UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

                   [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                            OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 1997

                                       OR

                   [  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                            OF THE SECURITIES EXCHANGE ACT OF 1934

For the transaction period from ____________________ to _______________________

                         Commission file number: 0-19045

                            COMSOUTH BANKSHARES, INC.
             (Exact name or registrant as specified in its charter)

             South Carolina                                57-0853342
(State or other jurisdiction of                         (IRS Employer
 incorporation or organization)                        Identification No.)

                        1136 Washington Street, Suite 200
                         Columbia, South Carolina 29201
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (803) 343-2144
              (Registrant's telephone number, including area code)

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 such 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 [  ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of October 31, 1997:

Common Stock, No Par Value                                  2,312,650
            Class                                        Number of Shares




                                       
<PAGE>




                            COMSOUTH BANKSHARES, INC.

                                      INDEX

PART I.     Financial Information

Item 1.        Financial Statements                                     Page No.

  Consolidated Balance Sheets -

        September 30, 1997 (unaudited) and December 31, 1996 ..........     3

  Consolidated  Statements  of  Operations  for the Three 
        months and Nine months ended September 30, 1997 and
        September 30, 1996 ............................................     4

  Consolidated Statements of Cash Flows for the Nine months
        ended September 30, 1997 and September 30, 1996 ...............     5

  Notes to Consolidated Financial Statements ..........................     6

Item   2.  Management's  Discussion and Analysis of 
           Financial  Condition and Results of Operations .............     9

PART II.    Other Information

Item 1.  Legal Proceedings ............................................    13

Item 2.  Changes in Securities.........................................    13

Item 6.  Exhibits and Reports on Form 8-K .............................    14

Signature .............................................................    15















                                       2
<PAGE>



                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                            COMSOUTH BANKSHARES, INC.
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                               September 30,            December 31,
                                                                                                  1997                     1996
                                                                                                  ----                     ----
                                                                                              (Unaudited)
ASSETS                       
<S>                                                                                           <C>                     <C>          
Cash and due from banks ...........................................................           $   9,700,621           $   9,441,553
Federal funds sold ................................................................                 510,000               3,650,000
                                                                                              -------------           -------------
   Total cash and cash equivalents ................................................              10,210,621              13,091,553
Investment securities:
   Held-to-maturity, at amortized cost (fair value of
   $18,539,385 in 1997 and $13,035,431 in 1996) ...................................              18,503,080              13,071,927
   Available-for-sale, at fair value (amortized cost of
   $22,750,882 in 1997 and $21,070,548 in 1996) ...................................              22,791,578              21,034,568
Loans receivable:
   (less allowance for loan losses: 1997 - $1,951,857;
   1996 - $1,802,402) .............................................................             134,079,496             113,879,003
Premises and equipment ............................................................               1,340,239               1,489,159
Accrued interest receivable .......................................................               1,525,101               1,343,298
Other assets ......................................................................                 673,965                 724,956
                                                                                              -------------           -------------
Total Assets ......................................................................           $ 189,124,080           $ 164,634,464
                                                                                              =============           =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits
   Noninterest bearing demand .....................................................              33,334,393              35,677,721
   NOW, money market and savings ..................................................              68,946,673              56,290,307
   Time deposits of $100,000 or more ..............................................              30,009,874              26,984,224
   Time deposits less than $100,000 ...............................................              30,205,516              23,442,953
   Other time deposits ............................................................               2,997,686               3,012,613
                                                                                              -------------           -------------
Total deposits ....................................................................             165,494,142             145,407,818
Federal funds purchased and securities sold under
   agreements to repurchase .......................................................               4,802,486               2,674,394
U.S. Treasury tax and loan accounts ...............................................               1,167,360                 784,106
Note payable ......................................................................               1,020,000               1,200,000
Accrued interest ..................................................................                 492,153                 446,225
Other liabilities .................................................................                 749,831                 481,099
                                                                                              -------------           -------------
Total Liabilities .................................................................             173,725,972             150,993,642
                                                                                              -------------           -------------
Stockholders' Equity
Preferred Stock
   (no par value, 50,000,000 shares authorized; no
    shares issued or outstanding)
Special stock
   (no par value, 50,000,000 shares authorized; no
   shares issued or outstanding)
Common Stock
   (no par value, 50,000,000 shares authorized; shares
    issued and outstanding - 1,541,080 in 1997 and
    1,532,826 in 1996) ............................................................              13,679,027              13,616,611
Retained earnings .................................................................               1,692,222                  47,958
Unrealized gain (loss) on investment securities available-
    for-sale, net of applicable deferred income taxes .............................                  26,859                 (23,747)
                                                                                              -------------           -------------
Total Stockholders' Equity ........................................................              15,398,108              13,640,822
                                                                                              -------------           -------------
Total Liabilities and Stockholders' Equity ........................................           $ 189,124,080           $ 164,634,464
                                                                                              =============           =============
</TABLE>

