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 March 31, 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 Identification No.)
 incorporation or organization)

                        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 April 30, 1998:

Common Stock, No Par Value                        2,341,320
         Class                                 Number of Shares





<PAGE>




                            COMSOUTH BANKSHARES, INC.

                                      INDEX

PART I.     Financial Information

<TABLE>
<CAPTION>
Item 1.        Financial Statements
Page No.

    Consolidated Balance Sheets -
<S>                                                                                                      <C>
              March 31, 1998 (unaudited) and December 31, 1997 .......................................... 3

    Consolidated Statements  of Operations  for the Three months ended March 31,
              1998 and March 31, 997 (unaudited)......................................................... 4

    Consolidated  Statements  of Changes in  Stockholders'  Equity for the Three
              months ended March 31, 1998 and March 31, 1997
              (unaudited)................................................................................ 5

    Consolidated  Statements  of Cash Flows for the Three months ended March 31,
               1998 and March 31, 1997 (unaudited)....................................................... 6

    Notes to Consolidated Financial Statements .......................................................... 7

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 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>

                                                                                                March 31,               December 31,
                                                                                                  1998                      1997
                                                                                                  ----                      ----
                                                                                               (Unaudited)
ASSETS
<S>                                                                                           <C>                       <C>         
Cash and due from banks ........................................................              $ 11,036,269              $  9,332,658
Federal funds sold .............................................................                17,685,000                 6,820,000
                                                                                              ------------              ------------
   Total cash and cash equivalents .............................................                28,721,269                16,152,658
Investment securities:
   Held-to-maturity, at amortized cost (fair value of
   $13,372,158 in 1998 and $18,558,395 in 1997) ................................                13,302,858                18,498,356
   Available-for-sale, at fair value (amortized cost of
   $24,852,379 in 1998 and $24,504,127 in 1997) ................................                24,869,820                24,527,758
Loans receivable:
   (less allowance for loan losses 1998 - $1,838,844;
   1997 - $1,805,860) ..........................................................               146,946,488               142,670,629
Accrued interest receivable ....................................................                 1,645,462                 1,643,676
Premises and equipment .........................................................                 1,248,514                 1,311,260
Other assets ...................................................................                   641,016                   767,201
                                                                                              ------------              ------------
Total Assets ...................................................................              $217,375,427              $205,571,538
                                                                                              ============              ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits
   Noninterest bearing demand ..................................................                35,537,006                41,283,341
   NOW, money market and savings ...............................................                79,443,925                70,904,709
   Time deposits of $100,000 or more ...........................................                36,979,405                34,363,250
   Time deposits less than $100,000 ............................................                37,269,934                33,235,474
   Other time deposits .........................................................                 3,402,866                 2,885,885
                                                                                              ------------              ------------
Total deposits .................................................................               192,633,136               182,672,659
Federal funds purchased and securities sold under
   agreements to repurchase ....................................................                 3,670,070                 3,096,166
Notes payable ..................................................................                 2,108,333                 1,189,167
U.S. Treasury tax and loan accounts ............................................                   728,058                 1,330,114
Accrued interest ...............................................................                   608,580                   625,948
Other liabilities ..............................................................                   815,391                   641,912
                                                                                              ------------              ------------
Total Liabilities ..............................................................               200,563,568               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 - 2,341,320 in 1998 and
    2,317,600 in 1997) .........................................................                13,824,539                13,699,539
Retained earnings ..............................................................                 2,975,809                 2,300,437
Accumulated other comprehensive income .........................................                    11,511                    15,596
                                                                                              ------------              ------------
Total Stockholders' Equity .....................................................                16,811,859                16,015,572
                                                                                              ------------              ------------
Total Liabilities and Stockholders' Equity .....................................              $217,375,427              $205,571,538
                                                                                              ============              ============
</TABLE>


                                       3
<PAGE>

                            COMSOUTH BANKSHARES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATION
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                                   Three Months ended March 31,
                                                                                                  1998                      1997
                                                                                                  ----                      ----
Interest income:                               
<S>                                                                                          <C>                        <C>        
Interest and fees on loans ...................................................               $ 3,323,350                $ 2,653,768
Investment securities ........................................................                   625,315                    539,516
Federal funds sold ...........................................................                    99,523                     48,215
                                                                                             -----------                -----------
   Total interest income .....................................................                 4,048,188                  3,241,499
                                                                                             -----------                -----------

