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 June 30, 1998

                                       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 July 31, 1998:

Common Stock, No Par Value                                   2,342,683
            Class                                          Number of Shares



<PAGE>



                            COMSOUTH BANKSHARES, INC.

                                      INDEX
<TABLE>
<CAPTION>

PART I.     Financial Information

Item 1.        Financial Statements                                                         Page No.

<S>                                                                                             <C>
    Consolidated Balance Sheets -
              June 30, 1998 (unaudited) and December 31, 1997 ................................     3
                                                                                                 
    Consolidated Statements of Operations for the Three months                                   
              and Six months ended June 30, 1998 and June 30, 1997 (unaudited)................     4
                                                                                                 
    Consolidated Statements of Changes in Stockholders' Equity for the Six                       
              months ended June 30, 1998 and June 30, 1997                                       
              (unaudited).....................................................................     5
    Consolidated Statements of Cash Flows for the Six months                                     
               ended June 30, 1998 and June 30, 1997 (unaudited)..............................     6
                                                                                                 
    Notes to Consolidated Financial Statements ...............................................   7-8
                                                                                                 
Item 2.  Management's Discussion and Analysis of Financial                                       
             Condition and Results of Operations .............................................  9-12
                                                                                                 
PART II     Other Information                                                                    
                                                                                                 
Item 1.  Legal Proceedings ...................................................................    13
                                                                                                 
Item 4.  Submission of Matters to a Vote of Security Holders .................................    13
                                                                                                 
Item 6.  Exhibits and Reports on Form 8-K ....................................................    13
                                                                                                 
Signature ....................................................................................    13
                                                                                              
</TABLE>




















                                       2
<PAGE>



                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                            COMSOUTH BANKSHARES, INC.
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                                 June30,                 December31,
                                                                                                  1998                      1997
                                                                                              ------------              ------------
                                                                                              (Unaudited)
ASSETS                      
<S>                                                                                           <C>                       <C>         
Cash and due from banks ........................................................              $  9,856,957              $  9,332,658
Federal funds sold .............................................................                 8,990,000                 6,820,000
                                                                                              ------------              ------------
   Total cash and cash equivalents .............................................                18,846,957                16,152,658
Investment securities:
   Held-to-maturity, at amortized cost (fair value of
   $12,891,101 in 1998 and $18,558,395 in 1997) ................................                12,816,059                18,498,356
   Available-for-sale, at fair value (amortized cost of
   $35,895,658 in 1998 and $24,504,127 in 1997) ................................                35,925,525                24,527,758
Loans receivable:
   (less allowance for loan losses 1998 - $1,975,390;
   1997 - $1,805,860) ..........................................................               150,039,280               142,670,629
Accrued interest receivable ....................................................                 1,687,428                 1,643,676
Premises and equipment .........................................................                 1,175,381                 1,311,260
Other assets ...................................................................                   597,857                   767,201
                                                                                              ------------              ------------
Total Assets ...................................................................              $221,088,487              $205,571,538
                                                                                              ============              ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits
   Noninterest bearing demand ..................................................                39,800,620                41,283,341
   NOW, money market and savings ...............................................                78,318,421                70,904,709
   Time deposits of $100,000 or more ...........................................                33,400,033                34,363,250
   Time deposits less than $100,000 ............................................                40,424,202                33,235,474
   Other time deposits .........................................................                 3,718,134                 2,885,885
                                                                                              ------------              ------------
Total deposits .................................................................               195,661,410               182,672,659
Federal funds purchased and securities sold under
   agreements to repurchase ....................................................                 3,109,676                 3,096,166
Notes payable ..................................................................                 2,100,000                 1,189,167
U.S. Treasury tax and loan accounts ............................................                 1,165,599                 1,330,114
Accrued interest ...............................................................                   635,708                   625,948
Other liabilities ..............................................................                   843,535                   641,912
                                                                                              ------------              ------------
Total Liabilities ..............................................................               203,515,928               189,555,966
                                                                                              ------------              ------------
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 - 2,342,683 in 1998 and
    2,317,600 in 1997) .........................................................                13,829,687                13,699,539
Retained earnings ..............................................................                 3,723,160                 2,300,437
Accumulated other comprehensive income .........................................                    19,712                    15,596
                                                                                              ------------              ------------
Total Stockholders' Equity .....................................................                17,572,559                16,015,572
                                                                                              ------------              ------------
Total Liabilities and Stockholders' Equity .....................................              $221,088,487              $205,571,538
                                                                                              ============              ============
</TABLE>