                                       3
<PAGE>


                            COMSOUTH BANKSHARES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATION
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                  Three Months ended                     Nine Months ended
                                                                       September 30,                        September 30,
                                                                 1997               1996               1997               1996
                                                                 ----               ----               ----               ----
Interest income:           
<S>                                                        <C>                 <C>                 <C>                 <C>         
Interest and fees on loans .........................       $  3,133,120        $  2,419,860        $  8,696,417        $  6,897,456
Investment securities ..............................            658,073             433,217           1,853,673           1,228,740
Federal funds sold .................................             12,176              13,148              84,652              98,023
                                                           ------------        ------------        ------------        ------------
   Total interest income ...........................          3,803,369           2,866,225          10,634,742           8,224,219
                                                           ------------        ------------        ------------        ------------

Interest expense:
Deposits ...........................................          1,628,509           1,179,283           4,552,140           3,458,379
Federal funds purchased and
   securities sold under agreements
   to repurchase ...................................             57,545              30,566             156,143              62,308
U.S. Treasury tax and loan accounts ................              7,968               8,339              22,584              24,819
Note payable .......................................             22,107              14,467              68,465              27,119
                                                           ------------        ------------        ------------        ------------
   Total interest expense ..........................          1,716,129           1,232,655           4,799,332           3,572,625
                                                           ------------        ------------        ------------        ------------

Net interest income ................................          2,087,240           1,633,570           5,835,410           4,651,594
Provision for loan losses ..........................            115,000                   0             220,000              50,000
                                                           ------------        ------------        ------------        ------------
Net interest income after provision
   for loan losses .................................          1,972,240           1,633,570           5,615,410           4,601,594

Noninterest income:
Lending operations and services ....................            301,559             243,106             935,747             749,618
Service charges on deposit accounts ................            173,995             138,056             508,281             394,010
Other ..............................................             19,985              19,884              60,556              60,686
                                                           ------------        ------------        ------------        ------------
    Total noninterest income .......................            495,539             401,046           1,504,584           1,204,314
                                                           ------------        ------------        ------------        ------------

Noninterest expense:
Salaries and employee benefits .....................            776,151             659,361           2,259,615           1,998,789
Occupancy expenses .................................            111,742             109,230             326,969             326,222
Furniture and equipment ............................            118,587             110,282             356,139             298,760
Advertising and marketing ..........................             57,546              23,192             114,446              67,959
Other ..............................................            442,925             468,310           1,418,777           1,232,598
                                                           ------------        ------------        ------------        ------------
   Total noninterest expense .......................          1,506,951           1,370,375           4,475,946           3,924,328
                                                           ------------        ------------        ------------        ------------

Income before provision for
   income taxes ....................................            960,828             664,241           2,644,048           1,881,580
Income tax expense .................................           (361,716)           (217,807)           (999,784)           (627,209)
                                                           ------------        ------------        ------------        ------------
Net income .........................................       $    599,112        $    446,434        $  1,644,264        $  1,254,371
                                                           ============        ============        ============        ============

Earnings per share:
   On common and common
      equivalents ..................................       $        .37        $        .32        $       1.02        $        .79
                                                           ============        ============        ============        ============
   On a fully diluted basis ........................       $        .37        $        .32        $       1.01        $        .79
                                                           ============        ============        ============        ============
</TABLE>


                                       4
<PAGE>


                            COMSOUTH BANKSHARES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                                   Nine Months ended September 30
                                                                                                     1997                   1996
                                                                                                     ----                   ----
Cash flows from operating activities:
<S>                                                                                            <C>                     <C>         
Net income .........................................................................           $  1,644,264            $  1,254,371
Adjustments to reconcile net income to cash
   provided by operating activities:
Depreciation and amortization ......................................................                282,258                 237,696
Provision for loan losses ..........................................................                220,000                  50,000
Deferred tax benefit ...............................................................                                        (75,000)
Amortization of premium and accretion of discount
    on investment securities .......................................................                 (6,078)                  6,368
(Increase) decrease  in interest receivable ........................................               (181,803)                 84,297
Decrease in other assets ...........................................................                 38,758                 172,874
Increase (decrease) in interest payable ............................................                 45,928                (107,441)
Increase (decrease) in other liabilities ...........................................                254,895                (540,230)
                                                                                               ------------            ------------
Cash provided by operating activities ..............................................              2,298,222               1,082,935
                                                                                               ------------            ------------

Cash flows from investing activities:
Purchase of investments, held-to-maturity ..........................................             (6,963,544)             (1,499,400)
Purchase of investments, available-for-sale ........................................             (4,931,625)            (11,174,538)
Maturities of investments, held-to-maturity ........................................              1,539,761               4,353,109
Maturities of investments, available-for-sale ......................................              3,250,000               2,500,000
Net increase in loans ..............................................................            (20,420,493)            (15,276,794)
Purchase of premises and equipment .................................................               (133,338)               (506,462)
                                                                                               ------------            ------------
Cash used for investing activities .................................................            (27,659,239)            (21,604,085)
                                                                                               ------------            ------------