Interest expense:
Deposits .....................................................................                 1,827,176                  1,427,395
Federal funds purchased and securities sold under
   agreements to repurchase ..................................................                    53,510                     44,775
U.S. Treasury tax and loan accounts ..........................................                     8,944                      9,768
Notes payable ................................................................                    23,924                     23,250
                                                                                             -----------                -----------
   Total interest expense ....................................................                 1,913,554                  1,505,188
                                                                                             -----------                -----------

Net interest income ..........................................................                 2,134,634                  1,736,311
Provision for loan losses ....................................................                   210,000                     15,000
                                                                                             -----------                -----------
Net interest income after provision
   for loan losses ...........................................................                 1,924,634                  1,721,311

Noninterest income:
Lending operations and services ..............................................                   404,496                    296,547
Service charges on deposit accounts ..........................................                   184,892                    163,265
Other ........................................................................                    35,969                     22,643
                                                                                             -----------                -----------
    Total noninterest income .................................................                   625,357                    482,455
                                                                                             -----------                -----------

Noninterest expense:
Salaries and employee benefits ...............................................                   908,700                    725,732
Occupancy expenses ...........................................................                   119,790                    107,638
Furniture and equipment ......................................................                   107,633                    109,574
Advertising and marketing ....................................................                    30,488                     24,058
Other ........................................................................                   389,879                    400,654
                                                                                             -----------                -----------
   Total noninterest expense .................................................                 1,556,490                  1,367,656
                                                                                             -----------                -----------

Income before provision for income taxes .....................................                   993,501                    836,110
Provision for income taxes ...................................................                  (318,129)                  (315,950)
                                                                                             -----------                -----------
Net income ...................................................................               $   675,372                $   520,160
                                                                                             ===========                ===========

Basic earnings per common share:
   Weighted average shares outstanding .......................................                 2,341,320                  2,304,465
   Net income per weighted average number
      of shares outstanding ..................................................               $       .29                $       .23
                                                                                             ===========                ===========

Diluted earnings per common share:
   Weighted average shares outstanding .......................................                 2,469,695                  2,419,271
    Net income per weighted average number
       of shares outstanding .................................................               $       .27                $       .21
                                                                                             ===========                ===========
</TABLE>


                                       4

<PAGE>




                            COMSOUTH BANKSHARES,INC.
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
              Three Months Ended March 31, 1998 and March 31, 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                                                                520,160                                  520,160
  Other comprehensive income,                                                                                   
     net of tax -                                                                                               
     Unrealized loss on securities                                                             (74,067)             (74,067)
                                                                                                                 -----------
Comprehensive income                                                                                                 446,093
                                                                                                                 -----------
Issuance of common stock .............       6,112           28,175                                                   28,175
                                         ---------      -----------      ----------           --------           -----------
Balance at March 31, 1997 ............   2,305,250      $13,644,448      $  568,456           $(97,814)          $14,115,090
                                         =========      ===========      ==========           =========          ===========
                                                                                                                
Balance at December 31, 1997 .........   2,317,600      $13,699,539      $2,300,437             $15,596          $16,015,572
Comprehensive income:                                                                                           
  Net income .........................                                      675,372                                  675,372
  Other comprehensive income,                                                                                   
     net of tax -                                                                                               
     Unrealized loss on securities ...                                                          (4,085)              (4,085)
                                                                                                                 -----------
Comprehensive income .................                                                                               671,287
                                                                                                                 -----------
Issuance of common stock .............      23,720          125,000                                                  125,000
                                         ---------      -----------      ----------             -------          -----------
Balance at March 31, 1998 ............   2,341,320      $13,824,539      $2,975,809             $11,511          $16,811,859
                                         =========      ===========      ==========             =======          ===========
                                                                                                             
</TABLE>




                                       5
<PAGE>




                            COMSOUTH BANKSHARES, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                                    Three Months ended March 31,
                                                                                                    1998                    1997
                                                                                                    ----                    ----
Cash flows from operating activities:
<S>                                                                                           <C>                      <C>         
Net income .......................................................................            $    675,372             $    520,160
Adjustments to reconcile net income to cash
   provided by operating activities:
Depreciation and amortization ....................................................                  88,101                   72,765
Provision for loan losses ........................................................                 210,000                   15,000
Amortization of premium and accretion of discount
    on investment securities .....................................................                 (18,364)                   3,844
(Increase) decrease in interest receivable .......................................                  (1,786)                  49,765
Decrease in other assets .........................................................                 126,185                   50,819
(Decrease) increase in interest payable ..........................................                 (17,368)                  49,025
Increase in other liabilities ....................................................                 175,584                  308,315
                                                                                              ------------             ------------
Cash provided by operating activities ............................................               1,237,724                1,069,693
                                                                                              ------------             ------------