                                       3
<PAGE>

                            COMSOUTH BANKSHARES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATION
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                           Three Months                         Six Months
                                                                           ended June 30,                     ended June 30,
                                                                       1998            1997               1998            1997
                                                                  -----------       -----------       -----------       ------------
Interest income:                                   
<S>                                                               <C>               <C>               <C>               <C>        
Interest and fees on loans .................................      $ 3,414,158       $ 2,909,529       $ 6,737,508       $ 5,563,297
Investment securities ......................................          648,844           656,084         1,274,159         1,195,600
Federal funds sold .........................................          194,592            24,261           294,115            72,476
                                                                  -----------       -----------       -----------       -----------
   Total interest income ...................................        4,257,594         3,589,874         8,305,782         6,831,373
                                                                  -----------       -----------       -----------       -----------

Interest expense:
Deposits ...................................................        1,898,297         1,496,236         3,725,473         2,923,631
Federal funds purchased and securities sold under
   agreements to repurchase ................................           39,104            53,823            92,614            98,598
U.S. Treasury tax and loan accounts ........................            8,306             4,848            17,250            14,616
Notes payable ..............................................           43,988            23,108            67,912            46,358
                                                                  -----------       -----------       -----------       -----------
   Total interest expense ..................................        1,989,695         1,578,015         3,903,249         3,083,203
                                                                  -----------       -----------       -----------       -----------

Net interest income ........................................        2,267,899         2,011,859         4,402,533         3,748,170
Provision for loan losses ..................................          215,000            90,000           425,000           105,000
                                                                  -----------       -----------       -----------       -----------
Net interest income after provision
   for loan losses .........................................        2,052,899         1,921,859         3,977,533         3,643,170

Noninterest income:
Lending operations and services ............................          373,867           337,641           778,363           634,188
Service charges on deposit accounts ........................          176,972           171,021           361,864           334,286
Other ......................................................           14,154            17,928            50,123            40,571
                                                                  -----------       -----------       -----------       -----------
    Total noninterest income ...............................          564,993           526,590         1,190,350         1,009,045
                                                                  -----------       -----------       -----------       -----------

Noninterest expense:
Salaries and employee benefits .............................          898,474           757,732         1,807,174         1,483,464
Occupancy expenses .........................................          125,120           107,589           244,910           215,227
Furniture and equipment ....................................          104,929           127,978           212,562           237,552
Advertising and marketing ..................................           30,205            32,842            60,693            56,900
Other ......................................................          406,743           575,198           796,622           975,852
                                                                  -----------       -----------       -----------       -----------
   Total noninterest expense ...............................        1,565,471         1,601,339         3,121,961         2,968,995
                                                                  -----------       -----------       -----------       -----------

Income before provision for income taxes ...................        1,052,421           847,110         2,045,922         1,683,220
Provision for income taxes .................................         (305,070)         (322,118)         (623,199)         (638,068)
                                                                  -----------       -----------       -----------       -----------
Net income .................................................      $   747,351       $   524,992       $ 1,422,723       $ 1,045,152
                                                                  ===========       ===========       ===========       ===========

Basic earnings per common share:
   Weighted average shares outstanding .....................        2,342,115         2,309,348         2,342,115         2,309,348
   Net income per weighted average number
      of shares outstanding ................................      $       .32       $       .23       $       .61       $       .46
                                                                  ===========       ===========       ===========       ===========