Cash flows from financing activities:
Net increase in deposits ...........................................................             20,086,324              10,070,697
Increase in federal funds purchased and securities
    sold under agreements to repurchase ............................................              2,128,092                 673,249
(Repayment ) proceeds of note payable ..............................................               (180,000)                900,000
Increase in U.S. Treasury, tax and loan accounts ...................................                383,253                 769,400
Proceeds from issuance of common stock .............................................                 62,416                   5,316
                                                                                               ------------            ------------
Cash provided by financing activities ..............................................             22,480,085              12,418,662
                                                                                               ------------            ------------

Decrease in cash and cash equivalents ..............................................             (2,880,932)             (8,102,488)
Cash and cash equivalents at beginning of period ...................................             13,091,553              17,249,878
                                                                                               ------------            ------------
Cash and cash equivalents at end of period .........................................           $ 10,210,621            $  9,147,390
                                                                                               ============            ============

Supplemental disclosure of cash flow information:
Cash paid for interest .............................................................           $  4,753,404            $  3,680,066
Cash paid for taxes ................................................................           $  1,090,223            $  1,244,155
Noncash adjustments to report investment securities,
  available-for-sale at fair value:
Investment securities, available-for-sale ..........................................           $     40,696            $   (192,703)
Other assets .......................................................................                 13,837                  65,387
Unrealized gain (loss) on investment securities, available-for-
   sale, net of applicable deferred income taxes ...................................           $     26,859            $   (127,316)
</TABLE>





                                       5
<PAGE>

                            COMSOUTH BANKSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The unaudited interim financial statements reflect all adjustments which are, in
the  opinion  of  management,   necessary  for  the  fair  presentation  of  the
consolidated  statements of operations and of cash flows for the interim periods
presented.  Such  adjustments  are of a normal  recurring  nature.  The  interim
financial  statements,  including  related notes,  should be read in conjunction
with the financial statements for the year ended December 31, 1996, appearing in
the Corporation's 1996 Annual Report and included in the Corporation's Form 10-K
Annual Report for the year ended  December 31, 1996.  The  unaudited  results of
operations  for the  nine  month  period  ended  September  30,  1997 may not be
indicative of the results for the year that will end December 31, 1997.

NOTE 1 - LOAN COMMITMENTS

At September 30, 1997,  standby  letters of credit of $3,212,000 and undisbursed
amounts on lines of credit of $23,137,000 were outstanding.

NOTE 2 - NOTES PAYABLE

During  1996,  the  Corporation  established  a  $1,200,000  line of credit with
another  financial  institution.  The line of credit expires  December 31, 2001.
Interest is variable at the lender's prime rate minus one-half  percent (8.0% at
September 30, 1997) with interest payments due quarterly.  The line of credit is
collateralized  by 550,000 shares of Bank of Charleston's  ("BOC") common stock.
At September 30, 1997, the Corporation had an outstanding  balance of $1,020,000
on this line of credit;  quarterly  payments of $60,000 were made during  March,
June and September 1997.

The line of credit agreement contains certain covenants. The principal financial
covenants require the Corporation to maintain the allowance for loan losses at a
minimum of 100% of  non-performing  assets;  tangible  equity to total assets at
least  equal  to 8% for BOC  and at  least  equal  to 6% for  Bank  of  Columbia
("BOCL");  non-performing  loans  plus OREO to loans  receivable  plus OREO at a
ratio no greater than 1.80%; and maintain a return on average assets of at least
1%. The Corporation is also restricted from paying any dividends unless approved
by the lender.  The Corporation was in full compliance with all of the covenants
at quarter end.

At  September  30,  1997,  BOCL  had  approximately  $11.0  million  and BOC had
approximately  $10.1 million in standby  credit  available  from other banks for
short-term borrowings.


                                       6
<PAGE>
NOTE 3 - STOCK OPTIONS

On April  29,1997,  6,425 options were granted to  non-employee  directors at an
exercise  price of $15.33 per share.  The average  high/low  price for  ComSouth
Bankshares,  Inc.  Common Stock for the 30 days prior to the  measurement  date,
April 29,1997 was $15.33.  The board granted 3,500 options to certain  employees
on January 28, 1997 at an option  price of $15.125  with an  expiration  date of
January 27,  2002.  The  closing  price for the stock was $15.125 on January 28,
1997.  The board granted  2,000 options to certain  employees on April 29, 1997.
These  options  were  granted  with an option  price of  $15.875,  which was the
closing price of the stock on April 29, 1997,  and an  expiration  date of April
28, 2002.  The board  granted 2,000 options to an employee on October 2, 1997 at
an option  price of $23.87 which was the average  high/low  price for the 30 day
period prior to October 2, 1997.  These options  expire on October 1, 2002.  The
board also on October 10, 1997 granted Messrs. A. P. Swanson, CEO and President,
and John P. Barnwell,  EVP/Administration,  for the Bank of  Charleston,  12,000
options each at a purchase price of $1.00 per share.  These options were granted
as compensation  for services  provided to the Corporation by these  individuals
since BOC's  inception and as an incentive for these  individuals to remain with
BOC.  The  options  vest  pro  rata  over a five  year  period,  with  continued
employment  being a condition of vesting.  However,  in the event of a change in
control,  all  options  will vest  immediately.  The  expiration  date for these
options will be five years from each  vesting  date with the first  vesting date
being October 9, 1998.  Since the options were granted at a price less than fair
market value,  the  Corporation  will record a pre-tax  compensation  expense of
approximately $9,500 per month for the 60 month period beginning October 1997. A
total of 8,479  options  were  exercised  during the  period  January 1, 1997 to
September 30, 1997 at an average exercise price of $7.36 per share.

