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                                  EXHIBIT 10.31


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                         CAROLINA FIRST BANCSHARES, INC.
                      DEFERRED COMPENSATION AGREEMENT WITH
                               JAMES E. BURT, III

         THIS PLAN AND AGREEMENT, dated as of the 31st day of December 1996, by
and between Carolina First BancShares, Inc., a North Carolina corporation
(hereinafter referred to as the "Company"), and JAMES E. BURT, III (hereinafter
referred to as the "Executive"):

                              W I T N E S S E T H :

         WHEREAS, the Company believes it is in the best interest of the Company
and the Executive to establish a plan for the purpose of providing certain
benefits for the Executive pursuant to his Employment Agreement:

         NOW, THEREFORE, it is mutually agreed as follows:

                                    ARTICLE I
                                   EMPLOYMENT

         The Company has employed the Executive as provided in the Employment
Agreement with the Executive, to which this is an exhibit.

                                   ARTICLE II
                                    BENEFITS

         The Company is obligated to provide benefits to the Executive as
follows:

         A. Except as expressly provided herein, no benefit shall be paid
hereunder, except to the extent then vested, upon the discharge of the Executive
by the Company for cause. The definition of "cause" shall be the same as "Cause"
in the Executive's Employment Agreement.

         B. Upon retirement from the Company, the Executive shall receive the
monthly amount then vested for 120 consecutive months beginning on the first
business day of the calendar month next succeeding the Executive's retirement
date. In the event the Executive dies after such monthly payments begin but
prior to receiving all 120 monthly payments, then his beneficiary(s) shall be
entitled to receive all remaining payments.

         C. If the Executive shall die before his retirement while in the employ
of the Company, the Company will make monthly payments of $4,166.67 for 120
months to the beneficiary(s) of the Executive beginning in the month of the
Executive's death.

         D. Upon permanent disability before retirement at age 65, the Executive
shall receive no benefits under this Deferred Compensation Plan until the
earlier of (i) age 65 or (ii) such time as his disability benefits cease, at
which time the Company shall pay the Executive, and after death, his
beneficiaries, monthly payments of $4,166.67 per month for 120 months beginning
in the month of the Executive's death. If the Executive shall die after becoming
permanently disabled but before the age of 65, then the monthly payments shall
begin at death and shall be made to his beneficiary(s) in the amount of
$4,166.67 per month for 120 months. "Permanent disability" shall have the
meaning given it in the Executive's Employment Agreement and shall be determined
accordingly.

         E. Should the Executive leave the employ of the Company for any reason
within twelve (12) months after a "Change of Control" (as defined in his
Employment Agreement) then the Company or its successor shall, upon Executive's
request within 30 days of such separation of employment, transfer to the
Executive the ownership of the Insurance policy, if any, that funds this
Deferred Compensation


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Agreement in lieu of all future monthly payments, but if such transfer is not
requested by the Executive prior to the payment of benefits hereunder, then the
Company shall pay such benefits when due.

         F. Should the Executive leave the employment of the Company for any
other reason prior to retirement, then no benefits shall be paid under this
plan, except and to the extent such benefits are vested.

         G. Notwithstanding anything to the contrary contained herein or in the
Employment Agreement, as of the date hereof, Executive shall be fully vested in
monthly payments of $2,500.00 through May 30, 1997, at which point his vested
benefits shall be $2,916.67 per month through May 30, 1998, at which time his
vested benefit becomes $3,333.33 through May 30, 1999 when the benefit becomes
$3,750.00 per month through January 31, 2000, at which time his vested benefit
becomes $4,166.67, regardless of any other provisions hereof and regardless of
any reasons for any termination or cessation of the Executive's employment. All
such amounts shall be vested, and shall be paid to the Executive or to the
Executive's named beneficiaries.

                                   ARTICLE III
                               SOURCE OF PAYMENTS

         Notwithstanding any references to life insurance contracts contained
herein, nothing herein shall require the Company to purchase such contract or
any other properties to secure its obligation under this Agreement, or if the
Company should purchase such contract or other property, to exercise any option,
election or right under such contract or other property, or if the Company
wishes to exercise any option, election or right under such contract or other
property, to exercise such option, election or right in any particular manner.