Diluted earnings per common share:
   Weighted average shares outstanding .....................        2,473,042         2,436,677         2,473,042         2,436,677
    Net income per weighted average number
       of shares outstanding ...............................      $       .30       $       .21       $       .57       $       .42
                                                                  ===========       ===========       ===========       ===========
</TABLE>






                                       4
<PAGE>




                            COMSOUTH BANKSHARES,INC.
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                Six Months Ended June 30, 1998 and June 30, 1997
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                             Accumulated
                                                                                                Other              Total
                                         Common            Common          Retained         Comprehensive      Stockholders'
                                         Shares             Stock          Earnings          Income(Loss)          Equity
                                         ------             -----          --------          ------------          ------
                                                                                          
<S>                                      <C>            <C>              <C>                  <C>             <C>        
Balance at December 31, 1996             2,299,138      $13,616,273      $   48,296           $ (23,747)      $13,640,822
Comprehensive income:
  Net income                                                              1,045,152                             1,045,152
  Other comprehensive income,
     net of tax -
     Unrealized gain on securities                                                                3,666             3,666
                                                                                                              -----------
Comprehensive income                                                                                            1,048,818
                                                                                                              -----------
Issuance of common stock                    12,482           58,200                                                58,200
                                         ---------      -----------      ----------           ---------       -----------
Balance at June 30, 1997                 2,311,620      $13,674,473      $1,093,448           $ (20,081)      $14,747,840
                                         =========      ===========      ==========           =========       ===========

Balance at December 31, 1997             2,317,600      $13,699,539      $2,300,437           $  15,596       $16,015,572
Comprehensive income:
  Net income                                                              1,422,723                             1,422,723
  Other comprehensive income,
     net of tax -
     Unrealized gain on securities                                                                4,116             4,116
                                                                                                              -----------
Comprehensive income                                                                                            1,426,839
                                                                                                              -----------
Issuance of common stock                    25,083          130,148                                               130,148
                                         ---------      -----------      ----------             -------       -----------
Balance at June 30, 1998                 2,342,683      $13,829,687      $3,723,160             $19,712       $17,572,559
                                         =========      ===========      ==========             =======       ===========
</TABLE>







                                       5
<PAGE>




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

                                                                                                    Six Months ended June 30,
                                                                                                   1998                    1997
                                                                                                   ----                    ----
Cash flows from operating activities:
<S>                                                                                           <C>                      <C>         
Net income .......................................................................            $  1,422,723             $  1,045,152
Adjustments to reconcile net income to cash
   provided by operating activities:
Depreciation and amortization ....................................................                 178,095                  186,286
Provision for loan losses ........................................................                 425,000                  105,000
Deferred Tax Benefit .............................................................                                          (50,000)
Amortization of premium and accretion of discount
    on investment securities .....................................................                 (21,649)                   6,521
Increase in interest receivable ..................................................                 (43,752)                (306,677)
Decrease in other assets .........................................................                 169,344                   99,343
Increase in interest payable .....................................................                   9,760                   21,903
Increase in other liabilities ....................................................                 199,504                  247,602
                                                                                              ------------             ------------
Cash provided by operating activities ............................................               2,339,025                1,355,130
                                                                                              ------------             ------------

Cash flows from investing activities:
Purchase of investments, held-to-maturity ........................................                       0               (3,281,875)
Purchase of investments, available-for-sale ......................................             (23,391,846)              (4,862,625)
Maturities of investments, held-to-maturity ......................................               5,704,261                   13,894
Maturities of investments, available-for-sale ....................................              12,000,000                        0
Net increase in loans ............................................................              (8,843,891)             (14,527,692)
Gross amount of loans serviced for others ........................................               6,265,717                  375,168
Remittances on loans serviced for others .........................................              (5,215,477)                (709,871)
Purchase of premises and equipment ...............................................                 (42,217)                (113,467)
                                                                                              ------------             ------------
Cash used for investing activities ...............................................             (13,523,453)             (23,106,468)
                                                                                              ------------             ------------