NOTE 4 - COMMON STOCK

The  Corporation  effected  a 3-for-2  stock  split  payable in the form of a 50
percent stock dividend on October 30, 1997 to shareholders of record October 15,
1997.

NOTE 5 - ALLOWANCE FOR CREDIT LOSSES

The Corporation adopted SFAS No. 114, "Accounting by Creditors for Impairment of
a Loan" and SFAS No. 118,  "Accounting  by Creditors for  Impairment of a Loan -
Income  Recognition and Disclosure" on January 1, 1995. These standards  address
the  accounting  for  certain  loans when it is  probable  that all  amounts due
pursuant  to  the  contractual   terms  of  the  loan  will  not  be  collected.
Individually  identified  impaired loans are measured based on the present value
of payments expected to be received, using the historical effective loan rate as
the discount rate.  Loans that are to be foreclosed or that are solely dependent
on the collateral for repayment may  alternatively be measured based on the fair
value of the  collateral for such loans or on observable  market prices.  If the
recorded  investment in the loan exceeds the measure of fair value,  a valuation
allowance is  established  as a component of the  allowance  for credit  losses.
Currently, the Banks have $42,000 in loans classified as impaired loans.

When a loan  becomes 90 days past due as to  interest  or  principal  or serious
doubt exists as to collectibility,  the accrual of income is discontinued unless
the loan is well secured and in the process of  collection.  Previously  accrued
interest on loans  transferred to nonaccrual  status is reversed against current
earnings and any  subsequent  interest is recognized on the cash basis.  Problem
assets include nonaccrual loans,  restructured loans and foreclosed  properties.
At September 30, 1997,  $109,000 of loans were on nonaccrual  status as compared
to $227,000  at December  31,  1996.  Interest  income of $16,500 and $4,132 was
recognized during 1997 and 1996 for loans previously recorded as nonaccrual. For
those loans  classified  as nonaccrual as of September 30, 1997 and December 31,
1996,  interest  income of $5,589 and $7,779 would have been  recognized  in the
respective periods if those loans had performed under the original terms.

All accruing loans 90 days or more past due were in the process of collection at
each period end. At September 30, 1997,  total  classified loans were $1,151,000
or .85% of total  loans,  compared to  $2,831,000  or 2.4% at December 31, 1996.
While it is difficult to determine the impact of these potential  problem loans,
the future impact is not expected to be material as an estimate of the potential
impact has been  considered in determining  the amount of the allowance for loan
losses  at  September  30,  1997.  Other  than the loans  previously  discussed,
management is not aware of any possible credit problems of borrowers which cause
management  to have  serious  doubts about the ability of the borrower to comply
with present loan repayment terms.

                                       7
<PAGE>
Management  continuously monitors business and geographic  concentrations of its
loan portfolio and believes that the loan  portfolio is adequately  diversified.
There were no significant  concentrations in any industry or with any individual
borrower for the periods presented.

PROBLEM ASSETS
                                         September 30, 1997    December 31, 1996
                                         ------------------    -----------------
Nonaccrual loans .......................        $109,238           $226,582
Loans past due ninety days or more .....          26,906            125,512
Troubled debt restructuring ............               0                  0
Other real estate owned ................               0                  0
                                                --------           --------
  Total ................................        $136,144           $352,094
                                                ========           ========
Nonperforming assets to total loans                             
  and other real estate owned ..........             .10%               .30%
                                                ========           ========
                                                         
NOTE 6 - ALLOWANCE FOR LOAN LOSSES

Activity in the allowance for loan losses was as follows:

                                       September 30, 1997   December 31, 1996
                                       ------------------   -----------------
Balance at beginning of year .......       $ 1,802,402        $ 1,784,508
Provision for loan losses ..........           220,000            110,000
Loans charged off:
  Commercial .......................           (68,695)           (96,977)
  Real estate-mortgage .............                 0                  0
  Consumer and other ...............           (26,637)           (28,954)
                                           -----------        -----------
    Total ..........................           (95,332)          (125,931)
                                           -----------        -----------

Recoveries:
  Commercial .......................            20,931             28,272
  Real estate-mortgage .............                 0                  0
  Consumer and other ...............             3,856              5,553
                                           -----------        -----------
     Total .........................            24,787             33,825
                                           -----------        -----------
Balance at end of period ...........       $ 1,951,857        $ 1,802,402
                                           ===========        ===========

