,588)           (35,700,880)
  Capital expenditures                                                                              (709,700)            (1,154,590)
  Proceeds from sale of premises and equipment                                                        15,200                 41,542
  Other, net                                                                                         247,630               (909,462)
                                                                                            ----------------------------------------
Net cash used for investing activities                                                           (50,168,995)           (61,329,619)
                                                                                            ----------------------------------------

Cash flows from financing activities:
  Net change in deposits                                                                          46,447,681             49,064,372
  Net change in federal funds purchased and securities sold under agreements to repurchase         1,587,714              7,720,146
  Net change in other short-term borrowings                                                          279,764              1,246,710
  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                                                                               (716,614)              (535,708)
                                                                                            ----------------------------------------
Net cash provided by financing activities                                                         47,598,545             60,557,530
                                                                                            ----------------------------------------

Net change in cash and cash equivalents                                                            1,644,212                778,539
Cash and cash equivalents at January 1                                                            25,663,652             20,615,188
                                                                                            ----------------------------------------
Cash and cash equivalents at June 30                                                      $       27,307,864  $          21,393,727
                                                                                            ========================================

</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 and six month  periods
                ended  June  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.


  NOTE 2:       RESERVE FOR LOAN LOSSES

                Activity in the reserve for loan losses for the six months ended
                June 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                             440,000             390,000
                Recoveries of charged off loans                              85,996             221,014
                Loans charged off                                          (137,834)           (214,296)
                                                                       -------------        ------------
                                                                         $4,189,363          $3,442,374
                                                                       =============        ============
</TABLE>

NOTE 3:         NONPERFORMING ASSETS

                The following is a summary of  nonperforming  assets at June 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.

                                       4


<PAGE>


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


<TABLE>
<CAPTION>

                                                                            1997                   1996
                                                                       ------------            ------------
               <S>                                                     <C>                     <C>
 
               Nonaccrual loans                                        $  362,011              $   156,862
               Loans past due ninety days or more                               0                   65,044
               Other real estate owned                                     16,559                        0
                                                                       ------------            ------------
               Total nonperforming assets                              $  378,570              $   221,906
                                                                       ============            ============
</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                                ($585,095)               ($531,597)
               Net unrealized gain SFAS 115                               (295,897)                       0
               Other, net                                                 (308,931)                (192,467)
                                                                       ------------              -----------
               Total deferred tax liabilities                           (1,189,923)                (724,064)
                                                                       ------------              -----------

               Deferred tax assets:

               Allowance for loan losses                                 1,114,817                  863,242
               Deferred loan fees and costs                                172,893                  218,092
               Deferred compensation                                       207,221                  196,084
               Net unrealized loss SFAS 115                                      0                  161,174
               Other, net                                                  214,318                  175,117
                                                                       ------------              -----------
               Total deferred tax assets                                 1,709,249                1,613,709
                                                                       ------------              -----------

               Net deferred tax asset                                  $   519,326               $  889,645
                                                                       ------------              -----------


</TABLE>
                                       5


<PAGE>


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



NOTE 5: LONG-TERM DEBT

               Long-term debt at September 30 is 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
                                                                                -------------       -------------
                                                                                  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 long-term debt                                              $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 for the next five years
               subsequent to June 30, 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, 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 June 30, all of which are held by the bank
               subsidiary, are summarized in Note 3.

               At June 30, 1997, impaired loans had a related specific allowance
               for  loan  losses  totaling  $36,000.   There  were  no  material
               commitments  to lend  additional  funds to customers  whose loans
               were classified as impaired at June 30, 1997.


NOTE 8: OTHER MATTERS

               At June 30, 1997,  outstanding  standby letters of credit totaled
               $1,712,181.

               For the six months ended June 30, 1997 and 1996, the  Corporation
               paid  interest of $9,015,565  and  $7,867,814  respectively.  The
               Corporation paid income taxes of $1,426,027 during the six months
               ended June 30,  1997 and  $1,279,971  during  the same  period in
               1996.


                                       7


<PAGE>


                      Management's Discussion and Analysis


Net Income

      Net income for the second  quarter of 1997 was  $1,514,457  an increase of
$332,151 or 28.1% from the  $1,182,306  for the same period in 1996.  Net income
per share for the second quarter  increased 24.6% from $0.45 in 1996 to $0.56 in
1997.