Cash flows from financing activities:
Net increase in deposits .........................................................              12,988,751               15,770,637
Increase in federal funds purchased and securities
    sold under agreements to repurchase ..........................................                  13,510                3,572,696
Proceeds (repayment) of note payable .............................................                 910,833                 (120,000)
(Decrease) increase in U.S. Treasury, tax and loan accounts ......................                (164,515)                 349,861
Proceeds from issuance of common stock ...........................................                 130,148                   58,200
                                                                                              ------------             ------------
Cash provided by financing activities ............................................              13,878,727               19,631,394
                                                                                              ------------             ------------

Increase (decrease) in cash and cash equivalents .................................               2,694,299               (2,119,944)
Cash and cash equivalents at beginning of period .................................              16,152,658               13,091,553
                                                                                              ------------             ------------
Cash and cash equivalents at end of period .......................................            $ 18,846,957             $ 10,971,609
                                                                                              ============             ============

Supplemental disclosure of cash flow information:
Cash paid for interest ...........................................................            $  3,893,489             $  3,061,300
Cash paid for taxes ..............................................................            $    671,793             $    736,837
Noncash adjustments to report investment securities,
  available-for-sale at fair value:
Investment securities, available-for-sale ........................................            $     29,867             $    (30,426)
Other (liabilities) assets .......................................................                 (10,155)                  10,345
Unrealized gain (loss) on investment securities, available-
   for-sale, net of applicable deferred income taxes .............................            $     19,712             $    (20,081)
</TABLE>




                                       6
<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, 1997, appearing in
the Corporation's 1997 Annual Report and included in the Corporation's Form 10-K
Annual Report for the year ended  December 31, 1997.  The  unaudited  results of
operations  for the six month period ended June 30, 1998 may not  necessarily be
indicative of the results for the year that will end December 31, 1998.

NOTE 1 - LOAN COMMITMENTS

At June 30,  1998,  standby  letters  of credit of  $1,835,000  and  undisbursed
amounts of lines of credit of $28,666,000 were outstanding.

NOTE 2 - NOTES PAYABLE

On May 18, 1998, the Corporation established a $2,100,000 term loan with another
financial institution.  This loan matures on June 30, 1999. Interest is variable
at the Wall Street Journal prime rate minus  one-half  percent (8.0% at June 30,
1998) with  repayments of interest only  quarterly  with principal to be paid at
maturity. 550,000 shares of Bank of Charleston's ("BOC") common stock is pledged
as collateral.  At June 30, 1998, the Corporation had an outstanding  balance of
$2,100,000 on this loan. A quarterly interest payment of $18,677 was made during
the quarter ending June 30, 1998.

The proceeds from the above  mentioned  note were used to extinguish the current
outstanding  balances of all other notes payable by the  Corporation  during the
second quarter of 1998.

At June 30, 1998, BOCL had approximately $11.0 million and BOC had approximately
$10.1  million in standby  credit  available  from  other  banks for  short-term
borrowings.

NOTE 3 - 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  require
creditors to account for impaired loans,  except for those collateral  dependent
loans  that are  accounted  for at fair  value  or at the  lower of cost or fair
value, at the present value of the expected future cash flows  discounted at the
loan's  effective  interest rate.  Specific  reserves are maintained on impaired
loans in accordance  with SFAS 114 and SFAS 118, when required.  The adoption of
the  standards  has not had a  material  impact on the  Corporation's  financial
position or results of operations.  Currently,  the Banks have $425,090 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 June 30,  1998 and  December  31,  1997,  $88,000 of loans was on  nonaccrual
status. No previous  nonaccrual loans have been returned to active status during
1998; therefore, no interest income has been recognized on these loans. Interest
income of $4,132 was  recognized  during 1997 for loans  previously  recorded as
nonaccrual.  For those loans  classified  as  nonaccrual as of June 30, 1998 and
December  31,  1997,  interest  income  of $4,479  and  $6,722  would  have been
recognized  in the  respective  periods if those loans had  performed  under the
original terms.
                                       7
<PAGE>