Because  extending  credit involves a certain degree of risk-taking,  management
has established loan and credit policies  designed to control both the types and
amounts  of  risk  assumed  and  to  minimize  losses.   Such  policies  include
limitations  on  loan-to-collateral  values  for  various  types of  collateral,
requirements for appraisals of real estate  collateral,  problem loan management
practices,  collection  procedures,  and nonaccrual  and charge-off  guidelines.
Management  closely  monitors the level of nonperforming  and potential  problem
loans to address any weaknesses in credits and to enhance the amount of ultimate
collection or recovery of problem  loans.  Should  increases in overall level of
nonperforming  and  potential  problem  loans  accelerate  from current  trends,
management  will adjust the  methodology  for determining the allowance for loan
losses to increase the provision  and  allowance  for loan losses.  In addition,
both BOCL and BOC maintain a loan  classification  system to monitor exposure to
potential  loan losses.  Management  believes that the allowance  levels at both
BOCL  and BOC  are  sufficient  to  absorb  expected  charge-offs,  and  provide
adequately for the inherent  losses that exist in the loan  portfolio,  assuming
more or less normal conditions exist.

                                       8
<PAGE>

ITEM 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

Statements  included  in  Management's  Discussion  and  Analysis  of  Financial
Condition and Results of  Operations  which are not  historical  in nature,  are
intended to be, and are hereby  identified as, `forward looking  statements' for
purposes of the safe harbor  provided by Section 21E of the Securities  Exchange
Act of 1934, as amended.  The Corporation  cautions readers that forward looking
statements,  including without  limitation,  those relating to the Corporation's
future business prospects,  revenues, working capital, liquidity, capital needs,
interest costs, and income,  are subject to certain risks and uncertainties that
could cause  actual  results to differ  materially  from those  indicated in the
forward looking statements,  due to several important factors herein identified,
among others,  and other risks and factors  identified  from time to time in the
Corporation's reports filed with the Securities and Exchange Commission.

GENERAL

ComSouth  Bankshares,  Inc.  (the  "Corporation")  is a registered  bank holding
company  incorporated on May 15, 1987 pursuant to the laws of the State of South
Carolina.  It presently  conducts its business through its two bank subsidiaries
(the  "Banks"),  Bank of  Columbia,  NA  ("BOCL")  and  Bank of  Charleston,  NA
("BOC").On  March 21,  1996,  the  Corporation  listed its  common  stock on the
American Stock Exchange under the ticker symbol CSB.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity  is the  ability  to  meet  current  and  future  obligations  through
liquidation  or maturity of existing  assets or the  acquisition  of  additional
liabilities. The Corporation's primary source of liquidity is funds derived from
the deposit gathering operations of the Corporation's two subsidiary banks - BOC
and BOCL,  with  additional  funds  provided from maturing  loans and investment
securities,  sales of temporary  investments,  or sales of investment securities
classified  as  available-for-sale.  These  funds  are used to pay  interest  on
deposits  and to fund deposit  outflows.  Any  remaining  funds are utilized for
investments and to fund loan commitments and  disbursements,  to repay debt, and
to fund  operating  expenses.  Negative  funds  positions may be dealt with by a
combination of actions  including  borrowing  from other banks or  rediscounting
qualifying  loans with the Federal Reserve Bank. At September 30, 1997, BOCL had
approximately $11.0 million while BOC had approximately $10.1 million in standby
credit available to them from other financial institutions.  Management believes
that a sufficient  liquidity balance is maintained through the operations of its
asset  and  liability  management  program.  Additionally,  the  standby  credit
facilities provide adequate protection in the event of negative cash flows.

At September  30, 1997 and December 31,  1996,  liquid  assets of  approximately
$51.5 million and $47.2  million,  respectively,  were available to meet demands
for  deposit  withdrawals,   undisbursed  amounts  on  lines  of  credit  ("loan
commitments") of $23,137,000 and $21,396,000,respectively, and letters of credit
totaling  $3,212,000 and $1,689,000,  respectively.  The amount of liquid assets
available  at  September  30,  1997  includes  cash  and  cash   equivalents  of
$10,200,000,  a decrease  of  $2,900,000  from the  December  31, 1997 amount of
$13,100,000.  This  decrease in cash and cash  equivalents  is  attributable  to
management's  decision to improve earnings by reducing investments in short-term
federal funds in favor of increasing investments in investment securities.

Reliance is being placed upon continued  deposit growth as the principal  source
of funds.  Management is committed to pay competitive market rates for deposits.
Deposits were  approximately  $165.5 million at September 30, 1997,  compared to
$145.4  million  at  December  31,  1996.  Of  the  total  deposit  base  of the
Corporation  at  September  30, 1997,  approximately  $32.4  million,  or 19.6%,
consisted of  Certificates of Deposits in amounts of $100,000 and higher ("Jumbo
Certificates").