      The primary  factors  affecting this increase were an increase of $966,455
in net interest income and an increase in noninterest  income of $37,239.  These
positive  factors were partially  offset by increases in noninterest  expense of
$435,902, the provision for income taxes of $225,641, and the provision for loan
losses of $10,000.

      Net income  for the six months  ended  June 30,  1997 was  $2,849,116,  an
increase of $734,918 or 34.8% from the  $2,114,198  for the same period in 1996.
Net income per share for this period increased 30.9% from $0.81 in 1996 to $1.06
in 1997.

      The primary factors affecting this increase were an increase of $1,825,728
in net interest income and an increase in noninterest income of $305,343.  These
positive  factors were partially  offset by increases in noninterest  expense of
$885,214, the provision for income taxes of $460,939, and the provision for loan
losses of $50,000.

      Annualized  return on average total assets for the second  quarter of 1997
was 1.15%  compared with 1.04% in 1996.  For the six months ended June 30, 1997,
annualized return on average total assets was 1.11% compared with 0.96% in 1996.
Annualized return on average stockholders' equity for the second quarter of 1997
was 17.49% compared with 15.69% in 1996. For the six months ended June 30, 1997,
annualized  return on average  stockholders'  equity was  16.80%  compared  with
14.20% for the same period in 1996.

Net Interest Income

      Net interest income,  the major component of the Corporation's net income,
was  $5,847,375 for the second quarter of 1997, an increase of $966,455 or 19.8%
from the  $4,880,920  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 4.70% in 1996 to
4.86% 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  $1,761,935 or 19.8% for the three months ended
June 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 8.74% in 1996 to 8.83% in 1997.  Average loans  increased  $60.5
million or 19.3% and average  investment  securities  increased  $5.8 million or
5.6% for the  second  quarter  of 1997  compared  with the same  period in 1996.
Average interest earning assets represented 91.6% of average total assets during
the second  quarter of 1997  compared  with 91.4% in 1996.  The  composition  of
average  interest-earning  assets changed  slightly as the percentage of average
loans to average  interest-earning  assets increased from 74.6% in 1996 to 76.9%
in 1997.

                                       8
<PAGE>


      Interest  expense  increased  $795,480 or 19.8% for the three months ended
June 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 4.56% for the three  months ended June 30, 1996 to 4.74% for the
same  period  in 1997.  Average  interest-bearing  liabilities  increased  $52.3
million or 14.8% for the second quarter of 1997 compared with the same period in
1996. Average interest-bearing  liabilities represented 83.8% of funding sources
during the second quarter of 1997 compared with 84.5% in 1996.

      For the six months ended June 30,  1997,  net  interest  income  increased
$1,825,728 or 19.3% 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 4.71% for the first
six 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  $3,270,032  or 18.9% for the six months ended
June 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 8.60% in 1996 to 8.79% in 1997.  Average
loans  increased  $59.8  million  or 19.7%  and  average  investment  securities
increased $12.8 million or 13.8% for the six months ended June 30, 1997 compared
with the same period in 1996. Average  interest-earning assets represented 91.6%
of average  total assets  during the six months ended June 30, 1997 versus 91.4%
in 1996. The composition of average  interest-earning assets changed slightly as
the  percentage of average loans to average  interest-earning  assets  increased
from 74.9% in 1996 to 76.9% in 1997.

      Interest  expense  increased  $1,444,304 or 18.4% for the six months ended
June 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 $54.7 million or 15.9% for the six months
ended June 30,  1997  compared  with the same  period in 1996.  The rate paid on
average  interest-bearing  liabilities  increased  from 4.59% for the six months
ended  June 30,  1996 to 4.70% in  1997.  Average  interest-bearing  liabilities
represented  84.3% of funding  sources during the six months ended June 30, 1997
compared with 84.9% in 1996.

Provision for Loan Losses

      A $240,000 provision for loan losses was made during the second quarter of
1997  compared  with a provision  of $230,000 in 1996.  The  provision  for loan
losses  increased during the second quarter of 1997 primarily due to loan growth
and a slight increase in the level of net charge-offs and  nonperforming  loans.
The  provision  for loan  losses  for the six  months  ended  June 30,  1997 was
$440,000  versus  $390,000  for the same  period in 1996.  The  increase  in the
provision  for loan losses for the six months ended June 30, 1997 was  primarily
due to loan  growth and a slight  increase in the level of net  charge-offs  and
nonperforming loans.