All accruing loans 90 days or more past due were in the process of collection at
each period end. At June 30, 1998,  total  classified  loans were  $3,627,000 or
2.4% of total loans,  compared to $3,736,000 or 2.6% at December 31, 1997. 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 June 30, 1998.  Towards the end of July 1998,  management became aware
of a potential  problem credit in the amount of $235,000.  The loan subsequently
has been placed on nonaccrual status and appropriate  adjustments have been made
to the  allowance  for loan losses.  Management  is currently  reevaluating  the
collateral value to determine  potential risk. Other than the loan  specifically
mentioned  and  others  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 borrowers to comply with present loan  repayment
terms.

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                             June 30, 1998      December 31, 1997
                                           -------------      -----------------
Nonaccrual loans                               $88,368                $87,989
Loans past due ninety days or more             133,321                 77,673
Troubled debt restructuring                          0                      0
Other real estate owned                              0                      0
                                              --------               --------
      Total                                   $221,689               $165,662
                                              ========               ========

Nonperforming assets to total loans
   and other real estate owned                     .15%                   .11%
                                              ========               ========

NOTE 4 - ALLOWANCE FOR LOAN LOSSES

Activity in the allowance for loan losses was as follows:

                                             June 30, 1998    December 31, 1997
                                             -------------    -----------------
Balance at beginning of period               $1,805,860            $1,802,402
Provision for loan losses                       425,000               334,000
Loans charged-off:
   Commercial                                 (234,137)             (321,642)
   Real estate-mortgage                               0                     0
   Consumer and other                          (30,565)              (34,097)
                                               --------              --------
       Total                                  (264,702)             (355,739)
                                              ---------             ---------
Recoveries:
  Commercial                                      6,748                20,931
  Real estate-mortgage                                0                     0
  Consumer and other                              2,484                 4,266
                                                  -----                 -----
      Total                                       9,232                25,197
                                                  -----                ------
Balance at end of period                     $1,975,390            $1,805,860
                                             ==========            ==========

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. In
addition,  both BOCL and BOC  maintain a loan  classification  system to monitor
exposure  to  potential  loan  losses.  Management  believes  that the June 1998
allowance  levels  at both  BOCL  and  BOC are  sufficient  to  absorb  expected
charge-offs  and provides  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 and Bank of  Charleston,  NA. 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 June 30,  1998,  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 June 30, 1998 and December 31, 1997,  liquid  assets of  approximately  $67.6
million and $59.2  million,  respectively,  were  available  to meet demands for
deposit withdrawals, undisbursed amounts on lines of credit ("loan commitments")
of $28,666,000  and  $22,043,000,  respectively,  and letters of credit totaling
$1,835,000 and $3,327,000,  respectively.  The amount of liquid assets available
at June 30, 1998 includes cash and cash equivalents of $18,800,000,  an increase
of $2,700,000 from the December 31, 1997 amount of $16,100,000. This increase in
cash and cash  equivalents is primarily due to strong growth in deposit accounts
and the maturity of investment securities during the quarter which were invested
in federal funds sold.

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  $195.7 million at June 30, 1998, compared to $182.7
million at December 31, 1997.  Of the total deposit base of the  Corporation  at
June 30, 1998,  approximately $33.0 million, or 17.0%, 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
June 30, 1998, total loans  outstanding were  approximately  $152.0 million,  as
compared to $144.5 million at December 31, 1997.  During the first six months of
1998, both Banks have experienced good 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  for loan losses each quarter to identify  problem loans in connection
with its assessment of the overall quality of the respective loan portfolios. At
June 30, 1998,  the allowance for loan losses at BOCL and BOC was  approximately
$951,000 and $1,024,000,  respectively.  At December 31, 1997, the allowance for
loan  losses  at  BOCL  and  BOC  was  approximately  $855,000  and  $951, 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 June 30,
1998,  the Tier I capital  ratio for BOCL was 10.6% and the total  capital ratio
was 11.8%,  while BOC had a Tier I ratio of 13.3% and a total  capital  ratio of
14.6%.