         The Executive, beneficiary and any other person or persons having or
claiming a right to payments hereunder or to any interest in this Agreement
shall rely solely on the unsecured promise of the Company set forth herein, and
nothing in this Agreement (other than the provisions of Article II, B. and F.)
shall be construed to give the Executive, beneficiary or any other person or
persons any rights, title, interest or claim in or to any specific asset, fund,
reserve, account or property of any kind whatsoever owned by the Company or in
which it might have any right, title or interest now or in the future, but
Executive shall have the right to enforce his claim against the Company in the
same manner as any unsecured creditor.

                                   ARTICLE IV
                                  BENEFICIARIES

         The death beneficiary of the Executive shall be the person, persons,
trust or charitable entity, living or in existence at the time for any
distribution hereunder, which the Executive shall have most recently designated
as highest in priority on a form, provided for that purpose by the Company,
signed by the Executive, filed with the Company, and attached to the Company's
original copy of this document as "Annex A". The death or non-existence of any
such beneficiary either before or after receipt of any distribution hereunder,
shall terminate the entire interest of such beneficiary in any to the then
undistributed portion of such Executive's account and such undistributed portion
shall thereafter be distributed to or for the benefit of the beneficiary or
beneficiaries designated as next highest in priority by such Executive. If no
such beneficiary be thus designated, or if all of the thus designated
beneficiaries do not survive or are no longer in existence at any time prior to
the complete distribution of such account, such account, or the then
undistributed balance thereof, shall be distributed by the corporation directly
to the person or persons who are heirs as named in the Executive's last will and
testament, except to the extent to which the specific bequests of such document
are paid by the Executive's other resources; or if there is no such document
then in existence under the laws of descent and distribution, to those persons
who would be entitled to the Executive's personal property, and in the
proportions to which they would be so entitled, had such Executive died, at the
time for such distribution, intestate and a resident of the State of North
Carolina.


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                                    ARTICLE V
                                  MISCELLANEOUS

         This Agreement supersedes all deferred compensation agreements
previously entered into by the parties hereto, none of which shall have any
further force and effect upon an after the execution and delivery hereof. This
Agreement shall be subject to, and governed by, the laws of the State of North
Carolina irrespective of the fact that one or more of the parties is or may
become a resident of a different state.

         In the event any parts of this Agreement are found to be void, the
remaining provisions of this Agreement shall nevertheless be binding with the
same effect as though the void parts were deleted.

         Whenever in this Agreement, words, including pronouns, are used in the
masculine, they shall be read and construed in the feminine or neuter whenever
they will so apply, and whenever in this Agreement, words, including pronouns,
are used in the singular or plural, they shall be read and construed in the
plural or singular, respectively, wherever they would so apply.

         This Agreement shall be binding upon the parties hereto, their heirs,
executors, administrators, successors and assigns. The Company agrees that it
will not be a party to any merger, consolidation, reorganization or transaction
which results in a "Change in Control" (as defined in the Employment Agreement),
unless and until its obligations hereunder shall be expressly assumed by its
successor or successors.

         This Agreement may be amended or revoked at any time or times, in whole
or in part, solely by the mutual written consent of the Executive and the
Company.

                                   ARTICLE VI
                                    FIDUCIARY

         The Company is hereby designated as the named fiduciary hereunder, and
shall be responsible for the management and control of the operation and
administration of this plan including any and all decisions pertaining to the
granting or denial of benefit claims and any and all decisions pertaining to the
review of denials of benefit claims.

                                   ARTICLE VII
                                 FUNDING POLICY

The Company shall establish a funding policy and method for this Plan, and shall
annually review such funding policy and method to make any necessary adjustments
thereto in order to ensure that such funding policy and method at all times
shall remain consistent with the objectives of this Plan, and to the extent
applicable, the requirements of Title I of the Executive Retirement Income
Security Act of 1974, as amended.

                                  ARTICLE VIII
                                 ADMINISTRATION

         The Secretary of the Company shall maintain a copy of this Agreement
and any amendments thereto continuously as official records of the Company.


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         IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
the day and year first above written.
                                                 COMPANY:

                                                 CAROLINA FIRST BANCSHARES, INC.

                                                 By:

                                                          Chairman

ATTEST:

____________________, Secretary

(CORPORATE SEAL)

                                                 EXECUTIVE
                                                 (SEAL)
                                                 James E. Burt, III


                                    EXHIBIT A

Beneficiaries Designated by Executive:

Name                                                      % Interest in Payment