Cash flows from investing activities:
Purchase of investments, held-to-maturity ........................................                       0               (3,281,875)
Purchase of investments, available-for-sale ......................................              (7,849,328)              (1,364,500)
Maturities of investments, held-to-maturity ......................................               5,214,938                    5,530
Maturities of investments, available-for-sale ....................................               7,500,000                        0
Net increase in loans ............................................................              (4,940,193)              (4,352,990)
Gross amount of loans serviced for others ........................................               1,554,136                  375,168
Remittances on loans serviced for others .........................................                (841,147)                (709,871)
Purchase of premises and equipment ...............................................                 (25,355)                 (64,101)
                                                                                              ------------             ------------
Cash used for investing activities ...............................................                 613,051               (9,392,639)
                                                                                              ------------             ------------

Cash flows from financing activities:
Net increase in deposits .........................................................               9,960,477                7,403,419
Increase in federal funds purchased and securities
    sold under agreements to repurchase ..........................................                 573,903                  190,626
Proceeds (repayment) of note payable .............................................                 919,167                  (60,000)
(Decrease) increase in U.S. Treasury, tax and loan accounts ......................                (602,056)                 436,991
Proceeds from issuance of common stock ...........................................                 125,000                   28,175
                                                                                              ------------             ------------
Cash provided by financing activities ............................................              10,976,491                7,999,211
                                                                                              ------------             ------------

Increase (decrease) in cash and cash equivalents .................................              12,827,266                 (323,735)
Cash and cash equivalents at beginning of period .................................              16,152,658               13,091,553
                                                                                              ------------             ------------
Cash and cash equivalents at end of period .......................................            $ 28,979,924             $ 12,767,818
                                                                                              ============             ============

Supplemental disclosure of cash flow information:
Cash paid for interest ...........................................................            $  1,930,922             $  1,456,163
Cash paid for taxes ..............................................................            $      1,800             $     57,952
Noncash adjustments to report investment securities,
  available-for-sale at fair value:
Investment securities, available-for-sale ........................................            $     17,441             $   (148,202)
Other (liabilities) assets .......................................................                  (5,930)                  50,388
Unrealized gain (loss) on investment securities, available-
   for-sale, net of applicable deferred income taxes .............................            $     11,511             $    (97,814)
</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 three month period ended March 31, 1998 may not  necessarily
be indicative of the results for the year that will end December 31, 1998.

NOTE 1 - LOAN COMMITMENTS

At March 31,  1998,  standby  letters of credit of  $2,181,000  and  undisbursed
amounts of lines of credit of $25,224,000 were outstanding.

NOTE 2 - NOTES PAYABLE

During 1996, the Corporation  established a $1,200,000  revolving line of credit
with  another  financial   institution.   The  line-of-credit  was  subsequently
converted to a term loan and matures  December 2001 with  interest  payments due
quarterly.  Interest  is  variable  at the  lender's  prime rate minus  one-half
percent (8.0% at March 31, 1998). 550,000 shares of Bank of Charleston's ("BOC")
common stock serve as  collateral.  At March 31, 1998,  the  Corporation  had an
outstanding balance of $900,000 on this loan. A quarterly payment of $60,000 was
made during March 1998.

During 1997, the Corporation established a $250,000 term loan with the financial
institution  noted in the preceding  paragraph.  This loan matures September 30,
2000.  Interest is variable at the lender's  prime rate minus  one-half  percent
(8.0% at March 31, 1998) with  repayments  of $20,833 plus accrued  interest due
quarterly. The loan is cross-collateralized  with the loan noted above. At March
31, 1998, the Corporation had an outstanding balance of $208,333 on this loan. A
quarterly payment of $20,833 was made during March 1998.

On March 19, 1998, the  Corporation  established a $1,000,000 term loan with the
financial institution  previously  mentioned.  This loan matures March 26, 2001.
Interest is variable at the lender's prime rate minus one-half  percent (8.0% at
March 31, 1998) with  repayments of interest only  quarterly for the first year,
followed by four quarterly  principal payments of $50,000 plus accrued interest,
followed by four quarterly principal payments of $200,000 plus accrued interest.
This loan is  cross-collateralized  with the existing  term loans.  At March 31,
1998, the Corporation had an outstanding  balance of $1,000,000 on this loan; no
quarterly payments were due or made during the quarter ending March 31, 1998.