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 June 30,  1998.  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  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.



                                       10
<PAGE>




RESULTS OF OPERATIONS

For the first six months of 1998, the Corporation had net earnings of $1,423,000
or $.57 per diluted  share,  an increase of 36% over the  $1,045,000 or $.42 per
diluted share for the same period of 1997. The economy in the market serviced by
each bank has been  favorable  over the past several  years and has  generated a
need for  businesses  to borrow  to fund  expansion  and  growth,  resulting  in
sustained  loan  growth  throughout  1997 and into the first  half of 1998.  The
improved  earnings  over the prior  period  are the  direct  result of this loan
growth.

The  Corporation  had total  revenues of  $9,496,000  and  $7,840,000  and total
expenses of $8,073,000 and $6,795,000 for the six months ended June 30, 1998 and
1997,  respectively.  Summarized  below is an  analysis  of the  composition  of
revenues and expenses for the six month periods ended June 30, 1998 and 1997.
<TABLE>
<CAPTION>

                                                                Six Months Ended June 30,
                                                         1998                          1997
                                                         ----                          ----
<S>                                         <C>              <C>         <C>               <C>  
Interest on loans                           $6,738,000        71.0%      $5,563,000         71.0%
Interest on investment securities            1,274,000        13.4%       1,196,000         15.2%
Interest on temporary investments              294,000         3.1%          72,000           .9%
Non-interest income                          1,190,000        12.5%       1,009,000         12.9%
                                            ----------       -----       ----------        -----

Total Revenues                              $9,496,000       100.0%      $7,840,000        100.0%
                                            ==========       =====       ==========        =====
</TABLE>


The  increase in  interest  on loans is entirely  due to the change in volume as
rates earned on loans were relatively the same for the two periods reported. The
increase in interest earned on investment  securities was also due to the change
in volume as rates  earned on  investments  during  the first  half of 1998 were
approximately  15 basis  points  below those earned for the same period of 1997.
Increased  earnings  in the  temporary  investment  category  were the result of
deposit growth and the maturing of investment securities and slightly lower than
planned loan growth during the period.  Noninterest  income improved by $180,000
between the two periods,  primarily due to a $28,000 improvement in fees derived
from deposit  services as a result of growth in deposit  accounts and a $170,000
improvement  in fees derived from  mortgage  loan  origination  fees as mortgage
rates remained favorable between the two periods, creating increased activity in
mortgage  loan  refinancing.  Business  manager  fees  declined  between the two
periods by approximately $25,000 as management has shifted towards a maintenance
rather than a growth strategy on this product at the present time.


















                                       11
<PAGE>




Operating Expenses for the six months ended June 30, 1998 and 1997 were as shown
in the following table:

<TABLE>
<CAPTION>

                                                         Six Months Ended March 31,
                                                         1998                      1997
<S>                                         <C>               <C>        <C>                <C>  
Interest on deposits                        $3,725,000         46.2%     $2,924,000          43.0%
Interest on note payable and
   securities sold under agreements
   to repurchase                               178,000          2.2%        159,000           2.3%
Provision for loan losses                      425,000          5.3%        105,000           1.6%
Salaries and employee benefits               1,807,000         22.4%      1,483,000          21.8%
Occupancy expenses                             245,000          3.0%        215,000           3.2%
Furniture and equipment expenses               212,000          2.6%        237,000           3.5%
Legal and regulatory                           237,000          2.9%        422,000           6.2%
Printing and supplies                           99,000          1.2%         85,000           1.3%
Advertising and marketing                       61,000           .8%         57,000            .8%
Other                                          461,000          5.7%        470,000           6.9%
Taxes                                          623,000          7.7%        638,000           9.4%
                                            ----------         ----      ----------         ----- 