While most of the large time deposits are acquired from  customers with standing
relationships  with the Banks, it is a common industry  practice not to consider
these types of deposits as core deposits because their retention can be expected
to be  heavily  influenced  by  rates  offered,  and  they  therefore  have  the
characteristics  of  shorter-term  purchased  funds.  Certificates of deposit of
$100,000 and over involve the maintenance of an appropriate matching of maturity
distribution and a diversification of sources to achieve an appropriate level of
liquidity.  Management  believes that the  Corporation's  liquidity  position is
relatively  strong and is adequate to meet the withdrawal  demand of these Jumbo
Certificates.

                                       9
<PAGE>

One of the  principal  uses of funds is to meet loan  demand at BOCL and BOC. At
September 30, 1997, total loans outstanding were  approximately  $136.0 million,
as compared to $115.7 million at December 31, 1996. During the first nine months
of 1997, both Banks have experienced strong loan growth. The economic picture in
the markets serviced by both Banks continues to be good.

Both BOCL and BOC maintain a loan  classification  system to monitor exposure to
potential  loan  losses.  Management  of the Banks  reviews the  adequacy of the
allowance  each  quarter  to  identify  problem  loans  in  connection  with its
assessment  of  the  overall  quality  of the  respective  loan  portfolios.  At
September  30,  1997,  the  allowance  for  loan  losses  at  BOCL  and  BOC was
approximately $1,011,000 and $941,000,  respectively.  At December 31, 1996, the
allowance for loan losses at BOCL and BOC was  approximately  $971,000 and $831,
000,  respectively.  The Comptroller of the Currency ("OCC"), the Banks' primary
regulator, requires national banks to maintain a Tier 1 (primarily stockholders'
equity) risk-based capital ratio of 4.0% and a total risk-based capital ratio of
8.0%. At September 30, 1997,  the Tier I capital ratio for BOCL was 9.6% and the
total capital ratio was 10.9%, while BOC had a Tier I ratio of 13.4% and a total
capital ratio of 14.7%.

The  Corporation's  primary  regulator,  the Board of  Governors  of the Federal
Reserve System (the  "Board"),  has issued  guidelines  requiring a minimum risk
based  capital  ratio of 8.0%,  of which at least  4.0% must  consist  of Tier I
capital.  The Corporation's Tier I capital ratio was 11.2% and its total capital
ratio was 12.5% at September 30, 1997.  These ratios are well within  guidelines
established by the Corporation's primary regulator.

RATE SENSITIVITY

In order to address  volatility in interest rates, the Corporation  maintains an
interest  sensitivity  management program, the objective of which is to maintain
reasonably  stable  growth in net  interest  income  despite  changes  in market
interest  rates.  The Interest  Rate  Sensitivity  Gap ("GAP") is defined as the
excess of interest  sensitive  assets over interest  sensitive  liabilities that
mature or reprice  within  specified  time  frames.  The GAP is a measure of the
Corporation's  risk of  significant  changes in net income at any point in time.
Adjustable rate loans, short term loans and temporary  investments represent the
majority of the Corporation's  interest  sensitive assets.  Money market deposit
accounts,  NOW  accounts,  savings  accounts  and  certificates  of deposit with
maturities of less than one year  represent  the majority of interest  sensitive
liabilities.

In addition to gap analysis,  management utilizes simulation modeling techniques
to project  the  potential  earnings  impact due to rate  changes.  Based on the
combination of the gap analysis and  simulation  modeling,  management  believes
that any  reasonably  expected  rate change would not have a material  impact on
earnings.

RESULTS OF OPERATIONS

For the first nine months of 1997, the  Corporation is reporting net earnings of
$1,644,000 or $1.01 per fully diluted share,  compared to $1,254,000 or $.79 per
share for the same period of 1996.

For the first  nine  months of 1997  loans  outstanding  grew by 17.4%.  Deposit
growth of 13.9% or  $20,285,000  was used to fund the loan  growth for the first
nine  months of 1997.  Although  the strong  loan  growth  created  pressure  on
management  to  gather  deposits,  the Banks  continued  to  concentrate  on the
acquisition of core deposits to support the growth.

The  Corporation  had total  revenues of  $12,140,000  and  $9,428,000 and total
expenses of $10,496,000  and $8,174,000 for the nine months ended  September 30,
1997 and 1996, respectively.  Summarized below is an analysis of the composition
of revenues and expenses for the nine month periods ended September 30, 1997 and
1996.
                                       10
<PAGE>

<TABLE>
<CAPTION>

                                                                                     Nine Months Ended September 30,
                                                                              1997                                    1996
                                                                              ----                                    ----
               
<S>                                                              <C>                   <C>              <C>                   <C>  
Interest on loans ................................               $ 8,696,000            71.6%           $ 6,897,000            73.2%
Interest on investment securities ................                 1,854,000            15.3%             1,229,000            13.0%
Interest on temporary investments ................                    85,000              .7%                98,000             1.0%
Non-interest income ..............................                 1,505,000            12.4%             1,204,000            12.8%
                                                                 -----------           -----            -----------           -----

Total Revenues ...................................               $12,140,000           100.0%           $ 9,428,000           100.0%
                                                                 ===========           =====            ===========           =====
</TABLE>

Increased  revenues  provided  by interest on loans is the result of strong loan
growth realized by both banks during the first nine months of 1997. Most of this
loan  growth  occurred  during  the second and third  quarters,  which  caused a
decline in this  category's  percentage to total  revenues as a major portion of
the deposit  growth in the first  quarter of the year was invested in investment
securities.   In  addition,   funds  which  typically  were  held  in  temporary
investments  for the purpose of  supporting  loan  growth were also  invested in
investment securities. As can be seen by the above table, the decline in revenue
ratios  provided by interest on loans and temporary  investments has been offset
by an increase in the investment securities category.