The line of  credit  agreement  and the term  loan  agreements  contain  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 foreclosed assets
to loans receivable plus foreclosed assets at a ratio no greater than 1.80%; and
maintain a return on average assets of at least 1%. The  Corporation was in full
compliance  with all of the  covenants at quarter end. The  Corporation  is also
restricted  from  paying  any  dividends  unless  approved  by the  lender.  The
Corporation  received a waiver from the lender on this  restriction for the 1997
three-for-two stock split and the 10% stock dividend paid in December 1996.

At  March  31,  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.




                                       7
<PAGE>



NOTE 4 - 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 $430,000 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 March 31,  1998,  $183,000 of loans was on  nonaccrual  status as compared to
$88,000 at December 31, 1997. 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 March 31, 1998 and December 31,  1997,  interest  income of $4,527 and $6,722
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 March 31, 1998,  total  classified  loans were $3,392,000 or
2.3% 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 March 31, 1998. 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 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
                                           March 31, 1998   December 31, 1997
                                           --------------   -----------------
Nonaccrual loans .........................    $182,721           $ 87,989
Loans past due ninety days or more .......      72,507             77,673
Troubled debt restructuring ..............           0                  0
Other real estate owned ..................           0                  0
                                              --------           --------
      Total ..............................    $255,228           $165,662
                                              ========           ========
                                                          
Nonperforming assets to total loans                       
   and other real estate owned ...........         .17%               .11%
                                              ========           ========
                                                       



                                       8
<PAGE>



NOTE 5 - ALLOWANCE FOR LOAN LOSSES

Activity in the allowance for loan losses was as follows:


                                             March 31, 1998    December 31, 1997
                                             --------------    -----------------
Balance at beginning of period ........       $ 1,805,860        $ 1,802,402
Provision for loan losses .............           210,000            334,000
Loans charged-off:
   Commercial .........................          (175,468)          (321,642)
   Real estate-mortgage ...............                 0                  0
   Consumer and other .................            (1,819)           (34,097)
                                              -----------        -----------
       Total ..........................          (177,287)          (355,739)
                                              -----------        -----------
Recoveries:
  Commercial ..........................               200             20,931
  Real estate-mortgage ................                 0                  0
  Consumer and other ..................                71              4,266
                                              -----------        -----------
      Total ...........................               271             25,197
                                              -----------        -----------
Balance at end of period ..............       $ 1,838,844        $ 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 March 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.


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

                                       9
<PAGE>

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 March 31, 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 March 31, 1998 and December 31, 1997,  liquid assets of  approximately  $67.2
million and $59.2  million,  respectively,  were  available  to meet demands for
deposit withdrawals, undisbursed amounts on lines of credit ("loan commitments")
of $25,224,000  and  $22,043,000,  respectively,  and letters of credit totaling
$2,181,000 and $3,327,000,  respectively.  The amount of liquid assets available
at March 31, 1998 includes cash and cash equivalents of $29,000,000, an increase
of $12,900,000  from the December 31, 1997 amount of $16,100,000.  This increase
in cash and cash equivalents is primarily  attributable to investment securities
which were either called or matured during the last week of the quarter and were
reinvested 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 $192.6 million at March 31, 1998, compared to $182.7
million at December 31, 1997.  Of the total deposit base of the  Corporation  at
March 31, 1998, approximately $40.0 million, or 20.8%, 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.

One of the  principal  uses of funds is to meet loan  demand at BOCL and BOC. At
March 31, 1998, total loans outstanding were  approximately  $148.5 million,  as
compared to $144.5  million at December 31, 1997.  During the first three 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
March 31, 1998, the allowance for loan losses at BOCL and BOC was  approximately
$883,000 and  $956,000,  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 March 31,
1998,  the Tier I capital  ratio for BOCL was 10.5% and the total  capital ratio
was 11.7%,  while BOC had a Tier I ratio of 12.9% and a total  capital  ratio of
14.0%.

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 11.1% and its total capital
ratio was 12.3% at March 31,  1998.  These  ratios  are well  within  guidelines
established by the Corporation's primary regulator.




                                       10
<PAGE>


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.