Total Operating Expenses                    $8,073,000        100.0%     $6,795,000         100.0%
                                            ==========        =====      ==========         =====
</TABLE>


The change in interest paid on deposits is principally  due to the strong growth
in deposits, however, rates paid on deposits increased by approximately 10 basis
points as competition  for deposits has continued to increase,  creating  higher
funds  costs.  The  significant  change in the loan loss  provision  for the two
periods is due to additional reserves needed to support the $22 million increase
in loans outstanding, management's recognition that a significant portion of the
portfolio  is  beginning  to mature,  and an  increase  realized  in  charge-off
activity.  Additionally,  the  Corporation  has begun to estimate and accrue for
potential  credit  risk as a result of the year 2000  problem.  The  increase in
salaries and employee benefits is primarily due to increased  staffing needed to
support the strong loan and deposit  growth.  The change in legal and regulatory
expenses is due to reduced  legal  expenses as a result of the  settlement  of a
significant portion of pending litigation during the first quarter of 1998.

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 six  months  ended  June  30,  1998  and 1997 was
$4,403,000 and $3,748,000, respectively. The average yield on earning assets was
8.2% and 8.4%, the average rate paid on interest  bearing  liabilities  was 4.9%
and 4.7%, and the  annualized net interest  margin was 4.3% and 4.6% for the six
months ended June 30, 1998 and 1997, respectively.

MERGER ACTIVITY

On April 14, 1998, the Corporation  entered into an Agreement and Plan of Merger
with Anchor Financial  Corporation  ("Anchor"),  that provides for the merger of
the Corporation into Anchor and the exchange of the  Corporation's  common stock
for shares of Anchor common stock. Consummation of the transaction is subject to
regulatory approvals and approval of the Corporation's  shareholders.  A special
shareholders  meeting has been  scheduled for August 27, 1998 at 11:00 AM at the
Bank of Charleston,  Charleston,  SC to vote on the Agreement and Plan of Merger
with Anchor. If all approvals are obtained, the transaction is expected to close
in the third quarter of 1998.



                                       12
<PAGE>





                           PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

Incorporated  by reference to Item 3 of the  Registrant's  Annual Report on Form
10-K for the year ended December 31, 1997.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          (a)  Annual Meeting: May 12, 1998
          (b)  The following directors were elected at the annual meeting:

                                                             VOTES
                                                     FOR              AGAINST
                   R. Lee Burrows, Jr.             809,770             4,127
                   Charles R. Jackson              812,245             1,649
                   J. Michael Kapp                 812,245             1,649

          The following directors continue their terms of office as directors:

                   Mason R. Chrisman
                   John C.B. Smith, Jr.
                   Arthur M. Swanson
                   Arthur P. Swanson
                   LaVonne N. Phillips
                   W. Carlyle Blakeney, Jr.

          (c)  J. W. Hunt and Company LLP was appointed independent  accountants
               of the  Corporation for the fiscal year ending December 31, 1998.
               The stockholders  voted 812,245 votes for and 1,312 votes against
               this appointment, with 337 abstaining.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8 - K

          (a)  Exhibit 27, Financial Data Schedule.

          (b)  A Form 8-K was filed on April 22, 1998 and reported  under Item 5
               the  Agreement and Plan of Merger by and between  Registrant  and
               Anchor Financial Corporation.  No financial statements were filed
               with the Form 8-K.


                                    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)

                                                s/Harry R. Brown
Date:  8-12-98                               By:--------------------------------
                                                  (Harry R. Brown)
                                                  Chief Financial Officer,
                                                  Chief Operating Officer,
                                                  Secretary and Treasurer





                                       13
<PAGE>




EXHIBIT INDEX

Exhibit 27                           Financial Data Schedule






                                       14