      At June  30,  1997  and  1996 the  ratio  of  annualized  net  charge-offs
(recoveries) to average loans was 0.03% and (0.004%), respectively. The ratio of
nonperforming  assets to total  loans and other real  estate  owned was 0.10% at
June 30, 1997 compared with 0.07% at June 30, 1996.

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<PAGE>


      The  reserve  for loan  losses  at June 30,  1997 and  December  31,  1996
represented 1.09% and 1.10%  respectively of total loans  outstanding.  Based on
the current evaluation of the loan portfolio, management believes the reserve at
June 30, 1997 is adequate to cover potential losses in the portfolio.

Noninterest Income

      Noninterest  income for the second  quarter of 1997  increased  $37,239 or
3.7% from the same  period in 1996.  The  primary  factors  attributing  to this
increase  were  increases in  commissions  and fees of $102,600 or 43.9%,  trust
income of  $22,355 or 32.3%,  and  mortgage  banking  income of $4,239 or 11.1%.
These positive  changes were offset by a decrease in other  operating  income of
$73,166 or 43.0%, and 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
decrease  in other  operating  income was due to  non-recurring  life  insurance
proceeds  received from  deferred  compensation  plans of previous  directors of
$100,957 during the second quarter of 1996.

      Noninterest  income  for the six  months  ended  June 30,  1997  increased
$305,343 or 17.0% from the same period in 1996. The primary factors  attributing
to this increase were  increases in  commissions  and fees of $196,900 or 48.5%,
other operating income of $54,410 or 25.5%, mortgage banking income of 20,852 or
21.2%,  trust  income of  $18,903  or 15.0%,  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
portfolio.

Noninterest Expense

      Noninterest  expense for the second quarter of 1997 increased  $435,902 or
11.2% 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  expense  caused  by  the
Corporation's  continued strong growth.  These increases were offset by a slight
decrease in equipment expense.

      Salaries and employee  benefits for the second  quarter of 1997  increased
$316,991 or 15.4% from the same period in 1996.  This increase was primarily due
to investments  in new personnel to further  develop the  infrastructure  of the
Corporation.  Other operating expense increased  $135,713 or 11.6% from the same
period in 1996.

      For the six months  ended June 30,  1997,  noninterest  expense  increased
$885,214 or 11.6% from the same period in 1996. The primary  factor  attributing
to this increase was an increase in salaries and employee benefits.

                                       10
<PAGE>


      Salaries  and  employee  benefits  for the six months  ended June 30, 1997
increased  $642,983 or 15.9% from the same period in 1996 due to  investments in
new personnel to further  develop the  infrastructure  of the  Corporation.  Net
occupancy  expense and equipment expense  experienced  slight increases from the
first six months of 1996. Other operating  expense for the six months ended June
30, 1997  increased  $219,418 or 9.4% compared with the same period in 1996. The
increase  in  other  operating  expense  was  primarily  due to an  increase  in
marketing related expenses.

Income Taxes

      The  provision for income taxes for the second  quarter of 1997  increased
$225,641  or 39.0% from the same period in 1996.  For the six months  ended June
30,  1997,  the  provision  increased  $460,939 or 41.8% 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 second quarter of 1997, average total assets increased 15.5% while
average loans  increased  19.3% and average  deposits  increased  14.6% from the
second  quarter of 1996.  For the six months ended June 30, 1997,  average total
assets  increased 16.4% while average loans increased 19.7% and average deposits
increased 15.3% 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  $18,000,000 at June 30, 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 six months of 1997 being 6.6%  versus  6.8% for the same period in
1996. At June 30, 1997,  the total  risk-based  capital ratio was 12.6% compared
with 12.2% at December  31, 1996.  The leverage  ratio at June 30, 1997 was 6.5%
compared with 6.8% at December 31, 1996.

Other Events

      On June 23, 1997, the Meeting Street Branch of The Anchor Bank, located at
134 Meeting Street, Charleston, South Carolina, opened for business.  Initially,
the Meeting Street Branch will function as a loan  production  facility and will
occasionally  open deposit accounts and receive  deposits to existing  accounts.
The Meeting  Street  Branch is The Anchor  Bank's  nineteenth  branch  along the
Carolina coast.

                                       11
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                           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) No reports on Form 8-K have been filed  during the quarter ended June
          30, 1997.

                                       12
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                                   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 :  August 8, 1997


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