RESULTS OF OPERATIONS

For the first three months of 1998, the Corporation had net earnings of $675,000
or $.27 per diluted  share,  an  increase  of 30% over the  $520,000 or $.21 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 quarter of 1998. The
improved  earnings  over the prior  period  are the  direct  result of this loan
growth.

The  Corporation  had total  revenues of  $4,673,000  and  $3,724,000  and total
expenses of $3,998,000  and $3,204,000 for the three months ended March 31, 1998
and 1997,  respectively.  Summarized  below is an analysis of the composition of
revenues and expenses for the three month periods ended March 31, 1998 and 1997.


                           Three Months Ended March 31,

                                                 1998                 1997
                                                 ----                 ----
Interest on loans ..................   $3,323,000   71.1%   $2,654,000    71.3%
Interest on investment securities ..      625,000   13.4%      540,000    14.5%
Interest on temporary investments ..      100,000    2.1%       48,000     1.3%
Non-interest income ................      625,000   13.4%      482,000    12.9%
                                       ----------   -----    ---------   -----
                                                            
Total Revenues .....................   $4,673,000   100.0%  $3,724,000   100.0%
                                       ==========   =====   ==========   =====
                                                          

The  increase in  interest  on loans is entirely  due to the change in volume as
rates earned on loans were the same for the two periods  reported.  The increase
in  interest  earned  on  investment  securities  was  mostly  due  to a  slight
improvement realized in the yield between the two periods as the Federal Reserve
implemented  a 25 basis point  increase in the federal funds rate in March 1997,
which  eventually  increased  rates  paid on  investment  securities.  Increased
outstandings  in the  temporary  investment  category  resulted in the  improved
earnings over the prior period.  Noninterest income improved by $143,000 between
the two periods,  primarily  due to a $20,000  improvement  in fees derived from
deposit  services  as a result of  growth in  deposit  accounts  and a  $118,000
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.


                                       11
<PAGE>




Operating  Expenses  for the three  months ended March 31, 1998 and 1997 were as
shown in the following table:



                                                Three Months Ended March 31,
                                                 1998                  1997
                                                 ----                  ----
Interest on deposits ...............   $1,827,000    45.7%   $1,427,000    44.5%
Interest on note payable and                                 
   securities sold under agreements                          
   to repurchase ...................       86,000     2.2%       78,000     2.4%
Provision for loan losses ..........      210,000     5.3%       15,000      .5%
Salaries and employee benefits .....      909,000    22.7%      726,000    22.7%
Occupancy expenses .................      120,000     3.0%      108,000     3.4%
Furniture and equipment expenses ...      108,000     2.7%      109,000     3.4%
Legal and regulatory ...............      121,000     3.0%      139,000     4.3%
Printing and supplies ..............       49,000     1.2%       42,000     1.3%
Advertising and marketing ..........       30,000      .8%       24,000      .7%
Other ..............................      220,000     5.5%      220,000     6.9%
Taxes ..............................      318,000     7.9%      316,000     9.9%
                                       ----------   -----    ----------   ----- 
                                                             
Total Operating Expenses ...........   $3,998,000   100.0%   $3,204,000   100.0%
                                       ==========   =====    ==========   ===== 
                                                             

The change in interest paid on deposits is principally  due to the strong growth
in deposits as rates paid on deposits  remained  basically  the same for the two
periods.  The significant  change in the loan loss provision for the two periods
is due to  additional  reserves  needed to support the $28  million  increase in
loans outstanding,  management's  recognition that a significant  portion of the
portfolio is beginning to mature,  and the charge-off of a sizable credit in the
fourth  quarter of 1997 and another in the first quarter of 1998.  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 the
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 three  months  ended  March 31,  1998 and 1997 was
$2,135,000 and $1,736,000, respectively. The average yield on earning assets was
8.1% and 8.3%, the average rate paid on interest  bearing  liabilities  was 4.7%
and 4.7%, and the annualized net interest margin was 4.3% and 4.4% for the three
months ended March 31, 1998 and 1997, respectively.

SUBSEQUENT EVENT

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.  If all
required  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 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  contained
                     reportable items concerning an 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)

Date: 5-13-98                           s/Harry R. Brown
                                   By:----------------------------
                                        (Harry R. Brown)
                                        Chief Financial Officer,
                                        Chief Operating Officer,
                                        Secretary and Treasurer



                                       13
<PAGE>

                                 EXHIBIT INDEX

Exhibit 27
Financial Data Schedule