Income derived from the Business Manager product was a major factor contributing
to the  growth in  non-interest  income  as fees  generated  from  this  product
increased  by  approximately  $180,000  over the same nine month period of 1996.
This  product  provides  immediate  cash flow to small  businesses  through  the
purchase by the Banks of such businesses' receivables.  The Banks are paid a fee
for the billing and  collection  of these  receivables  and retain full recourse
against the seller of the purchased receivables in case of default.

In  addition,  fees derived from  deposit  services  increased by  approximately
$115,000  over the same nine month  period  last year as a result of the deposit
growth realized between the two periods and a pricing change on fees by the Bank
of Columbia.

Operating Expenses for the nine months periods ended September 30, 1997 and 1996
were as shown in the following table:

<TABLE>
<CAPTION>

                                                                                    Nine Months Ended September 30,
                                                                              1997                                   1996
                                                                              ----                                   ----
<S>                                                              <C>                   <C>              <C>                   <C>  
Interest on deposits .............................               $ 4,552,000            43.4%           $ 3,458,000            42.3%
Interest on note payable and
   securities sold under agreements
   to repurchase .................................                   248,000             2.4%               114,000             1.4%
Provision for loan losses ........................                   220,000             2.1%                50,000              .6%
Salaries and employee benefits ...................                 2,260,000            21.5%             1,999,000            24.5%
Occupancy expenses ...............................                   327,000             3.1%               326,000             4.0%
Furniture and equipment expenses .................                   356,000             3.4%               299,000             3.7%
Legal and regulatory .............................                   622,000             5.9%               551,000             6.7%
Printing and supplies ............................                   126,000             1.2%               124,000             1.5%
Advertising and marketing ........................                   114,000             1.1%                68,000              .8%
Other ............................................                   671,000             6.4%               558,000             6.8%
Taxes ............................................                 1,000,000             9.5%               627,000             7.7%
                                                                 -----------           -----            -----------           -----

Total Operating Expenses .........................               $10,496,000           100.0%           $ 8,174,000           100.0%
                                                                 ===========           =====            ===========           =====
</TABLE>

                                       11
<PAGE>
The  increase in  interest  paid on deposits is the result of an increase of $20
million in deposits between the two periods. In addition, rates paid on deposits
have  increased  slightly due to the need to attract funds to support the strong
loan growth between the periods.  The increase in interest paid on notes payable
and securities  sold under  agreements to repurchase is due to a $1,200,000 note
with another financial institution. The interest impact during the third quarter
of 1996 was less as the note was not fully  drawn  until the  fourth  quarter of
1996. Loans  outstanding have increased by 25 percent since the third quarter of
1996.  As a result  of this  growth,  coupled  with the  lack of  maturity  in a
significant portion of the portfolio and a 15 percent increase in annualized net
losses for 1997 over 1996, management felt that additional  contributions to the
loan loss provision was prudent.  The increase in salaries and employee benefits
is due to additional staffing to support the loan and deposit growth.  Legal and
regulatory  expenses  increased  as a result of  increased  activity  in pending
litigation.  The relocation  during the third quarter of 1997 of BOCL's drive-in
branch was the primary  cause for the  increase  in  advertising  and  marketing
expenses.  Other  expenses  increased  by  $113,000  between  the two periods as
director  fees  increased  by $30,000  due to a fee  increase  in January  1997,
consulting fees increased by $22,000 due to programming  expenses related to the
year 2000 project,  postage and freight expense  increased by $15,000 related to
loan and  deposit  growth and  outside  services  increased  by  $15,000  due to
increased ATM fees and correspondent fees.

The  increase  in tax  expenses  in 1997 is  primarily  the  result of  improved
earnings  during the year.  In  addition,  the company  reduced its tax expenses
during 1996 by $75,000 as a result of an  adjustment  to its  deferred tax asset
valuation allowance.

NET INTEREST INCOME

Net interest income represents the difference  between interest earned on assets
and the interest paid on liabilities.  It traditionally  constitutes the largest
source of a financial institution's earnings.

Net interest  income for the nine months ended  September  30, 1997 and 1996 was
$5,835,000 and $4,652,000, respectively. The average yield on earning assets was
8.5% and 8.6%, the average rate paid on interest  bearing  liabilities  was 4.8%
and 4.6%, and the annualized net interest  margin was 4.7% and 4.8% for the nine
months ended September 30, 1997 and 1996, respectively.

THIRD QUARTER EARNINGS

Earnings for the third  quarter of 1997 were  $599,000 or $.37 per fully diluted
share,  up 34 percent over the $446,000 or $.28 per share reported for the third
quarter  of 1996.  Net  interest  income  showed an  increase  of  approximately
$453,000 between the two periods.  This increase is the result of an increase in
loan volume during the period as the Corporation realized some tightening of the
net interest margin due to paying a slightly higher rate to attract  deposits to
support the loan growth.

Total non-interest  income increased by $95,000 between the two quarters as fees
generated  by the  Business  Manager  program  increased  by $36,000 and deposit
service fees  increased by $40,000 over the same period last year. The increased
fees from the  Business  Manager  program  were the  result of  increased  sales
efforts for the product,  and the increase in fees derived from deposit services
resulted  from the  deposit  growth  realized  between  the two  periods  and an
increase  in fees for  deposit  services by BOCL  between  the two  periods.  In
addition,  mortgage  loan fees  increased by $12,000  between the two periods as
mortgage rates have remained relatively low supporting increased productivity.

Total non-interest expenses increased by $280,000 for the third quarter of 1997,
compared to the same quarter in 1996.  Federal  income tax expense  increased by
$144,000 due to improved  earnings for the third quarter of 1997.  Other factors
contributing to the increase of non-interest expenses were salaries and employee
benefits which  increased by $117,000 due to additional  staff needed to support
the loan and  deposit  growth.  Consulting  fees  increased  by  $20,000  due to
programming  fees related to the year 2000 project,  director fees  increased by
$10,000 due to an increase in director  fees in January  1997,  advertising  and
marketing  expenses  increased by $35,000 primarily due to the relocation of the
drive-in  branch for BOCL  during the third  quarter  of 1997.  These  increased
expenses were  partially  offset by a reduction in other expenses of $48,000 due
to a loss of $25,000 on a counterfeit check and a loss of $23,000 on the sale of
OREO during the third quarter of 1996.

                                       12
<PAGE>

ACCOUNTING AND REPORTING MATTERS

In February 1997,  the FASB issued SFAS No. 128,  "Earnings Per Share." SFAS No.
128  simplifies  the current  computation  of  earnings  per share and makes the
United States standards for the computation  more compatible with  international
earnings per share  standards.  The  Statement  requires  dual  presentation  of
earnings per share for all entities  with complex  capital  structures.  It also
replaces the  presentation of primary  earnings per share with a presentation of
basic earnings per share. The Statement is effective for the Corporation for the
year ended December 31, 1997. The Corporation  does not anticipate that adoption
of this statement will have a material effect on its financial statements.

                           PART II - OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

          Reference  is made to the  Corporation's  Forms 10-Q for the  quarters
          ended March 31, 1997 and June 30, 1997.

ITEM 2c.  CHANGES IN SECURITIES

          During 1997, the  Registrant  issued shares of its common stock to the
          following  persons  upon  exercise of options  issued  pursuant to the
          Registrant's  Incentive  Stock Option Plan. The securities were issued
          pursuant to the exemption from registration  provided by Section 4 (2)
          of the  Securities  Act of 1933 because the issuance did not involve a
          public offering by the issuer.

Date               Class of                Shares     Exercise
Issued              Purchasers             Issued     Price
------             -----------             ------     -----
01/31/97           Director                468       $7.272
02/03/97           Directors               523        7.272
02/03/97           Former Director         138        7.272
02/04/97           Director                248        7.272
02/05/97           Directors               661        7.272
02/10/97           Former Director         220        7.272
02/13/97           Former Director         275        7.272
02/16/97           Director                248        7.272
03/04/97           Director                303        7.272
03/10/97           Director                248        7.272
03/18/97           Former Director         248        7.272
03/21/97           Former Director         605        5.345
                                           303        6.318
                                           303        7.272
04/11/97           Directors               303        7.272
04/15/97           Former Director         413        7.272
04/16/97           Directors               440        7.272
04/19/97           Director                468        7.272
04/21/97           Former Director         275        7.272
04/21/97           Directors               523        7.272
04/23/97           Director                275        7.272
04/25/97           Director                716        7.272
06/06/97           Director                275        15.33
                                           ---
                                         8,479

                                       13
<PAGE>


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8 - K

    (a)     Exhibit 27, Financial Data Schedule.
    (b)     No reports on Form 8-K have been filed during the quarter.  However,
            a Form 8-K was filed on October 15, 1997.


                                       14
<PAGE>

                                    SIGNATURE

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.



                                        COMSOUTH BANKSHARES, INC.
                                                 (Registrant)

Date: November 10, 1997                 By:s/Harry R. Brown
                                           ---------------------------
                                           (Harry R. Brown)
                                           Chief Financial Officer,
                                           Chief Operating Officer,
                                           Secretary and Treasurer

                                       15
<PAGE>


                                 EXHIBIT INDEX

Exhibit 27          Financial Data Schedule